Today, Chile will inaugurate a new president at a moment when the country’s foreign policy is entering complicated waters.
As José Antonio Kast takes office, Santiago faces a dilemma increasingly familiar across Latin America: how to manage deep economic ties with China while preserving longstanding strategic relationships with the United States. For decades, Chile navigated this balance with relative ease. Now, however, intensifying competition between Washington and Beijing is making that equilibrium harder to maintain.
The recent controversy surrounding a proposed Chinese-backed submarine cable linking Chile directly to Hong Kong offered an early glimpse of the challenge ahead. What began as a technical telecommunications decision quickly escalated into a diplomatic dispute, exposing tensions within Chile’s own institutions and drawing an unusually sharp reaction from Washington, which reportedly revoked the visas of the ministers involved.
Yet the cable dispute matters less for the project itself than for what it revealed: Chile, like much of Latin America, is entering a new phase in which relations with China are no longer simply an economic question, but is also a geopolitical one, particularly as Washington renews its strategic attention to the region.
The state of the Chinese connection
Chile’s position reflects a broader regional reality. “The United States is our historic partner, but China is our main trading partner,” says Patricio Navia, a professor of Latin American politics at New York University. China now absorbs roughly 32.7 percent of Chilean exports, particularly copper, lithium, and cherries. At the same time, the United States remains Chile’s principal strategic partner, and the country grants Chileans access to the Visa Waiver Program, a privilege no other Latin American country enjoys.
“Kast must reassure Washington that Chile remains a close ally, even as it conducts business with China,” Navia adds. “At the same time, Santiago must show Beijing that it is a reliable commercial partner—though not one with the same deep, historic relationship it shares with the United States.”
China’s engagement with Latin America has largely focused on economic expansion. Infrastructure projects, energy investments, and commodity trade have become the pillars of Beijing’s presence in the region.
That presence is already significant in Chilean energy. Chinese firms control roughly 65 percent of electricity distribution and about 70 percent of electricity transmission in the country, according to figures provided by Claudio Seebach, dean of engineering at Adolfo Ibáñez University.
“China thinks in terms of a hundred-year horizon,” Seebach said. “They don’t necessarily need a political ally in Chile, but they do want influence and presence in strategic sectors.”
Chinese investment, he argues, often follows a logic distinct from Western capital. “When Chinese firms expand abroad, they do not demand ideological alignment. For them, business is business.”
Domestic difficulties in Chile
The debate is unfolding within a difficult domestic political context. The incoming administration will face a fragmented Congress, tensions with the opposition, and a complex fiscal outlook.
Chile’s fiscal situation is already raising concerns. “The latest report from the Autonomous Fiscal Council shows a troubling trend,” warns Loreto Cox, a professor at the School of Government at Pontificia Universidad Católica. “If it continues, Chile could end up with debt levels well beyond what is considered prudent. Restoring order to the public finances is essential.”
Yet doing so will not be easy. Controlling public spending is always politically costly, particularly in an environment where relations between the incoming government and the opposition are already deeply strained.
Given these difficulties, resisting the attraction of Chinese capital may prove politically difficult, even as the strategic stakes grow clearer.
Striking the Washington-Beijing balance
For Chile, the immediate challenge is less about choosing sides than about managing the political realities of the moment. The current administration in Washington has taken a more confrontational approach toward China and has shown little hesitation in linking economic cooperation to geopolitical alignment. In that environment, Santiago has limited incentives to test the boundaries of the relationship.
The Trump administration has already demonstrated a willingness to impose abrupt policy responses when countries appear to move too close to Beijing. Meanwhile, Kast recently attended the Shield of the Americas Summit, a gathering widely interpreted as part of Washington’s effort to consolidate a group of hemispheric partners aligned with U.S. strategic priorities, which could indicate a willingness to prioritize U.S.-Chile relationships.
A more pragmatic strategy may be to reinforce cooperation with Washington in the short term, particularly on security and diplomatic coordination, while quietly preserving the economic foundations of Chile’s relationship with Beijing. Such an approach would allow the new government to avoid unnecessary confrontation during a period of heightened tension.
Toward the end of Kast’s four-year term, as global dynamics evolve and the United States enters a post-Trump political phase, Chile may find greater space to recalibrate its external partnerships. Maintaining flexibility now could allow Santiago to reengage more openly with both powers later, rather than locking itself prematurely into a rigid geopolitical alignment.
If the new government manages that balance successfully, Chile could once again offer something valuable to the rest of Latin America: a model for how middle powers navigate great-power rivalry without sacrificing their strategic autonomy.
Victoria Flowerree is a Chilean graduate of Columbia University in political science. She is the Communications Coordinator for Global Americans.
