‘Argenchina’: why Argentina overtook Brazil and became China’s ‘darling’ in Latin America

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In 2022, the amount allocated by Beijing to Argentina totaled US$ 1.34 billion, compared to US$ 1.30 billion received by Brazilians, shows a study. In 2022, China invested US$1.34 billion in Argentina, against US$1.30 billion in Brazil Getty Images via BBC At the end of his trip to China, in June, Sergio Massa, Argentine Economy Minister and presidential candidate, he joked that his country should be renamed “Argenchina”. “We are going to found the Republic of Argenchina,” he told journalists in Beijing after receiving the promise of a new round of billion-dollar investments. But, as the saying goes, every joke has a grain of truth. The numbers don’t lie: ties between Argentina and China have strengthened significantly, to the point that the neighboring country has displaced Brazil as the main destination for Chinese investments in Latin America last year. In 2022, according to the study by the Brazil China Business Council (CEBC) Chinese investments in Brazil: 2022 — technology and energy transition, the amount allocated by Beijing to Argentina totaled US$ 1.34 billion, against US$ 1.30 billion received by Brazilians. More recently, following Chinese lobbying, Argentina was announced as one of the six countries that will join the BRICS from 2024, a group formed by Brazil, Russia, China, India and South Africa. The others are Saudi Arabia, Egypt , United Arab Emirates, Ethiopia and Iran. And, since last year, Argentina has been part of the so-called ‘New Silk Road’, a Chinese developmental project. It was the first major economy in Latin America to join the initiative. Experts interviewed by BBC News Brasil say they believe that last year was an isolated case, and Brazil — which has always received practically half of total Chinese investment in Latin America — should regain leadership (read more below). And, even with the possible victory of anarcho-capitalist Javier Milei, the highest rated presidential candidate in voting intention polls and an ally of former president Jair Bolsonaro (PL), who has openly criticized China, they consider a break between both countries. The first round of the Argentine presidential elections will take place next Sunday, October 22nd — Massa (União pela Pátria), the government candidate, and Milei (A Liberdade Avança), from the opposition, are the favorites in the dispute. Third in the polls is also the opponent and former Argentine security minister Patricia Bullrich (Together for Change). Dependency Sergio Massa, Argentine Economy Minister and presidential candidate, joked that Argentina should be renamed “Argenchina” Reuters via BBC China is Argentina’s second main trading partner, after Brazil. Thirty years ago, in 1992, it was 14th. There are many reasons for the rapprochement between the two countries, some of which also explain Chinese interest in Brazil. On the one hand, Argentina, like Brazil, is a country that exports commodities — a power both in agriculture, with meat, wheat, corn, soy, and in mineral resources, with oil, gas and lithium. On the other, China, with a population of more than 1.4 billion people and a voracious appetite, needs these raw materials to develop and grow. “China will always need to import a large amount of food because its own agricultural resources are not sufficient. In this sense, Argentina, with its enormous agricultural wealth, is an obvious partner”, Jorge Heine, former -Minister of National Assets of Chile and former Chilean ambassador in Beijing, now a professor at Boston University, in the United States. But the historic shortage of dollars in the neighboring country, especially due to the high external debts incurred during its various crises, ended up increasing this dependence. “Argentina today does not have many options on the table that do not involve China, this is an unavoidable reality. The United States and Western banks are at risk of default, Europe is increasingly distant from the region, Russia, which could take advantage of this vacuum, at back with its crises due to the war in Ukraine… the only country with the scale to form some type of more comfortable partnership with Argentina is China”, says Tulio Cariello, director of Content and Research at CEBC. In June, Argentina reached an agreement with the People’s Bank of China, the Chinese Central Bank, to expand the currency swap, which in total reaches US$ 19 billion and which allowed the country to have access to less than a third of these resources , together with a disbursement from the Development Bank of Latin America and the Caribbean (CAF), pay in yuan part of the debt with the International Monetary Fund (IMF). And, as a backdrop, there is also the geopolitical issue — China has been increasing its influence over Latin America, a region that for a long time was considered “the backyard” of its main arch-rival in the international geopolitical chess: the United States. “China has a long-term view of its investments and, in this sense, problems or setbacks in the Argentine economy constitute less of an obstacle than for Western companies,” explains Heine. Furthermore, according to him, “the American economy competes with the Argentine economy — the USA produces meat and soy, for example. There are more elements of complementarity between the Chinese and Argentine economies, which explains this fruitful partnership”, he adds. For a high-ranking source in the Argentine government, interviewed by BBC News Brasil on condition of anonymity, China “has been Argentina’s main financial ally in recent times and President Alberto Fernández is grateful to the Chinese government. That’s why his last trip international went to China, in a gesture of presidential diplomacy, after the renewal of the currency swap”. Fernández arrived in China last Saturday (14/10) to meet with former president Dilma Rousseff, head of the New Development Bank (also called “Brics Bank”), in Shanghai, and with Chinese president Xi Jinping, in Beijing. He participates in the 3rd Belt and Road Forum for International Cooperation and also meets with investors. Argentine President Alberto Fernández chose China as his last presidential trip Reuters via BBC Brazil Although Argentina overtook Brazil in investment volume last year, experts interviewed by BBC News Brasil do not believe that this will become a trend. “I think this issue of Argentina overtaking Brazil has to be contextualized. The difference between the two in 2022 is very small, it doesn’t even reach US$500 million. Not to mention that in historical terms, Brazil has almost always led, with some countries in the region surpassing, in rare moments, specific issues. Chile, for example, was already ahead of Brazil for having received a gigantic investment in the lithium area”, says Cariello, from CEBC. Boston University’s Heine agrees. “I consider what happened last year more as a chance than anything else. There are several Chinese projects being developed in Brazil. Therefore, what happens in one year does not necessarily mean a trend”, he points out. Unrealized investments Economic crisis increased Argentina’s dependence on China Reuters via BBC According to the CEBC report, last year, one of the reasons that helped Argentina surpass Brazil in the volume of Chinese contributions was the significant business in the lithium segment, in the mining area. There were two acquisitions in the exploration of the mineral by the Chinese Ganfeng Lithium and Zijin Mining Group. But experts point out that, as is the case in Brazil, many billion-dollar Chinese investments announced in Argentina have not yet come to fruition. “For more than 15 years, China has been announcing investments in Argentina that in most cases have not materialized sufficiently. What has happened, lately, are some specific investments”, economist Marcelo Elizondo, president, tells BBC News Brasil of the Argentine Committee of the International Chamber of Commerce (ICC). In his view, “Argentina is unattractive to Chinese investors, who have faced many obstacles”, he adds, citing the “exchange rate gap” (the differences between the official exchange rate and the various parallel exchange rates for the dollar) and the difficulty in import inputs and machines for production. “In this sense, China has been present much more for Argentina’s financial and cyclical needs (such as payment to the IMF)”, he adds. Change of direction with Milei? Experts do not believe in a break between China and Argentina with Javier Milei’s victory Reuters via BBC And what should happen to Argentina if the best-rated candidate for president, the anarcho-capitalist Javier Milei, wins? Dubbed the “Argentine Trump”, Milei suggested “cutting relations with China”, due to the fact that the Asian country is governed by the Communist Party, and wants to bring Argentina closer to the United States, currently Argentina’s third main trading partner. He also promised, if elected, to take Argentina out of Mercosur and called President Luiz Inácio Lula da Silva (PT) a socialist “with a totalitarian vocation”. “This break (between Argentina and China) would be impossible. China is the main destination for the beef and soy that we export. It is impossible to stop trading with China. It is not possible to ideologize foreign trade, that is impossible”, Diego Guelar, former Argentine ambassador to Brazil, tells BBC News Brasil. For the Argentine ambassador to Switzerland, Gustavo Martínez Pandiani, listed as chancellor in the eventual government of candidate Sergio Massa, “China is today one of the most important emerging economies on the planet and has become a relevant investor in Latin America. We think it should continue strengthening the strategic partnership with China with the aim of advancing in the development of key sectors such as agro-industrial and energy, among others”. Heine, from Boston University, recalls that former president Jair Bolsonaro (PL) also used the same anti-China rhetoric during the presidential race, but during his government, trade relations between the two countries were not harmed. “My guess is that Milei, if elected, will have to do the same as Bolsonaro did: swallow his words and do what the imperatives of international economic realities impose on him,” he says. Despite this, Ariel González Levaggi, executive secretary of the Center for International Studies at the Argentine Catholic University, does not rule out friction between Argentina and China with Milei’s victory. “These elections are not good news for the Chinese, because the three candidates presented agendas that are much less favorable to China. But, in the case of Milei, the concern is great, especially regarding the deepening of relations, with a fear that some investment projects are paralyzed”, he says. “In any case, it is unlikely that bilateral relations will return to the level of Cristina Kirchner’s presidency (2007-2015), especially in her second term, when there was a rapprochement between the two countries, and Argentina had a very refractory position towards the States United”, he concludes. Text originally published in

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