China overtook the United States as the principal consumer of Chilean goods in the first half of 2009, reaching its highest percentage share of Chilean exports yet. China’s continued appetite for Chilean copper, among other commodities, has helped cushion Chile’s overall drop off in exports.
Statistics from Chile’s Customs Service reported that China imported 21.6% (US$4.8 billion) of Chilean exports compared to 14.1% (US$3.16 billion) imported by the United States, which has traditionally been the main importer for Chilean goods.
China and the United States have traded places as Chile’s top customer over the past few years. During the first half of 2006, China imported only 8.4% of Chile’s exports compared to 17.7% by the United States.
By 2008, China had caught up to within one percentage point: buying 14.8% of Chilean goods compared to 15.8% for the US. Since then China has taken over the top spot.
“At the moment emerging Asian economies, especially China, are sustaining international activity, while the United States has shown a fall in its activity, and thus less demand,” explained economist Christian Johnson of the Universidad Adolfo Ibáñez.
The statistics showed Chile’s overall exports falling by 40.4% in the first half of 2009, a figure largely attributed to decreased overseas demand as a result of the global financial crisis. China, although its share of the pie increased, was no exception. Exports to the Asian giant fell 13%: a small decrease compared to the drop off in demand by Chile’s other principal customers.
Factory exports were down during the January-June period by 18%, while agricultural and fishing exports fell 8.8%. The industry suffering the biggest drop off in demand was the traditionally lucrative copper-mining industry, whose exports fell by half (50.5%) despite continued high demand from China. Copper prices, while stable of late, are down significantly from last year: US$1.83 compared to US$3.67 in the same period in 2008
China bought 41.6% of Chile’s copper exports in the first six months of this year, while the United States bought 10.6%.
“China is one of the countries that buys a lot of copper from us [Chile] and has intensified its purchases,” said Erik Haindl, dean of economics at Universidad San Sebastián. “China’s recovery plan is very metal-intensive and this helps us to offset the fall in copper prices.”
The International Monetary Fund (IMF) has projected that China’s economy will grow by 6.5% in 2009, while the U.S. economy is set to shrink by 2.5%. It has also estimated that this year, China will become the world’s second-largest economy after the United States, taking Japan’s place.
By Chris Noyce - Santiago Times