On March 15, 2018, Chilean financial regulator SVS approved a $1.3 billion acquisition by China Southern Power Grid of a 27.7% stake in Transelec SA. The purchase has strategic implications, as Transelec SA operates some 10,000 km of electricity transmission lines throughout Chile and is reported to control around 85% of the Chilean market. State Grid Corporation of China (SGCC), a state-owned enterprise with ties to the People’s Liberation Army (PLA), was initially part of the bid but withdrew before the end of 2017, when China Southern Power Grid won preliminary approval.
This regulatory approval comes two months after the January 2018 China-CELAC Forum, which was held in Santiago, and signals strengthening ties between Chile and China. At the Forum, China claimed that Latin America was “eager” to join One Belt, One Road.
China is Chile’s largest trading partner and already has a substantial presence in Chile, which has evoked security-minded concerns among some observers in the U.S., Japan and elsewhere. A sizeable investment in the country’s power sector would complement and reinforce Chinese mining operations, and manufacturing and processing plants, which would benefit from upgraded energy infrastructure. Chinese companies have likewise been increasing their investments in the energy sectors of Brazil and Argentina. This investment in Brazil alone has reached $20 billion and may rise further if Chinese firms bid on Electrobras, once privatized.