by almost 20 % with respect to trading partners during the 2000s, which contrasts with the greater stability of the 1990s. of course, better macroeconomic policies contributed markedly to this success. whereas previous income booms had been accompanied by strongly pro - cyclical economic policies that incubated problems, this time greater efforts at fiscal saving, more exchange rate flexibility and better banking supervision helped the countries take advantage of the high commodity prices. but for a large part of the region, the seed of the success of the 2000s was sown by china. today our objective is to look ahead, not to dwell on thoughts about the region during the past decade. the strength of the chinese economy leads one to think that this phenomenon of high terms of trade will go on for some time, posing a number of challenges to economic development in the region. at the risk of oversimplifying these challenges, let me group them into three categories : ( i ) challenges to macroeconomic management, ( ii ) structural challenges, and ( iii ) cyclical challenges. the first two depend essentially on us, while the third refers to the short - term trajectory of the chinese economy and its possible impact on developing countries. macroeconomic challenges a first issue worth noting is that commodity prices have experienced successive cycles throughout history, and there is a permanent risk of mistaking a temporary phenomenon for a permanent one. this time is no different. there is a valid argument that the chinese economy can sustain its recent dynamism for many years to come. while there are reasons to believe that the chinese economy should converge to growth rates around 7 % within the next few years, and that 9 % growth rates are very difficult to sustain, this does not imply a substantial deterioration in chinese demand for commodities. 3 in the case of chile, the experts surveyed by the ministry of finance have raised their estimates for the long - term copper price on repeated occasions on the grounds of both supply - and demand - side considerations. 4 however, economic cycles do exist and the response of supply – which has not been fully perceived so far – will tend to drive prices to their trend values, which are below current levels. clarity on this point is not only fundamental to determine a fiscal policy consistent with medium - term income, but also to guide private spending and investment decisions on the basis of sustainable future earnings. for macroeconomic policies, there is an important claro, sebastian. presented at the v chile - china entrepreneurial meeting, centro cultural de carabineros,

abroad. avoiding them is impossible, but we can surely mitigate them. chile ’ s macroeconomic policy framework leans on various pillars that must be tended to. to begin with, a fiscal policy that is serious and predictable. keeping a budget rule based on the structural balance, which permits to shield public expenditure from economic fluctuations and also empower it to support domestic expenditure when needed, is highly beneficial. a second pillar is our high financial and commercial openness. although it links us more to external shocks, it also permits us to diversify risks, makes us more flexible and facilitates our search for new markets and opportunities. in the distant past we were a pretty closed economy, undiversified and much more vulnerable to the ups and downs of the world economy. a third pillar is our strong, well regulated financial system that proved its resilience during the crisis of 2008 – 2009. existing regulation has allowed the development of prudent banking not engaged in highly risky or toxic instruments. of course there are areas that lag behind, and it is obvious that protection to financial customers needs enhancement. every effort in that direction, which is consistent with keeping a sound financial system, is welcome. let us recall that the u. s. crisis originated in – among other factors – a very noble and pro - customer objective : to increase access to home ownership to the less privileged population. the bis central bankers ’ speeches problem was that they lent to the wrong people, based on an expected ever - increasing housing price trend that proved unsustainable. in chile, the recent creation of a financial stability committee is a step towards helping to prevent this kind of episode from occurring. finally, there is monetary policy based on an inflation - targeting scheme with a floating exchange rate. this allows conducting monetary policy with transparency and with a goal that is clear and known by everybody. the bank makes decisions aiming at expected inflation standing at 3 % over a two - year policy horizon. safeguarding the credibility of this goal is crucial for monetary policy to be an effective tool that not only succeeds in keeping inflation low and stable but also helps to reduce the volatility of output and employment. now i would like to take a look at recent macroeconomic developments and their implications for the conduct of monetary policy. from the high inflation to the great recession in the early part of the past decade we enjoyed relative quiet in the macroeconomic front. inflation moderated across the world and the economies resumed their trend growth rates. there were