\t\t\t \t\t\t\t\t \t\t\t\t\t Despite Argentina\u2019s claims to the contrary, the United States government\u2019s bailout appears to come with strings attached: they want China \u201cout\u201d of Argentina. But with Argentina exporting billions in goods to China each year and some chunky prospective infrastructure projects on the cards, would President Javier Milei really cut ties \u2014 and could he afford to do so?<\/p>\n
This wrangle is being watched closely in the region: China is among most Latin American countries\u2019 main trading partners, and many have commercial and military cooperation agreements with Beijing. Now, the U.S. government is pushing to change that: Treasury Secretary Scott Bessent said after his first meeting with Milei that the U.S. did not want Latin American countries to start doing mining rights for aid deals with China, as it has in Africa \u2014 a characterization China has strenuously denied.\u00a0<\/p>\n
\u00a0U.S. President Donald Trump has described Milei\u2019s Argentina as a \u201cbeacon\u201d for the region, prompting questions about what might be in store for its regional neighbors.\u00a0<\/p>\n
The U.S. financial support package is designed to stave off a financial crisis for Argentina around the October 26 mid-term elections. While the U.S. has intervened directly in Argentina\u2019s currency market to prop up the peso, concrete details of the bailout have remained elusive. Trump and Bessent said this week that the support would depend on Milei\u2019s party performing well in the national mid-terms \u2014 although Bessent later softened this to say that Argentina would simply need to pursue \u201cgood policies.\u201d<\/p>\n
Trump: \u2018I\u2019d be very upset\u2019 Relations with China featured prominently during a lunch meeting between Milei and Trump in Washington on Tuesday. \u201cYou can do some trade, but you certainly shouldn\u2019t be doing beyond that,\u201d Trump said. \u201cCertainly, [they] shouldn\u2019t be doing anything having to do with the military with China. And if that\u2019s what\u2019s happening, I\u2019d be very upset about that.\u201d<\/p>\n
Days ago, U.S. Treasury Secretary Scott Bessent had said that Milei was \u201ccommitted to getting China out of Argentina\u201d \u2014 although he added on Tuesday that he was referring to \u201cports, military bases, observation facilities that have been created in Argentina\u201d and that U.S. assistance \u201cis not predicated on\u201d closing the country\u2019s US$18.5 billion currency swap with China.<\/p>\n
Argentine Economy Minister Luis Caputo has also said the China swap agreement would continue.<\/p>\n
The Chinese embassy in Argentina decried Bessent\u2019s comments in a public statement, saying that his words show the \u201cCold War mentality\u201d of some U.S. officials \u201cwho only seem to operate with the goal of confronting and intervening in the affairs of other sovereign nations.\u201d<\/p>\n
China is Argentina\u2019s second-largest trade partner after Brazil, the largest supplier of Argentine imports, and the main importer of Argentine beef and soy. \u201cEighty percent of Argentine meat exports goes to China,\u201d said Alejandra Conconi, executive director of the Argentine-Chinese Chamber of Commerce.<\/p>\n
Important Chinese projects in Argentina include the construction of two hydroelectric dams in Santa Cruz \u2014 which have been on stand-by since 2020 \u2014 and a contract to build Atucha III, which would become Argentina\u2019s fourth nuclear power plant. China also has a scientific deep space observation facility in Neuqu\u00e9n province, which skeptics say operates with hermetic secrecy. However, there are no Chinese military bases nor ports in Argentina, and at present there are no plans to do so.\u00a0<\/p>\n
Cooling relations? The cooling in relations didn\u2019t start with Trump. Rather, it appears to be rooted in Milei\u2019s own worldview: the president made explosive comments about the Asian giant before he ever reached the Casa Rosada.\u00a0<\/p>\n
\u201cNot only will I not trade with China, I will not trade with any communist,\u201d Milei said in September 2023, a month after coming first in the presidential primaries.\u00a0<\/p>\n
Relations with China have grown \u201ccold\u201d since Milei became president, according to Patricio Giusto, head of the Chinese-Argentine Observatory \u2014 but he added that, given the president\u2019s previous comments, \u201cit could have been worse.\u201d<\/p>\n
Anti-communist rhetoric notwithstanding, Milei made a U-turn in mid-2024, calling China \u201ca very interesting trade partner\u201d in an interview after negotiating the renewal of the currency swap, which China had suspended when Milei took office.<\/p>\n
Two months later, Milei met Chinese President Xi Jinping for the first time at the G20 summit in Brazil. They discussed building constructive cooperation between the countries and expanding their commercial ties. Although there have been no major new economic announcements, they have signed several trade agreements, including resuming Argentine poultry exports and starting to export nuts, as well as signing a key tax agreement with China.<\/p>\n
One of the main points of interest has been completing the two dam projects, which have been stalled due to a lack of funding on the Argentine side. The Milei government initiated talks to restart works, but there have been no concrete developments yet.<\/p>\n
\u201cIf Argentina now says \u2018We are out of this project, we are not interested,\u2019 China will probably decide not to continue investing a single dollar in other projects,\u201d Giusto said.<\/p>\n
You may also be interested in: How China\u2019s new Peru megaport gives it a foothold in South America<\/p>\n
So, will Milei break up with China for Trump? \u201cIt\u2019s hard to think how that would be carried out in practical terms,\u201d Giusto said. \u201cChina is a major source of investment in many sectors: energy, railroads, lithium, mining. For Argentina to drop any of them right now would be absurd.\u201d<\/p>\n
Conconi said that Bessent and Trump\u2019s comments were intended to \u201cintimidate\u201d Chinese investors, but China is very unlikely to stop investing in Argentina. \u201cArgentina cannot operate without China. Without its imports, the national industry would not work,\u201d she said. China is a key supplier of agricultural and construction machinery, industrial equipment like motors and electrical transformers, solar panels, trucks, and even train parts.<\/p>\n
Conconi believes that any potential moves from Milei to scale back commercial relations with China will not stop ongoing investments, but they \u201ccould slow them down or put new agreements and investments on stand-by.\u201d<\/p>\n
China is unlikely to break any contracts of their own accord, but would surely retaliate if they feel attacked, Giusto added.<\/p>\n
Provincial projects \u201cCould Argentina find a way to block Chinese investments? Yes, of course, but what would the benefits be?\u201d he said, adding that potential \u201cretaliations\u201d could include breaking the contracts over the dams and space observatory, as well as trade. \u201cWould the U.S. replace all that? Will they start buying soy and beef from us?\u201d<\/p>\n
Giusto says Argentina should keep doing business with both China and the U.S. \u2014 and keep Milei\u2019s personal views out of it. \u201cMost countries don\u2019t put ideology first. In this case, there\u2019s no strategy. Milei is now asking for help out of necessity and desperation.\u201d<\/p>\n
Giusto and Conconi both pointed out that dealing with China isn\u2019t up to Argentina\u2019s national government alone: rare earth minerals and other natural resources belong to the provinces, not the national government, and governors will likely want to protect any Chinese investments and projects in these areas. \u201cGovernors from all over the political spectrum travel to China and are avid for cooperation,\u201d Conconi pointed out.<\/p>\n
\u201cIt will all depend on what Milei decides to do,\u201d Giusto said. \u201cIf he decides to kick China out of Argentina, or restrict or ban China, I think we could see a response even tougher than commercial retaliation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Despite Argentina\u2019s claims to the contrary, the United States government\u2019s bailout appears to come with strings attached: they want China \u201cout\u201d of Argentina. But with Argentina exporting billions in goods to China each year and some chunky prospective infrastructure projects on the cards, would President Javier Milei really cut ties \u2014 and could he afford […]<\/p>\n","protected":false},"author":23,"featured_media":1023,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[600,414,601,81,83],"tags":[597,595,598,596,599],"class_list":["post-1021","post","type-post","status-publish","format-standard","has-post-thumbnail","category-argentina-trade-with-china","category-business","category-china-us-relations","category-international-relations","category-us-bailout-of-argentina","tag-argentina-trade-with-china","tag-business","tag-china-us-relations","tag-international-relations","tag-us-bailout-of-argentina"],"_links":{"self":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/1021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/comments?post=1021"}],"version-history":[{"count":0,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/1021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media\/1023"}],"wp:attachment":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media?parent=1021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/categories?post=1021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/tags?post=1021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}