Argentina

Argentina

Since the 1970s, Argentina’s diplomatic relations with China have been deeply affected by the superpower competition. China is today Argentina’s main export market for agricultural products, a trade structure that has reinforced the Latin American country’s specialisation in primary goods export and its dependence on imported industrial goods and foreign capital.

Argentina

Written by Rubén Laufer.

Historical Background

Argentina established diplomatic relations with the People’s Republic of China (PRC) in 1972. After his overthrow in 1955 and exile to Spain in the 1960s, Argentine General Juan Domingo Perón would make public his sympathy for the Chinese Revolution and the Maoist government, however, under his administration (1946–55) there was limited trade relations with the PRC at the private level.

Until 1972, with US influence in Latin America particularly strong in the context of the Cold War, Buenos Aires had recognised Taiwan as the sole government representative of China. The military dictatorship led by General Juan C. Onganía (1966–70), who was very close to Washington, kept its distance from the PRC due to the Argentine policy of ‘ideological frontiers’, which was associated with the US strategy of cutting all ties with communist countries. Since the early 1970s, however, a growing number of countries have started to recognise the PRC, especially after US President Richard Nixon’s 1972 visit to Beijing, at a time when the United States was weakened by the failure of its intervention in Vietnam, the dollar crisis, the growing economic competition from Europe and Japan, and the expansionism of the Soviet Union. In Argentina, the tough internal struggle between the factions associated with the two superpowers brought General Alejandro A. Lanusse to power in the last stage of the military dictatorship. During his term, from 1971 to 1973, he paved the way for the normalisation of diplomatic relations with Beijing, as part of a strategy of distancing himself from Washington. Lanusse also improved relations with the Soviet Bloc, abandoning the policy of ‘ideological borders’ in favour of ‘opening to the East’, which included stipulating far-reaching trade agreements with Moscow. This continued to a large extent in the foreign policy of the new Peronist government (1973–76), which sought to distance itself from the United States by strengthening diplomatic ties with both the Soviet Union and China.

After Mao Zedong’s death in 1976 and the beginning of the economic reforms under Deng Xiaoping in the late 1970s, a new stage in bilateral relations began. In Argentina, the coup on 24 March 1976 installed a violent dictatorship that would last until 1983. This regime had strong economic, political, and strategic ties with both superpowers but was increasingly leaning towards the Soviet Union. Dictator Jorge R. Videla (in power from 1976 to 1981) consolidated trade relations with the Soviet Union, while at the same time building political relations with Beijing, encouraged by the changes taking place in China and the normalisation of relations between Washington and Beijing in 1979. In June 1980, Videla paid a six-day official visit to China, where he signed a series of agreements on the sale of meat and grain and on scientific, technological, and financial cooperation. These agreements helped to lift Argentina’s dictatorship out of international isolation following the 1976 coup, and to counter criticism from the international community of the brutal human rights violations perpetrated by the regime.

After the return to a constitutional regime in December 1983, the government of Raúl Alfonsín (1983–89) intensified diplomatic relations with China as part of a strategy of international reintegration to widen Argentina’s autonomy vis-a-vis the United States. Alfonsín’s visit to China in 1988 added military cooperation to the bilateral agenda, which until then had been largely associated with grain sales.

In the 1990s, the end of the Cold War and the global hegemony of neoliberalism shaped bilateral relations during the two successive governments of Carlos Menem (1989–99). As trade with the Soviet Union had been in decline since 1986, Argentina sought to replace Moscow with Beijing as a trade partner. This was why the Menem government did not support Western sanctions against Beijing after the crackdown on the Chinese democratic movement in 1989. Although Argentina’s strategic realignment with the United States in the early 1990s took precedence over bilateral relations with China, President Menem politically supported China’s aspiration to join the World Trade Organization (WTO) after his re-election in 1995 and Argentina continued to back China’s attempt to be recognised as a ‘market economy’ even as the controversy continued long after China’s accession to the WTO in 2001.

After the deep economic, social, and political crises of 2001 in Argentina, the 12 years covered by the presidencies of Néstor Kirchner (2003–07) and Cristina Fernández de Kirchner (2007–11 and 2011–15) marked a qualitative leap in bilateral relations with China. China became a major trading partner, investor, and key source of financial support for the Argentine Government. The ‘strategic partnership’ that Argentina established with China in 2004 was upgraded to a ‘comprehensive strategic partnership’ in 2014.

Despite some initial distancing from the government of the conservative Mauricio Macri (2015–19) due to the reorientation of its foreign policy towards the United States, trade, financial, and investment relations with China remained stable, and intensified again in the context of the COVID-19 pandemic under the presidency of Alberto Fernández, which began in December 2019.

Current bilateral relations between Argentina and China are not exceptional within Latin America. China is the first or second destination for exports and origin of imports, investment, and loans for most Latin American countries, many of which have established ‘strategic partnerships’ of various types with Beijing.

BRI Status

Nineteen countries in Latin America have already signed memorandums of understanding to cooperate with China under the Belt and Road Initiative (BRI). However, in recent years, the replacement of reformist or neo-developmentalist governments with conservative ones, US influence over economic and strategic considerations, and direct pressure from Washington have prevented the four largest Latin American economies—Brazil, Argentina, Mexico, and Colombia—from joining the BRI.

As of September 2021, Argentina had not signed any cooperation agreement with China within the framework of the BRI, although it is expected to do so soon. Former president (and current Vice-President) Cristina Fernández de Kirchner pushed for such an agreement but was unable to make it happen. Her presidency was followed by the conservative administration of Macri, which prioritised relations with the United States and Europe. His government obstructed several large infrastructure projects contracted to Chinese companies based on the agreements reached with Kirchner in 2014. Very soon, however, Macri had to soften his stance towards China, partly due to the deteriorating economic conditions in Argentina resulting from his policies.

Current Economic Relations

Trade: China has been among Argentina’s top trading partners in recent years. Until 2008, the trade balance was in favour of Argentina. However, since then, the balance has reversed, with an average annual deficit close to 4.5 billion USD in the following decade. China is today Argentina’s main export market for agricultural products. It buys mainly soybeans (28% of total exports to China), frozen beef (17%), grain sorghum (14%), grain barley (8%), animal and vegetable fats and oils (7%), and bird meat and offal (3%). In 2019, China was the destination for 75% of Argentine meat exports. Exports of wine and fish products to China also grew. Argentina is one of China’s major sources of beef imports. The rapid growth of meat exports to China since 2019 has raised the expectations of the Argentine ruling classes of a new boost in livestock exports, given the troubles of the local economy. Meanwhile, Chinese exports to Argentina include printed circuits for mobile phones, parts for electrical appliances, radios, glyphosate, automatic machines for dataprocessing, and other industrial products.

Today China also has a substantial presence across the entire production chain for soybeans, which are Argentina’s main exportable product, from the supply of seeds to the control of export ports. Added to this are the large investments in key export sectors (mainly agri-food items such as soybeans, barley, soybean oil, chicken, and beef), including the acquisition by the Chinese state-owned food processing giant COFCO Group of 100% of the local subsidiaries of Nidera and Noble Agri, making it a leading firm in oilseed milling in Argentina. In 2018, the COFCO Group exported the highest volume of grains and derivatives among companies in Argentina.

Investment and Financing: Along with the intensification of trade relations between Argentina and China, Chinese investment increased markedly. The oil, mining, and infrastructure sectors see intense competition among Chinese, European, Russian, and US corporations, with the backing of their respective states.

Chinese companies have investments or are involved as contractors in a wide range of activities: oil, through CNOOC and Sinopec; energy projects (the Atucha III nuclear power plant, with its Chinese technology and capital; Condor Cliff and La Barrancosa hydroelectric dams in Santa Cruz Province; and a photovoltaic solar energy plant in Caucharí, Jujuy Province); aerospace activities (the Bajada del Agrio Space Station in the Province of Neuquén); surface and underground railway projects; mining (the Veladero gold and silver mine; lithium and potassium mines in the provinces of Salta and Jujuy); electronics assembly plants; soy and its derivatives (flour and oil), biodiesel, and cattle in the Pampas region; and financing and swaps.

Chinese direct investments in and loans to Argentina are growing. They have been used to replenish the foreign reserves of the central bank and to buy products from China, as well as hiring Chinese companies for the construction of infrastructure projects. After the signing of more than 30 bilateral economic agreements in December 2018, the Argentine Ambassador in Beijing, Diego Guelar, stated that China is today the ‘first investor, the first banker, and the first market for Argentina’.

The agreements that are currently being implemented include the construction or improvement of important railways linked to the soybean export complex—for instance, the renovation of the Belgrano Cargas and San Martín Cargas railways, to facilitate access to the Pacific Ocean. The renovation involves not only financing from China, but also the import of Chinese-made locomotives and wagons. In this way, Argentine governments are allocating large financial resources to the purchase of industrial and capital goods from China, instead of directing them to the reactivation of Argentina’s once advanced domestic railway industry—a situation that has been the subject of criticism and debate in political and academic circles in Argentina.

Consecutive Argentine governments have requested currency exchanges with China. The first, for about 10.5 billion USD, was agreed to in 2009 by the government of Cristina Fernández de Kirchner and expired in 2012 without having been used. A second swap, for 3.8 billion USD, was signed by the same government at the end of 2014 and extended in 2015, and then renewed for three years by the Macri government in July 2017. The Joint Action Plan 2018 agreed to expand this second currency exchange by 8.7 billion USD, which was renewed in July 2020 by the current government of Alberto Fernández. The exchanges amount to a total of 130 billion yuan—equivalent to almost 20 billion USD. At the time of the last renewal in July 2020, this amount represented 42% of the reserves (43.35 billion USD) of the Central Bank of Argentina.

At a meeting prior to taking office in December 2019, President Fernández and President Xi’s envoy, Arken Imirbaki, Vice-Chairman of the National People’s Congress, discussed the construction of a fourth nuclear power plant in Argentina, which would use exclusively Chinese technology and be financed with a loan of 9 billion USD from China. The Argentine President expressed his willingness to join the BRI, and the Chinese authorities also showed interest in the strategic waterway of the De la Plata and Paraná rivers, connecting Argentina with Bolivia, Brazil, Paraguay, and Uruguay.


Partial list of the most recent bilateral economic agreements

• Joint Declaration on the Establishment of a Comprehensive Strategic Association (2014).
• Framework Agreement for Economic Cooperation and Investments (2014).
• Financing agreement for the Kirchner–Cepernic dams in Santa Cruz Province (2014).
• Memorandum of Understanding on the Financing of the Manuel Belgrano Thermoelectric Power Plant (2015).
• Signing of the loan contract for the repair of the Belgrano Cargas railway (2016).
• Agreement on Cooperation in the Construction of a CANDU Nuclear Power Plant (Heavy Water) (2017).
• Cooperation Agreement on the Construction, Establishment, and Operation of a China Deep Space Station within the Framework of the Chinese Moon Exploration Program, Neuquén Province (2018).
• Joint Action Plan 2019–2023 (2018).
• Memorandum of Understanding between the Ministry of Production and Labour of the Argentine Republic and the Ministry of Commerce of the PRC on Promoting Trade and Investment Cooperation (2018).
• Memorandum of Understanding between the Ministry of Commerce of the PRC and the Ministry of Transport of the Argentine Republic on Strengthening Cooperation in the Infrastructure Sectors (2018).
• Supplementary agreement to the bilateral currency swap agreement between the Central Bank of Argentina and the People’s Bank of China (2018).

Following the outbreak of swine flu in China in mid-2020, Argentine and Chinese authorities agreed to establish 25 megafarms for pig production in Argentina—financed by China and for export to the Chinese market—but the project was postponed twice. This is a government-to-government agreement, which would be implemented by the private sector in both countries. The project is highly controversial because of the serious implications for public health of techniques already used in many countries for intensive pig production (some have described it as a ‘pandemic factory’) and because of the risk it will increase Argentina’s industrial and financial dependence on China.

(Source: Chinese Ministry of Commerce)

Aid: Argentina is not a major recipient of aid. However, during the COVID-19 pandemic, Beijing donated and assisted with the assembly of modular hospitals. Argentina also purchased medical supplies and vaccines from China.

Key Controversies

Asymmetric Trade: Since 2008, bilateral trade has been asymmetric in terms of both trade balance and trade composition. Trade with China has reinforced Argentina’s specialisation in the export of primary goods—primarily, agri-food—and its dependence on imported industrial goods and foreign capital. While political and business leaders, as well as academics, have repeatedly called for trade diversification and value-adding to the exports to China, these recommendations have not been heeded. Many have proposed overcoming these imbalances by attracting investment from China for the establishment of new industries (such as the installation of large pig farms for intensive production) or big infrastructure projects. But so far this investment has not helped to stop the entry of massive amounts of Chinese industrial goods to the detriment of national production. Instead, it has consolidated Argentina’s old primary-export specialisation and the country’s tendency towards deindustrialisation.

Financial Dependence: The increasingly frequent appeals to Chinese financing—both to sustain Argentina’s foreign exchange reserves and to fund construction projects—contribute to a dependent economic structure. The currency swap with the Chinese central bank in November 2020—equivalent to nearly 20 billion USD—constituted 50.3% of Argentina’s international assets. This is significant given the renminbi is not yet a freely convertible currency and renminbi assets can only be used to pay for imports from China, to remit profits from Chinese companies, or to finance Chinese projects.

Strategic Conflict between the United States and China, and Hindrance of Latin American Integration: The willingness of the Fernández government to join the BRI coincides with other Latin American countries’ reconfiguration of their international engagements, as they associate their development strategies with China—the rising power that provides them with a market, industrial goods, investment, and financing. The gradual adaptation of national economic policies to the priorities of the Chinese partner could lead to a strategic alignment of Latin American countries with China in a possible conflict with the United States. However, the presence of powerful interests linked to the great powers in Latin American countries accentuates the divergent orientations of the governments in the region and hinders the long-delayed integration of Latin America.

Key Sources

Media:

There are very few English-language media outlets in Argentina, and the few that exist are foreign and not objective. Among Spanish-language print media, several are strongly anti-Chinese (for instance, InfoBAE, and the newspapers Clarín and La Nación), while others are very vocal in favour of the strategic partnership with China (Página12). On issues of bilateral relations with China, a good source of information on the internet is LaPoliticaOnline and the platform China en América Latina.

Books, Reports, and Scholarly Articles:

Laufer, Rubén. 2017. ‘Argentina y su asociación estratégica con China en la era Kirchner [Argentina and its Strategic Partnership with China in the Kirchner Era].’ Jiexi Zhongguo: Análisis y pensamiento iberoamericano sobre China (22). Link.

Laufer, Rubén. 2019. La asociación estratégica Argentina–China y la política de Beijing hacia América Latina [The Strategic Partnership between Argentina and China and Beijing’s Policy towards Latin America]. Centro de Estudios Latinoamericanos, Universidad Nacional de San Martín. Link.

Mangione, Germán. 2021. ‘China: relación complementaria o subordinación y dependencia [China: Complementary Relationship or Subordination and Dependency]?’ Agencia Tierra Viva, 26 March. Link.

Oviedo, Eduardo Daniel. 2000. La política exterior argentina hacia China (1945–1999) [Argentina’s Foreign Policy towards China (1945–1999)]. Universidad Nacional de Rosario. Link.

Romero Wimer, Fernando G. and Paula Fernández Hellmund. 2016. Los capitales chinos, el agro argentino y algo más [Chinese Capital, Argentine Agriculture, and More]. Universidad de Buenos Aires, Facultad de Cs. Económicas, Biblioteca Digital. Link.

Svampa, Maristella. 2020. ‘Argentina será la nueva fábrica de cerdos para china [Will Argentina be China’s New Pig Factory]?’ Observatorio Plurinacional de Aguas (OPLAS), 31 July. Link.

Updated on 20 September 2021.


Rubén Laufer is a postgraduate professor and researcher at the University of Buenos Aires, Argentina. He has published numerous academic articles in journals such as Revista Ciclos, Revista Interdisciplinaria de Estudios Sociales, and Revista Izquierdas, among others.