Tag Archives: currency swap agreement China Argentina

Cold War Tactics: Taunting America in its Backyard

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In  June 2024, China renewed a multibillion-dollar portion of a currency swap, alleviating concerns that Argentina would need to pay back the funds from its depleted reserves. Argentine President Javier Milei, who often derided China during his presidential campaign, calling its leaders “assassins,” thanked Beijing, saying the extension provided financial relief. His office said mutual respect with China is vital to Argentina’s development and prosperity. Milei, an unshakable opponent of communism, has taken a more pragmatic approach to Beijing, saying Chinese investments and trade are essential to Argentina’s future, while maintaining closer relations with the U.S. China has deepened its ties with Argentina in key economic sectors, from the lithium mining companies in the arid north to the agricultural industry on the farm belt’s vast open plains… 

China is Argentina’s second biggest trade partner, after neighboring Brazil, racking up about $20 billion in commerce in 2023, compared with $14 billion for the U.S. Argentina’s exports to China have increased eightfold over the past two decades, as the Asian country invested in mining, oil and gas, finance and construction. China’s stock of foreign direct investments is up 500% since 2015, to more than $3 billion,

Argentina recently bought U.S.-made jet fighters, forgoing an offer to purchase Chinese ones. A Chinese company, Shaanxi Coal and Chemical Industry Group, reached a deal in 2022 with officials in the province of Tierra del Fuego to build a port in Argentina’s far south, giving Beijing a strategic location for accessing Antarctica and a crucial shipping route through the Strait of Magellan. That project has now been shelved, an adviser to the Milei government said….

Particularly worrisome to Washington has been a Chinese space station in the windswept plains of Neuquén that has little oversight from the Argentine government. U.S. military officials worry the remote base, which has a 35-meter-wide antenna, could be used for global surveillance by targeting U.S. satellites. 

Excerpt from Ryan Dubé, Argentina’s Milei Finds It Hard to Decouple From China, WSJ, Aug. 18, 2024

China in Latin America

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A plan for a…railway across the Amazon, from Brazil’s Atlantic coast to Peru, is among a sheaf of infrastructure projects that China is offering to finance in Latin America. Li Keqiang, China’s prime minister, signed an agreement for a feasibility study for the railway during an eight-day trip through South America that began on May 18th, 2015 in Brazil and took him to Colombia, Peru and Chile…

The same goes for Chinese loans. The $22 billion lent last year outstripped credits from traditional multilateral development banks, according to China-Latin America Economic Bulletin, published by Boston University. Apart from Brazil, the money has mainly gone to Venezuela, Ecuador and Argentina, where it has helped to sustain left-wing governments. Mr Li’s trip suggests a new interest in the business-minded countries of the Pacific Alliance.

Many governments in Latin America have embraced the Chinese dragon as a welcome alternative to the United States and the conditions imposed by the IMF and the World Bank. For a region with huge shortcomings in infrastructure, China’s investment, like its trade, is potentially a boon. But both have pitfalls.  An obvious one is sweetheart deals. In 2014 Cristina Fernández de Kirchner, Argentina’s president, negotiated a currency swap with China, as an alternative to settling her dispute with foreign bondholders. The price is high: the money is tied to 15 infrastructure deals in which Chinese firms face no competition.

Excerpts, The Chinese Chequebook, Economist,  May 23, 2015, at 29