Chinese Capital and Argentine Political Alternation: From Dependence to Autonomy?
Chinese Capital and Argentine Political Alternation: From Dependence to Autonomy?
Eduardo Daniel Oviedo 0
0 National University of Rosario (UNR) , Riobamba 250, Rosario , Argentina
1 Eduardo Daniel Oviedo
The political analysis of Argentine-Chinese relations in investments and financial matters shows two faces of the China's capital exports to Argentina. On the one hand, Argentina became the perfect example in the practice of China's government's desired aims stipulated in its first China's Policy Paper on Latin America and the Caribbean. On the other hand, China increased its structural power, integrating Argentina into its trade and financial scheme, and the South American country became dependent on Chinese capital. However, the political alternation and the change of foreign policy in Argentina in December 2015 diluted the unilateral dependence on China and transitioned to a multilateral dependence on the global capital markets, although China continued to play an important role in Argentine trade and finance. For that reason, the paper asserts some ideas about the way in which Argentina's integration into the China's global strategy presented not only supports but also challenges to the Argentine democracy, while exploring the impact of the second “Policy Paper”.
Investment; North-South relations; Centre-periphery; Dependency; Political alternation
This paper was written thanks to the support of the fellowship granted by the Global South Unit of
the London School of Economic and Political Science.
The Chinese government has promoted capital export to different regions of the
world since the beginning of its ‘going-out strategy’ in 1999.1 According to the
Statistical Bulletin of China’s Outward Foreign Direct Investment (2016), China’s
Direct Investment abroad grew steadily since 2002. Several years later, the global
economic crisis is slowing down this trend, but soon resumed in 2010. The fast
increase of the exported capitals saw a turning point in 2015, when China’s Outward
Foreign Direct Investment (OFDI) surpassed China’s Inward Foreign Direct
Investment (IFDI). Regions at a greater distance from this country, such as Latin America
and the Caribbean (LAC), were also integrated into this global strategy.
Until 2010 Argentina followed this trend closely but did not experience a great
relevant increase in China’s FDI inflows. However, China and other
capital-exporting economies are relevant for peripheral countries like Argentina (
which need complementing national with international capital to promote economic
modernization, in a way similar to the previous experience of East Asian
countries, particularly China. In addition, national and international capitals are not only
meaningful to develop modernization in Argentina, but they can also—indirectly—
contribute to consolidating its democratic system
By mid-2014, when the two countries had established a “comprehensive strategic
relationship”, the Chinese influence in Argentina increased to such an extent that
made this country financially dependent on China. This was the outcome of
Argentina’s performance between 2009 and 2016 since China’s government achieved in
practice targets in investment and finance as stipulated by China’s first Policy
Document on LAC, published in 2008. This dependence2 on Chinese financial power
arose during the last 2 years of Cristina Fernández de Kirchner’s government, and
extended until Mauricio Macri’s administration reinserted the country into the world
capital markets in 2016.
The present paper seeks to understand this change in the bilateral relations
elucidating the political factors that led Argentina to shift from being country influenced
by China to becoming a Chinese capital-dependent country over a short time. In this
analysis of Chinese–Argentinian relations, the Asian country has been open about its
strategy as outlined in the two ‘Policy Papers’ to LAC, published in 2008 and 2016,
and the South American country has attempted to assert its interests through two
1 The “going-out strategy” (走出去战略) is the name of the Chinese government’s policy to stimulate
and promote the investments of Chinese companies abroad initiated in 1999 to strengthening their
competitive capabilities and mitigate the pressure that the huge amounts of foreign reserves exerts on the
foreign exchange rate of the Renminbi.
2 Dependency has been defined as an explanation of the economic development of a state in terms of the
external influences (political, economic, and cultural) on national development policies
It is not a question of the two economies-central and peripheral ones-being separated, without a
structural link that encompasses them. Quite the opposite. It is a relationship of interdependence-between
two or more economies and between them and world trade, but in which the economies of the dominant
countries can expand and be self-sufficient, while the economies of the dominated countries can only do
the above as a reflection of such expansion, which can have a positive or negative effect on their
(Dos Santos 1979: 216, cited by Bernal Meza 2016: 14)
different responses to China over three phases: parity, dependency and reassertion
of autonomy.3 Consequently, the hypothesis asserts that the transition from parity to
dependency can be accounted for the Argentine government’s short-time financial
need and Argentina’s isolation from the international financial system at the moment
that China builds a long-term influential network on finance in the world. These
factors propelled the economical relation to weigh heavily on the two countries’ foreign
Argentina’s political alternation in December of 2015 changed the government’s
orientation and foreign policy towards China. President Mauricio Macri diluted
Argentina’s financial dependence, predominantly on China, into a dependence on
multiple sources of global capital markets. This increased the country’s autonomy
in bilateral relation, although China retained a strong influence on commercial and
financial fields. Therefore, political alternation and the return to the international
financial system became key causes to explain the transition from dependency to the
reassertion of autonomy in the bilateral relations, but not in multilateral relations,
because Argentina continues being dependent on world capital markets.
2 Research Methodology
In order to test these assertions, the research is divided into eight sections. The first
section poses the question about the specific nature of Chinese capitals in Argentina.
The article uses the word capital because is a broader term than the investment one,
commonly used by journalists and academics in Latin America. The second part
locates capital exports within China’s comprehensive power, unlike the doctrines
that fragment the power of the states. The following section considers how China
implemented the investments and financial goals suggested by China’s first Policy
Paper in the Argentine case. Then, it explains how China increased its structural
power in Argentina through the integration of this country into its commercial and
financial scheme. The fifth section analyses how the Cristina Fernández de
Kirchner government became dependent on Chinese capital after 2014. After this turning
point, section six explains how the political alternation in Argentina affected
bilateral relations and how the Macri administration changed the policy towards China.
Section seven describes the points of the second Policy Paper to LAC in investment
and financial matters, published in 2016. Section eight examines the results of
Mauricio Macri’s visit to China in May 2017 as the final point of the time scope of this
study. Finally, the conclusion offers some ideas about how Argentina’s integration
into China’s global strategy presented both supports and challenges to the
democracy in Argentina and explores some perspectives on the second “Policy Paper”.
The methodology involves a qualitative analysis based on the literature review
and a quantitative analysis on FDI and other official statistical data from Argentine
and Chinese sources. Diplomatic documents, such as China’s Policy Papers on LAC
and bilateral agreements, are used to compare the Chinese aims and data on trade,
3 I would like to thank Chris Alden for this observation.
investments and finance. In addition, political and economic facts and other
evidence have been collected from press articles or specific literature.
The time period under study begins in 2007. This is the first year that China’s FDI
flow towards Argentina surpassed Argentina’s FDI flow towards China
However, the most significant turning point took place in 2010, when three major
Chinese state-owned enterprises (SOEs) reported long-term investments in
Argentina. Beyond these two breaking points on Chinese capitals export to Argentina, the
research focuses on the last 2 years of the Cristina Fernández de Kirchner
(2014 and 2015)
. It was then that Argentina’s financial problems and isolation
from world capital markets provided President Xi Jinping with a golden opportunity
to propose the so-called “comprehensive strategic partnership” and to sign more than
eighty bilateral documents in 2 years. Finally, the examined time period ends with
President Macri’s visit to Beijing in May 2017, when both presidents reached
consensus on several bilateral agreements signed by the former Argentine government, and
put an end to the tension emerged after the political alternation in December 2015.4
2.1 Which Kind of Chinese Capitals Flow Towards Argentina?
The concept of “Chinese investments” became popular among Latin American
journalists and academics in the last decade. This corresponds to an undeniable
reality: in 2015, China became the second largest supplier of Foreign Direct Investment
(FDI) abroad, behind the United States and ahead of Japan
(Ministry of Commerce,
National Bureau of Statistics and State Administration of Foreign Exchange of the
People’s Republic of China 2016)
. In addition, LAC is the second destination of
Chinese FDI. However, knowing if Chinese investments actually arrived in
Argentina in this way or in another is not only a terminological question, but also has
different economic and political implications.
The first article in the Agreement between the Government of Argentine Republic
and the Government of the People’s Republic of China on the Promotion and
Reciprocal Protection of Investments (1992), stipules: “The term ‘investment’ means, in
conformity with the laws and regulations of the Contracting Party in whose
territory the investment is made, every kind of asset invested by an investor of one
Contracting Party in the territory of the other Contracting Party, in accordance with the
latter’s laws.” From the academic world, Imad Moosa defines FDI as “the process
whereby residents of one country (the source country) acquire ownership of assets
for the purpose of controlling the production, distribution and other activities of a
firm in another country (the host country)”
Even though there are differences between the two definitions, Moosa and the
first article of the agreement provide similar ideas about investment; the agreement
refers to “investment” whereas Moosa refers to “FDI”. However, this paper
considers that FDI directly leaves China and enters Argentina and excludes the investments
4 President Mauricio Macri has not yet completed his first term, but from the point of view of Robert
Keohane the relation has closed the process of political cooperation. This was started when appears
discord generated by political alternation, followed by policy coordination between both presidents that led
to a new phase of cooperation when President Macri visited China.
that indirectly come from China (such as investments through tax havens), since
Chinese official data report the first destination and the Central Bank of Argentina
(BCRA) registers the first origin of investment. Besides, when these two concepts
are examined in the context of Argentine–Chinese relations it is possible to see that
the amounts of FDI and investments via tax havens are relevant to Argentina, but
there are other main forms of capitals that also arrived in this country during the
examined period, such as loans for infrastructure projects and bilateral currency
swaps. Therefore, this article uses the concept of “capital” to involve several forms
of investments and financial transfers, which is a broader concept than “investment”,
although the latter is usually used in the literature.
For that reason, China’s main capitals in Argentina include investments and
loans. Investments comprise FDI, investments through tax havens and investments
in third countries with impact in Argentina. Loans cover currency swaps and loans
for infrastructure projects (which are in progress or have not yet been started).
Figure 1 shows a summary of China’s capital flows towards Argentina.
2.2 Comprehensive National Power, Asymmetric Interdependence and Chinese
Capital Exports Towards Argentina
Since the Chinese revolution of 1949, the diplomatic behaviour of the People’s
Republic of China (PRC) has been based on the comprehensive power vision, in
opposition to the power fragmentation one.5 The PRC’s diplomatic history has
several examples of that vision, but this section only pays attention to two of them to
illustrate this behaviour.
In the first case, China deployed its trade, cultural and people-to-people
diplomacy to normalizing diplomatic relations in times of the Cold War. That is, trade,
culture and people were means to support foreign policy in order to obtain political
recognition. In the second case, through its rapid expansion (the so-called “peaceful
rise”), China entered into a phase of political, economic and cultural
internationalization after it turned a major power in 1999
. That year, China started
economic internationalization when the PRC’s government announced the
“goingout strategy”, which stimulated local companies to invest abroad to control
production and distribution channels of raw materials, which were considered crucial for
China’s growth. Five years later, the Chinese government started implementing the
cultural internationalization, when the Ministry of Education created the first
Confucius Institute in the world, in Seoul city. Simultaneously, huaqiao and huaren6
numbers in Chinese communities abroad and Chinese tourists in the world had grown
5 This perspective is shared by several authors. During the Cold War, political realism divided the
agenda of international affairs in high politic (strategic-military) and low politic (economic-cultural)
divided the concept of power and coined the terms “hard power” and “soft power”.
In a similar sense, Strange 2015) separated the power in the political economy in two kinds: structural
power and relation power.
6 The overseas Chinese, called huaqiao (华侨) in Chinese, are the Chinese citizens living outside
Chinese territory; while huaren (华人) are citizens with non-Chinese nationality but of Chinese origin.
significantly.7 Therefore, these two examples show that China’s diplomatic
behaviour relied upon a comprehensive strategy based on an integral power vision and,
from this perspective, is also necessary to analyse Chinese capital export towards
Huang Shoufeng (1992
) is the most important representative of this line
of thought in China. In the early 1990s, he coined the concept of “comprehensive
national power”, called in Chinese zonghe guoli (综合国力).
Capital export is the axis of the China’s economic internationalization. In 2015
China’s OFDI surpassed China’s IFDI
(Ministry of Commerce, National Bureau of
Statistics and State Administration of Foreign Exchange of the People’s Republic
of China 2016)
. That year China also ranked second in terms of OFDI flows in the
world, after the United States and before Japan
(Ministry of Commerce, National
Bureau of Statistics and State Administration of Foreign Exchange of the People’s
Republic of China 2016)
. These records show: (1) China’s economic model is
slowing down and stops offering opportunities to foreign investors; (2) facing China’s
slowing economy, Chinese companies increased their capital exports to the world,
associated with Chinese banks, insurance companies and under government
guidance. In addition, China’s government put Renminbi’s internationalization into
practice through bilateral swap agreements, and the International Monetary Fund (IMF)
included Renminbi in the Special Drawing Rights basket from October 1, 2016. All
these economical facts have great significance for the theory of neocolonialism,8
which is rejected by Chinese officials and scholars.
The comprehensive national power is a realist vision limited only to State’s
behaviour. The same problem happens with dependence and autonomy, unilateral
terms surpassed by the concept of interdependence, particularly asymmetric
interdependence in term of
Keohane and Nye (1977)
. In fact, China has all the features of
a great power and a Northern country, while Argentina has attributes of a medium
power and a Southern economy. This bilateral asymmetry, reflected by the size of
, is the context in which capital flows. In turn, given
the features of Argentina’s food exporter and China’s food needs, the trade
provided an explanatory framework for Argentina’s
original expectations to expand its exports, generate surpluses and increase their
international reserves. However, the chronic deficit of this South American
country in the Argentine–Chinese trade showed the reverse process, that is, Chinese
surplus in bilateral trade, the transfer of foreign currency from Argentina to China, the
decrease of Argentine reserves and the growing needs of foreign capitals of which
China has been a main supplier. Thus, the original potential capacity was not put
into practice, beyond productive sectors with large-scale export competence, such as
agri-food commodity sector, particularly the soybean.
7 According to the Ministry of Commerce of China (MOFCOM), the flow of Chinese tourists abroad
from 10 million in 2000 passed to 57 million in 2010 and reached 127 million in 2015.
8 According to the thesis of Lenin in Imperialism, the Highest Stage of Capitalism (1917), China’s
capitalist development has already entered into the imperialist phase, where the exports of the capitals have
more relevance than the exports of goods.
through tax havens
In third countries
with impact in
BCRA stock data
US$ 674 million
China's stock data
US$ 1,948 million
US$ 11,000 million
Projects for around
US$ 21,980 million
2.3 China’s First “Policy Paper” and Its Practice in Argentina
Published in 2008, China’s first Policy Paper established the guiding principles of
China’s foreign policy towards LAC. The following five points summarize China’s
Policy Paper goals in investments and financial matters:
1. Encourage and support qualified Chinese companies with good reputation
in investing in manufacturing, agriculture, forestry, fishing, energy, mineral
resources, infrastructure, and service sector in LAC to promote the economic
and social development of both sides;
2. Continue to welcome investment by LAC businesses in China;
3. Encourage Chinese commercial banks to set up branches in LAC;
4. Push for the conclusion of banking regulatory cooperation agreements;
5. Work with LAC countries to jointly combat money laundering and terrorist
(Ministry of Foreign Affairs of People’s Republic of China 2008)
Considering that a decade has passed since its publication, it is possible to check
whether China has implemented its goals in these two areas in the Argentine case.
Point 1 includes FDI and investments through tax havens. China’s FDI flow and
stock towards Argentina differ in terms of US dollar figures between the two-country
official data (see Table 1). However, in the two cases, China’s FDI flows and stock in
Argentina grew. On the one hand, and according to the Central Bank of Argentina,
China’s FDI grew from US$ 112 million in 2008 to US$ 674 million in 2015. On the
other hand, Chinese official data record US$ 173 million in 2008 and US$ 1948
million in 2015. The latter source shows that China’s FDI stock in Argentina is similar
to China’s FDI stock to Pacific Alliance. In fact, according to the 2015 Statistical
Bulletin of China’s Outward Foreign Direct Investment (2016), the stock of China’s
FDI in Chile, Colombia, Peru and Mexico together reached US$ 1987 million. In
August 2016, the Ambassador of the PRC in Argentina noted that China is the third
largest investor in this country
More than 50 Chinese companies operate in Argentina, mainly in the areas of
oil and gas, mining, fishing, telecommunication and agriculture.
Commerce, National Bureau of Statistics and State Administration of Foreign Exchange
of the People’s Republic of China 2016)
. Two significant Chinese companies—
China Petrochemical Corporation (Sinopec) and China National Offshore Oil
Company (CNOOC)—invested in Argentina’s oil industry. The China Metallurgical
Group Corporation has a 70% stake in the Minera Sierra Grande, an iron ore mine in
Río Negro province. Also, there are Chinese investments in third states that have an
impact in Argentina. For example, in 2014 China National Cereals, Oils and
Foodstuffs Corporation (COFCO) bought Nidera, a grain trade company established in
the Netherlands and operational base in Argentina. In 2016, COFCO also acquired
Syngenta, a food processing, manufacturing and marketing company. In addition,
an MOFCOM report (2016) asserts that China provides 11,000 direct jobs and near
30,000 indirect jobs in Argentina
(Ministry of Commerce, National Bureau of
Statistics and State Administration of Foreign Exchange of the People’s Republic of
In July 2016, the Ambassador of Argentina in China, Diego Guelar, stated that
China’s government agreed to finance US$ 25 billion in the next 5 years through
loans for infrastructure projects in Argentina
. However, up to
January 2017, the Ministry of Economy and Public Finance recorded a total of US$
59,510 million for 2016–2019 period and only US$ 2027 million came from China.
This amount corresponds to two announcements, one of Chinese origin companies
(US$ 1.5 billion) and another of Argentine–Chinese origin companies (US $ 527
million).9 Finally, during President Macri’s visit to China in May 2017, the two
parties signed several agreements for infrastructure projects financed by China (see
Point 2 is a “Policy Paper” aim that has not been achieved. Argentina’s FDI
towards China is scarce. During the examined period, a decreasing trend can be
observed, from US$ 13 million in 2008 to US$ 3 million in 2014, according to
Chinese official data (see Table 3). Up to the end of 2014, Argentina had 429 projects in
(Outward Exchange, Cooperation and Promotion Platform of Shandong
Point 3 is another achieved “Policy Paper” aim. In 2012, the Industrial and
Commercial Bank of China (ICBC) bought 80% of Standard Bank’s shares and set a
branch in Buenos Aires. According to ICBC home page, this transaction is one of
9 Argentine-Chinese origin companies corresponds to private investments and private–public
investments. The latter is defined as: "Announcements of private investments in the framework of an
agreement with the public sector (public tenders, public sector credit lines). It does not include investments of
100% state-owned public companies”
(Ministry of Finance 2016)
10 The list of agreements signed during President Macri’s visit to China in May 2017 can be found on
the following website: http://www.casarosada.gob.ar/informacion/eventos-destacados-presi/39571-estos
ICBC’s largest investments in financial services outside of China and is the largest
bank investment ever made by China in Latin America (ICBC 2017).
Point 4 was also achieved. Both countries’ governmental authorities signed
several cooperation agreements in financial and banking matters, including two
bilateral currency swaps. The first swap was signed in 2009, but Argentina’s government
did not implement it. The second swap was concluded in 2014, for RMB 70
billion (US$ 10,375 million). In addition, discrepancy between different official data
motivated Ministry of Commerce of China (MOFCOM) and the BCRA to sign a
Memorandum of Understanding on Establishing the Statistical Cooperation
Mechanism for Direct Investment in 2014.11 China has signed this kind of agreements
with the United States, Argentina and other countries
(National Bureau of Statistics
of the People’s Republic of China 2015)
. A similar situation appears in the trade
relation. For this reason, authorities of the Argentina National Institute of Statistics
and Censuses (INDEC) and MOFCOM signed an agreement to harmonize bilateral
trade statistics in 2016.12 During President Macri’s visit to China in May 2017, both
presidents requested the Working Group to make every effort to complete the
ongoing studies and submit a report in 2018
(Joint Declaration between the Argentine
Republic and the People’s Republic of China 2017, article 9)
Point 5 is other achieved “Policy Paper” aim. Both governments signed two
agreements. In 2010, an agreement for the exchange of information relating to taxes
was concluded. In 2016, the two ministers of Security signed an agreement for
cooperation in security matters. The purpose was “taking the most effective action
against transnational organized crime”
(Framework Agreement 2016)
, among which
are economic crimes, money laundering and related crimes.
When its implementation is retrospectively checked, Argentina appears as a
perfect example for the practice of the desired goals in investment and financial
matters by China’s government. Four of the five aims mentioned in the China’s Policy
11 Several factors produce different statistical data: (1) China only reports the first destination of FDI;
(2) Chinese statistical data include Hong Kong and Macau among its destinations; (3) Several
Chinese capital flows go to Argentina through “tax havens” (such as the Virgin Islands or Cayman Islands)
and they must be considered China’s FDI in these financial destinations, but then these funds are
redirected towards other economies, without identifying the final destination.
12 In 2016, according to the INDEC, the Argentine deficit was around US$ 6 billion, while for
MOFCOM was US$ 3 billion. A report from the Chamber of Exporters of the Argentine Republic 2017: 11)
asserts that in 2015, Argentina reported about US$ 540 million more in exports to China than China
reported importing from Argentina. 70% of this difference corresponds to soybeans. In the same year,
Argentina reported about US$ 2.8 billion more in imports from China than China reported exporting to
Argentina. 50% of this difference corresponds to parts for telephones or mobile phones.
2470 + 1600
Source: Argentine–Chinese bilateral agreements (2014–2017). In April 2017, the Córdoba province
government decided to put an end to the negotiations with ICBC and Bank of China to finance the gas
pipeline project (US$ 1800 million). The provincial governor, Juan Schiaretti, declared that the two
banks “wanted to impose unacceptable and leonine conditions, which Córdoba is not willing to comply
Paper to LAC have been successfully fulfilled in Argentine case, with the exception
of Point 2.
2.4 China’s Structural Power and Argentina
Two economical phases help to explain how Argentina became an example of
China’s first Policy Paper. The first phase involves trade, and the second regards finance.
These two phases respond to China’s global power construction: in Susan Strange’s
words, China builds structural power; in Robert Keohane’s words, it constructs
hegemony.13 Also this last author coined the concepts of harmony, cooperation
and discord, useful for this article to explain the two phases. In both, the automatic
condition of harmony14 (similar to the invisible hand of Adams Smith) inserted
describes four interacting structures: control over security, production, credit, and
control over knowledge, beliefs and ideas. In more specific term than Strange’s structures, Keohane
considers that “Hegemonic powers must have control over raw materials, control over sources of capital,
control over markets, and competitive advantages in the production of highly valued goods”
14 According to this author, harmony “refers to a situation in which actors’ policies (pursued in their own
self-interest without regard for others) automatically facilitate attainment of the other’s goals”
Argentina in the Chinese economic scheme by supplying raw materials, purchasing
manufactures and attracting Chinese capital flows.
In the first phase, China’s export-led growth model stimulated the world economy
and created a trade cycle. Chinese market demanded investments and raw materials
to increase the industrial production and export to the world. China’s interest in raw
materials stimulated countries like Argentina, which was integrated into the
Chinese economic scheme as a supplier of soybeans, crude oil and other commodities
needed by the Chinese “factory”. From the harmony perspective, the first phase was
a long-term cycle where Argentine–Chinese total trade and complementation grew
between two parties.
However, not everything was harmonious in the relationship, since a discord
of economic interests also arose among both parties. These differences could be
solved through policy coordination between the two governments and lead to
cooperation.15 But not all of these disagreements have a solution. Certain contradictory
interests created by the structural relation and the economic harmony cannot be
saved by policy coordination. They are part of the clash of modernizations between
the two countries
(Oviedo 2015a: 139)
. For example, the structural relation and the
economic harmony increased a power asymmetry in favour of China16 and
consolidated North–South relation and centre–periphery scheme.17 This scheme produced:
(a) an Argentine chronic trade deficit since 2008; (b) concentration of Argentina’s
exports in primary goods; (c) the local industry inability to compete with made in
China products in the domestic market; (d) the decline of Argentine exports in third
markets due to Chinese competition
. This is the reason why
several Argentine scholars concluded that this kind of relations is in accordance with
, a centre–periphery scheme (
an extractive model
(Gomez Mendes 2015)
or compare it with the Argentina and
UK linkage between the late nineteenth century and the Great Depression of 1929
Contrary to Argentina’s expectations, official data of both states assert a “lost
decade” for Argentina in trade relation. According to INDEC, this country
transferred US$ 36 billion to China via bilateral trade deficit between 2008 and 2016.
This trade imbalance is the opposite of the enormous amounts of US dollars
transferred from China to other South American countries. According to the Ministry of
Industry, Foreign Trade and Services of Federative Republic of Brazil (2017), this
country had US$ 185 billion of surplus in the same period.
Prochile agency (2017
15 Keohane defines international cooperation “…as a process through which policies actually followed
by governments come to be regarded by their partners as facilitating realization of their own goals, as the
result of policy coordination”
(Keohane 1984: 63)
16 According to the World Bank data, in 1991 the Argentine GDP (in current US$) represented 50% of
the Chinese GDP. In 2000 that percentage dropped to 20.3 and in 2011 to 6.1%. In 2015, the Argentine
GDP represented 5.5% of the Chinese GDP.
17 It is necessary to clear out the difference between the North–South relations and the centre-periphery
scheme. While the first indicates the positions of states in the international system in terms of power
(China in the North; Argentina in the South), the second refers to trade exchange between different
economic structures. As central country, China exports manufactures to Argentina. As peripheral country,
Argentina exports primary products to China.
records Chile surplus about US$ 41 billion. This is the great paradox of the relation,
since Argentina exports food commodities while China imports them (Fig. 2).
The liberal view of the benefits of bilateral trade was not accompanied by
Argentina’s commercial expectations in the last decade. In fact, the goods that Argentina
imports from China can be bought in other countries, whereas the goods that China
imports from Argentina are a part of the essential raw materials that China need
to assure its food safety. This is because the goods bought by China in Argentina
are more relatively inelastic than Argentina imports from China, although China
can also be acquired agricultural products in other suppliers of the world market.
Thus, in the context of the Fernández de Kirchner government’s partial isolation,
China became Argentina’s second supplier due to Argentina’s trade diversion as well
as China’s product prices, but Argentine exports remained stagnant. The equation
between a producer and importer of agricultural products and food, especially after
China lost food self-sufficiency, was favorable to Argentina. Hence, the Argentine
trading expectations were solid, because it responded to a potential reality that was
not reflected in the trade praxis. China’s “sells future” diplomacy was associated
with its expectations of future Argentine exports, that is, China’s negotiating tactic
of changing present agenda items by the future expectations
(Oviedo 2006: 73)
led China to establish an asymmetric trade exchange in a relation where both parts
originally were symmetrical. The “lost decade” in trade relations rose other markets
expectation (India, Southeast Asia, etc.), which started being seen as relevant. But,
for the moment Argentine–Chinese trade continues to be an asymmetric exchange,
center-periphery, in an asymmetrical relation of power, where their leaders were not
to “become pessimistic about the continuation of the trading relations”
facing new future trade expectations. Therefore, the idea to cut
interdependence does not emerge in Argentina because future trade expectations continue
despite the asymmetry of the relation.
The second phase involves financial power. Using the “going-out strategy”,
Chinese government linked Argentina in its swap scheme, investment and loan flows,
where again China is the driving force. As it has been seen, this strategy gain force
in 2010, 1 year before the Fernández de Kirchner government established the import
substitution model and exchange control, as a result of the international crisis, the
BCRA’s reserves decreased, and Argentina became isolated from the world capital
markets. In this phase, harmony helped Fernández de Kirchner government solve
short-term financial problems to support political stability until the presidential
elections of December 2015. But, at the same time, cooperation also increased the
asymmetries between the two parts and Argentina’s dependence on Chinese finance.
One can assert that a financial cycle formed in the relation (trade deficit with China,
reserve decrease in the BCRA, financial instability and Chinese swap agreement).
Thus, besides the already established centre–periphery model in the trade field, the
second phase added dependence on Chinese capital, expanding the bilateral
asymmetry and starting China’s role as Argentina’s creditor.
2.5 Financial Cycle and the Dependence’s Moment
Argentina entered into default in December 2001 and the country was isolated from
the international financial system until April 2016. The high prices of soybeans,
byproducts and other commodities produced by Argentina served to avoid isolation
and increased foreign currency. Up to 2008, the Central Bank of Argentina
accumulated reserves for US$ 50 billion, excluding the payment to IMF and the sovereign
debt restructuring in 2005 and 2010. However, from 2008, capitals began to
outflow abroad and Argentines bought US dollars to protect their savings from the
ravages of domestic inflation. After Cristina Fernández de Kirchner took office for her
second term in 2011, the government implemented Keynesian measures, including
exchange controls to avoid the capital outflows and maintaining the reserves level,
but this measure did not solve the problem. In 2013 Economy Minister Axel Kicillof
estimated that there were around US$ 40 billion dollars in the hands of Argentines
in the country
(La Prensa 2013)
, while a 2014 report stated that Argentines would
hold 12% of physical dollars outside the United States
(El Economista 2014)
is, an important, parallel and private “central bank” awaiting viable conditions in
Argentina to return to the official system.
The foreign trade imbalance was another cause of reserve decline. Even after
Argentina’s government applied several defensive measures to Chinese products,
according to INDEC, Argentina transferred to China US$ 24,2 billion between 2008
and 2014. In addition, deficit with the United States reached US$ 22 billion.
Significant imbalances also emerged with Bolivia, France, Germany and Russia (INDEC
2016). It immediately appeared the comparison with the United States as the focal
point of the analysis of President Fernández de Kirchner after her second State visit
to China. In her speech of February 11, 2015, President Fernández de Kirchner
mentioned that “the trade deficit with the United States is US$ 5 billion, while the
China one is US$ 6.3 billion”
(La Política On Line 2015)
. “The difference is not
terrible, but we do not get the United States investments here”
(La Política On Line
. From an academic point of view, Carlos Escudé had already mentioned the
idea of “buying from those who buy from us” (
b). In a similar version,
President Fernández de Kirchner spoke about the need to “buy from those who
invests in our country”
(La Política On Line 2015)
. Although both slogans are
strategically assertive, these trade imbalances reduced foreign trade surplus and, inter
alia affected Central Bank’s reserves, which decreased US$ 19 billion during a
similar period.18 In addition, domestic inflation devalued the Argentine peso, hindered
exports and facilitated Chinese products imports.
To stabilize the financial situation, Argentina’s government looked anywhere for
capital access. In 2014, it approached BRICS trying to obtain New Development
Bank’s funds, although this idea did not materialize. In its continuous search for
credits, the government found the Renminbi internationalization policy, originally
started by China in Chiang Mai Initiative (清迈倡议) in 2000. But, stabilizing
international reserves through currency swap carried the cost of increasing dependence
on Chinese capital. Indeed, Argentina’s financial illiquidity and its isolation from the
world financial system were factors of weakness towards China in the negotiation
process, and the Chinese government took advantage of the situation to negotiate
important political issues, such as China’s Deep Space Station to be constructed in
the Province of Neuquén. So, Argentina’s financial crisis and isolation from world
capital markets provided President Xi Jinping a golden opportunity to propose the
so-called “comprehensive strategic partnership” and to sign numerous agreements.
This negotiation is a perfect example of diplomatic barter and interconnection
of agenda’s issues. Argentina allowed the constructions of the Deep Space Station
in Neuquén Province and China supported Argentina in financial matters through
loans for infrastructure projects and the renewal of swap agreement. Of course, Xi
Jinping’s government support to the Fernández de Kirchner government was not
well seen by the opposition parties, because Argentina’s government stabilized the
domestic finances until the presidential election on December 2015. Both Mauricio
Macri and the Cambiemos coalition criticized the construction of the two dams on
the Santa Cruz river and the Deep Space Station. Also, they both considered
Article 5 of the Framework Agreement on Economic and Investment Cooperation as
unconstitutional.19. Nevertheless, the Senate approved the previously mentioned
agreement with 133 votes in favour, 108 against and 15 absent. The opposition
parties, such as the Radical Civic Union, PRO Union, the ARI Civic Coalition and the
Renewal Front, voted against approving the agreement. Even Mauricio Macri, as a
18 According to the Central Bank of Argentina, international reserves decrease from their peak of US$
50,517 million on March 27, 2008 to US$ 31,443 million on December 30, 2014.
19 Article 5: Infrastructure cooperation: “The Parties shall establish a five-year integrated plan. This plan
shall be detailed in a Complementary Agreement for Infrastructure Cooperation to be concluded within
the framework of this agreement. The Argentine Government, pursuant to the provisions of such
Complementary Agreement for Infrastructure Cooperation, shall apply the most advantageous award process
used in similar cooperation programmes with third country in connection with the public-sector projects
provided for in the Integrated Plan. The procurement of Argentina´s public sector projects, the execution
of which falls under the scope of the Integral Plan, may be made through direct award provided they are
subjected to concessional financing from the Chinese side and the award is made under advantageous
quality and price conditions”
(Framework Agreement for…., 2014)
presidential candidate, sent a letter to Chinese Ambassador in Argentina conveying
his preoccupation about the signed agreements.20
As a result, the growing Chinese influence on Argentina’s government increased
the power asymmetry between both countries. This political situation configured a
relation based on China’s predominance over Argentina and, between July 2014 and
April 2016, changed towards Argentina’s dependency on Chinese capital. This was
the belle époque of Chinese influence in Argentina. Simultaneously, Fernández de
Kirchner’s government stabilized short-term financial situation with Chinese capital,
which in the form of currency swaps or loans indebted the country for the first time
with this new central power.
This situation persisted even during the first months of Mauricio Macri’s
presidency, since Argentina was still in isolation from the world’s financial system.
The government needed the Chinese currency swap to facilitate the removal of the
exchange controls that had been imposed by the Fernández de Kirchner
administration. Once Argentina returned to the international financial system and removed
the previously mentioned exchange controls, Macri’s government automatically
diluted its exclusive dependence on China into a dependence on multiple sources
of global capital markets, increasing the autonomy in its foreign policy decisions
vis a vis China. Xi Jinping’s government lost a strategic partner in South America,
although the intense interrelation developed during the three Kirchner’s
administrations (2003–2015) still gave China considerably high influence on the commercial
and financial fields. Figure 3 briefly describes the process.
2.6 Political Alternation in Argentina and Chinese Diplomatic Reaction
The political alternation in several democracies in the world disturbed China’s
diplomacy. In Taiwan, Tsai Ing-wen’s election led to ending the “diplomatic truce” in
the Taiwan Strait. In the United States, Donald Trump’s arrival to the White House
raised doubts about the “one-China policy” and his protectionist strategy affected
China’s export-led growth model. In addition, Mexico’s government cancelled
Mexico-Queretaro railroad and the transcontinental rail line crossing Brazil and Peru is
temporarily suspended, lessening China’s potential influence on LAC countries. In
Argentina, political alternation changed the country’s foreign policy towards China.
This internal political change in Argentina caused concern in Chinese diplomacy.
Political alternation is an intra-regime change, characterized by the peaceful
handover of political power to an opposition party or party alliance in a democratic
system. This is not a structural change
(Melo 2001: 12)
, but it modifies government
orientation and, consequently, foreign policy.21 Argentina went from a populist left
(Gratius, 2009: 16)
to a de-ideologized and pragmatic foreign
20 Macri said that such agreements compromise Argentine state for the next decades and require broad
consensus, as well as profuse information on the commitments established in them and a clear basis of
their convenience and scope. Unfortunately, this has not happened
21 This concept is only used in the democratic system and it is different to political succession, used in
both democratic and authoritarian regimes.
policy, according to Foreign Minister Susana Malcorra
(La Nación 2015)
Nevertheless, every government has a political orientation and this is ideological, so it
is impossible to actually have a “de-ideologized foreign policy”, because as public
policy implies the execution of external orientation. During the electoral campaign,
the president accepted the “comprehensive strategic partnership” but with balance (a
concept that rises academic interest to the extent that the Argentine–Chinese relation
is fully asymmetric).
The Macri administration sought to shorten its high dependence on Chinese
capital and provoked a discord in the relation when it examined the agreements signed
during the Cristina Fernández de Kirchner government. Meanwhile, China’s
government quickly considered that Argentina’s internal contradictions affected the
diplomatic arena, whereas professor Lin Hua understood that the revision of
agreements by Macri administration “pointed to the former government and not to China”
(Lin 2016: 57)
. In the middle of the dispute, the Argentine Naval Prefecture sank
a Chinese fishing vessel while fishing illegally in Argentine jurisdictional waters.
However, short-term trade, financial and political needs limited President Macri’s
action to radically change the orientation toward China, particularly when Argentina
had not yet emerged from its recent default situation and needed the Chinese capital
to remove exchange control. At that moment, Macri discovered China’s structural
power and realized how the previous government had allowed enlarge China’s
influence in the unfavourable circumstances of international isolation.
Political alternation generated traditional conflict of interests between a
status quo power that defends the respect to the legal continuity and the
responsibility of the state, according to the agreements signed by the previous government,
and Argentina’s new national policy that sought to modify them. Both to distinguish
themselves of the previous administration and to change the clauses of agreements,
Macri government considered that these were huge amounts of money for Pharaonic
projects and with environmental and transparency problems. Furthermore,
Cambiemos coalition and public opinion emphasized the peaceful use of the Deep Space
Station as well as special conditions granted to China in the Government
procurement, as regulated by Article 5 of the Framework Agreement. To face this challenge,
the Chinese government exercised its financial power and responded with indirect
threats, when three banks of China warned the Argentinian government about
several clauses in the two dams Facility Agreement including the “cross-default” clause
related to the Belgrano Freight Facility Agreement. This political discord was
produced by Argentina’s internal political break which, although did not imply a
revolutionary change, affected the relation. The situation recalled Unites States policy
towards China after the 1949 revolution when President Truman demanded that the
recently born People’s Republic of China complied with its international
obligations and his government responded that a “New China” had been created and that it
was necessary to review all the agreements signed by the Kuomintang before 1949.
This shows the risk of the great powers that invest politically and economically in
unstable countries, particularly a few months before electoral processes, positioning
themselves in favor of the ruling political party with which China government had
excellent diplomatic relations and provided political support.
Government of Fernández de Kirchner
Government of Macri
Although Argentine officials confirmed the strategic partnership and the two
parts had high interactions, only the presidential diplomacy could solve the discord.
Both presidents agreed on the principles to resolve the discrepancies in the bilateral
meeting held at the Fourth Nuclear Security Summit in Washington, continued by
the bilateral meeting during the G-20 Hangzhou Summit and finished the political
coordination process when President Macri made a State visit to China. Given the
asymmetries between both parties, several problems posed by Argentina related to
the economic sphere, but they were political issues for China, as Xi Jinping
government considered that Argentina was moving away from “comprehensive strategic
relations” toward the European-American axis. During the visit of President Macri
to Hangzhou, the legal debate over the civilian or military use of the Deep Space
Station—which had not been explicitly defined in the original agreement—was
Through policy coordination in Washington, Hangzhou and Beijing, the two
parties moved from discord to a new stage of cooperation in the four main issues of
China’s capital export to Argentina:
1. Bilateral currency swap agreement Before the first presidential meeting, the two
central bank governors agreed to convert the remaining RMB of the agreement
to US dollars for easier remove exchange control imposed in 2011. The Embassy
of the People’s Republic of China in Buenos Aires (2015) assumed that this was
a Macri administration decision, but Argentina’s government had to pay an
interest rate according to Shibor+ 400 basis points, less than 4% in dollars
Bank of Argentina 2015a)
. Therefore, this financial consensus altered the nature
of the swap agreement, initially planned in order for importers and exporters of
both countries buy Argentine or Chinese products in local currencies,
transforming it into a Chinese loan to the Fernandez de Kirchner and Macri governments
(Chiacchiera 2017). This operation was concluded 12 days after Macri took office,
22 The additional Protocol establishes that the Station “will be implemented exclusively with a view to
nonmilitary use in the field of science and technology, and the information resulting from its research
may under no circumstances be used for military purposes.”
(In Additional Protocol to the “Cooperation
Agreement between…”, 2014)
agencies signed the Protocol of Phytosanitary Requirements for the Export of
Table Grapes from Argentina to China. In addition, the 2017–2019 Working
Plan, signed between Ministry of Agroindustry and the General Administration of
Quality Supervision, Inspection and Quarantine of the People’s Republic of China
(AQSIQ), agreed to give priority to the treatment of problems about the access of
several Argentine products to the Chinese market, such us: cherry, lemon, sweet
citrus, dried peas, honey, Patagonian sheep meat, fresh meat, pork meat, wheat,
2.7 China’s Second “Policy Paper” and Macri Administration
China’s government published its second “Policy Paper” in November 2016. This
document contains new goals in investment and financial matters that can be
summarized in the following seven points:
1. Expand and optimize investment in LAC countries on the basis of equality and
2. Sign agreements on investment protection, avoidance of double taxation and tax
evasion with LAC countries, so as to create a favourable environment and
conditions for investment cooperation between enterprises of both sides;
3. Support the efforts of Chinese enterprises to invest and start business in LAC
countries, and align high-quality capacity and advantageous equipment of China
with the needs of LAC countries, in order to help the countries in need to enhance
their capacity for independent development;
4. Support its financial institutions to strengthen business exchanges and cooperation
with national, regional and international financial institutions in LAC countries
and further improve the construction of branch networks in the region;
5. Efforts will be made to enhance dialogue and cooperation between the central
banks and financial regulatory authorities of the two sides, expand cross-border
local currency settlement, discuss RMB clearing arrangements, and steadily
promote monetary cooperation;
6. On the basis of bilateral financial cooperation, and giving full play to the role
of China–Latin America Cooperation Fund, concessional loans, special loans
for Chinese–Latin American infrastructure, arrangements between China and
Caribbean countries, China will actively explore cooperation forms, including
insurance and financial lease, continuously expand cooperation with regional
financial institutions in LAC, and support cooperation in key areas and major
projects between the two sides.
7. Deepen its cooperation with trade and investment promotion institutions and
business associations in LAC, and facilitate, by making use of relevant
mechanisms and platforms for bilateral and collective cooperation, exchanges between
enterprises of the two sides, so as to achieve win–win cooperation
Foreign Affairs of People’s Republic of China 2016)
Because the “Policy paper” was published in November 2016, it is too early
to have statistical data to check the correlation between the goals and practice of
Chinese policy. Nonetheless, according to the first “Policy Paper” experience, the
second “Policy Paper” is an important guideline to understand China’s government
interests in both areas, with purpose of harmonizing the Argentine interest with the
China’s proposal. Although the consensus reached on loans for infrastructure works
is previous to the Policy Paper’s publication, the implementation will take place
after it. Therefore, some of the goals could be reached if the natural course of agreed
action between the parties continues.
2.8 Mauricio Macri’s State Visit to China and the Chinese Real Power
The presidential meetings in Washington (April 2016) and Hangzhou (September
2016) continued with President Macri’s visit to China in mid-May 2017. The trip
also included the State visit to Japan. Viewed from the protocol point of view,
visiting Japan after China was inopportune. In 1990, President Carlos Menem made
a similar trip, being criticized by a sector of the Argentine diplomacy. However,
this political action expresses a more comprehensive and less unilateral orientation
towards East Asia than during Fernández de Kirchner government, implies placing
the two countries on an equal level, and allows researchers differentiate the main
investment sources to be found in both countries: state-owned companies in China,
private companies in Japan.
“Consensus” has been the word most used to express the common points reached
by both presidents in the negotiation process. In terms of Chinese capital flows
towards Argentina, this consensus linked to three major cooperation projects:
• Belgrano Freight Railway Rehabilitation Project both sides agreed on
Amendment IV to Amended and Restated Contract. Besides, the Ministry of Transport
and the China Machinery Engineering Corporation (CMEC) signed a
Memorandum of Understanding for a credit extension of US$ 1.6 billion to complete the
renovation of the Belgrano Freight Railroad, which links the Northwest region
with Rosario’s ports
(Ministry of Transport of Argentina 2017)
, and to the
Pacific ports of Chile through the Socompa international railway pass.
Simultaneously, the Finance Minister and the President of China Development Bank
(CDB) signed a Memorandum of Understanding for the financing of the works.
The CDB will finance the acquisition of railway equipment, works and services
for a narrow-gauge railway with a total length of 1400 km. The original loan was
agreed in December 2013 for US$ 2.47 billion. As of the agreement, an
additional US$ 1.6 billion will be added to make works that were not contemplated
in the original agreement
(Ministry of Finance of Argentina 2017)
. In addition,
the two sides signed a Memorandum of Understanding on Railway Cooperation
for the San Martín Freight Railway Recovery Project.
• Santa Cruz Hydro Power Station Project The Chinese side required the
Argentine side to finish the procedures for the environmental impact study and the
Argentine side is committed to advance with the project as soon as possible;
Nuclear Power Plant Project The estimated goals are the construction of Fourth
Nuclear Power Plant (Atucha IV) begin in January 2018 in the province of
Buenos Aires, and the Fifth Nuclear Power Plant (Atucha V) in the province of Río
Negro in 2020. The total amount is estimated in USD 12.5 billion
Chamber of Exporters of the Argentine Republic 2017)
Other documents were signed during the President Macri’s visit. Jujuy province
government concluded agreements with ZTE Corporation (for the Jujuy
Interconnected and Safe project) and the Power Construction Corporation of China (for the
construction of the “Caucharí” photovoltaic power station). The Investment and
Foreign Trade Bank and the China Development Bank (CDB) also concluded a
financing agreement. The CDB will provide US$ 150 million in seven-year low-interest
loans (including a grace period of 2 years) to support Argentina to increase value
added in products and develop renewable energy. In addition, an agreement was
signed between Argentina Investment and Trade Promotion Agency and the Trade
Development Bureau of the Ministry of Commerce. The two sides will strengthen
cooperation in the areas of information exchange, trade and investment promotion,
and small medium enterprise services, and jointly build a multi-level and
multi-sector trade and investment promotion platform.
Although Cambiemos coalition had strongly criticized the Framework
Agreement for Economic and Investment Cooperation, Decree 338 of 15 May 2017,
signed by vice-president Gabriela Michetti, defined the scope of the term
“concessional financing” stipulated in the Article 5.23 In addition, the project that will be
benefit from direct awarding established in the same article must being included
in the China–Argentina Integrated Five-Year Plan for Infrastructure Cooperation
(2017–2021). Precisely, this Five-Year Plan listed 16 priority infrastructure
cooperation projects. Finally, a Chamber of Exporters of the Argentine Republic report
(2017) asserts that these projects have not specific implementation deadlines and
that China still maintains the “cross-default” clause.
Last but not least, it would be important to highlight that the Argentine side
requested to join the Asian Infrastructure Investment Bank (AIIB)
and was approved by its Board of Directors in June 2017. Thus, Argentina
expands options of financing for public infrastructure projects and participates in the
One Belt, One Road initiative.
23 Decree 338 defines "concessional financing" as financing that meets the following conditions: (a) a
grace period equal to at least the contemplated period of total or partial execution of the project, in the
event that it is anticipated stages for the project execution; (b) an interest rate with a discount of at least
25% with respect to the interest rate of public securities issued by the Argentina subject to the law and
jurisdiction of the state of New York, with a similar duration, considered at the time of the signing of
concessional financing loan contracts; and (c) a repayment term of at least 10 years counted from the
expiration of the grace period
(Argentine Republic Republic et al. 2017)
Argentina is a new part of China’s global power construction on trade and finance
areas. The Argentine integration in the Chinese strategy took place in two phases.
In the first one, bilateral trade and complementation grew steadily in recent decades,
but since 2008 it is simultaneously considered a “lost decade” from the Argentine
perspective, unlike other LAC countries benefited from large trade surpluses, like
Chile and Brazil. In the second one, China expanded its influence in Argentina until
it became the only external source of capital in isolation condition, and turned being
unilateral dependent on Chinese capital until 2016. The bilateral currency swap and
loans for infrastructure granted by Chinese institutions were the main mechanisms
that increased dependence on Chinese finance for the next years.24
This new situation was not only transformed Argentine–Chinese relations into
more asymmetric power relations, but also increased asymmetric exchanges in
bilateral linkage after the crisis of 2008. In this new framework, the original parity
turned into commercial and financial dependence in the scheme of the
asymmetric interdependence. Then, unilateral dependence became a multilateral one when
Argentina returned to the world capital market. But, as in Taiwan and United States
cases, political alternation in Argentina affected relations with China. Macri
administration returned to the international financial system and diminished dependence
on PRC, but its overall dependence on foreign capital continues.
Four out of the five goals mentioned in the Policy Paper have been successfully
fulfilled in Argentina. The main capital flows involved currency swap, loans for
infrastructure projects and investments through “tax havens”, which made us
distinguish between investment and capital concepts. These data confirm that Argentina
has been an almost complete example about how China implemented financial and
investment aims stipulated in the first “Policy Paper”, except for Point 2, because
Argentina’s FDI in China decreased since 2008.
In comparative terms, China’s FDI is scarcely related to Argentina’s needs, but
is similar to China’s FDI towards all four members of the Pacific Alliance. In
addition, a rationale for Chinese capital expansion abroad also raises the need for
protection, guarantees and other effects that require restructuring the “going-out
strategy”, as it can be seen in the second Policy Paper. In this regard, a contradiction
appears between the macroeconomic climate for investments, permissive legislation
and protection for capital claimed by the Chinese government with its practice of
investments in LAC. For example, Chinese enterprises invested more in countries
with high risks or precarious conditions for foreign capital (as the Fernández de
Kirchner administration in Argentina, or Venezuela in times of Hugo Chávez and
Nicolás Maduro) than in countries where these are given favourable macroeconomic
24 According to INDEC, in 2016 China is Argentina’s second largest trading partner, after Brazil and
before US. Exports to China accounted for 7.7% and imports 18.8%. In financial matters, Chinese FDI is
not important, but as above-mentioned, the US$ 10.375 million swap agreement has been used and there
are loans granted for various infrastructure projects.
conditions, like Chile or Mexico.25 However, while there was economic risk, there
was no political risk because the political orientations of Argentina and Venezuela
governments were close to China. When the political orientation changed in
Argentina after political alternation, political risks appeared from the Chinese
perspective. This corroborates our theoretical vision that the China’s capital export must be
analysed in terms of China’s political interest and comprehensive power. In addition,
one takes note that the signing of free trade agreements did not favour the increase
of investments in Chile and Peru.
Political alternation and new general orientation have played an important role in
designing foreign policy towards China. The Macri government put bilateral
relations into a tension situation and the Chinese government re-negotiated the
agreements signed by President Fernandez de Kirchner, while the political guidelines
set by both presidents in Washington, Hangzhou and Beijing led to a new level of
cooperation. Both parties made changes to the agreement on the Deep Space
Station and the two dams on the Santa Cruz River, but not with respect to Article 5
of the Framework Agreement. President Macri has managed to get Argentina out
of dependence on Chinese capital, although China’s government still has a strong
interference in the Argentine economy and it is an alternative source of capital in
an unstable financial world. As in other political alternations, such as done in the
United States and Taiwan, the new political orientation was limited by China’s
economic power that, based on arguments of state’s responsibility and continuity,
threatened Argentina to apply cross-default in moment that this country returned to
the international financial system. Obviously, Argentina cut off dependency from
China and increased autonomy, but Argentina still continues to depend on
international capital. That is because the Macri administration reduced dependence in the
bilateral level, although not in the general level of the foreign policy. However, not
everything has been tension situation in the bilateral relationship, as the Chinese
government helped Argentina to stabilize finances between 2014 and 2015,
eradicate the exchange control in 2016 with the swap agreement, and maintain several
main infrastructure projects in Argentina.
From the perception of Argentina’s interests, this paper considers the following
points relevant in the short-term perspective for the bilateral relations:
• The cooperation in investments and financial matters will continue to increase
within the unequal centre-peripheral scheme and asymmetrical interdependence.
From the Argentine position, it is impossible to change this structure in the short
and medium terms.
• Argentina needs trade surplus with China (and other countries) help to cut off
financial cycle (Argentine deficit, imbalance and Chinese bilateral currency swap
or another source of financing).
• Given the protectionist measures of the Chinese government, only
non-valueadded commodities can abruptly increase exports to China and balance the trade.
25 It be recalled that up to 2015 China’s FDI stock in Argentina was US$ 1948 million, similar to the
stock of the Pacific Alliance. Up to same year, Chile had 204 million and Mexico 524 million.
This means increasing agricultural production, export the surplus of
non-industrialized grains and seeds to China without reducing the export of value-added
commodities (such as soy-oil, soy meal, pellets and biodiesel) towards other
destinations. Of course, it is necessary to continue exporting value-added
products and the efforts made by the Argentine government for these products to get
access to the Chinese market.
• According to the practice of the first Policy Paper, the second Policy Paper is an
important guideline to understand the Chinese government’s interests in
investments and financial matters, for the purpose of harmonizing the Argentine
interest with China’s proposal. In general terms, the economic policy of Macri
government harmonizes with the “going-out strategy” and the seven points of the
second Policy Paper of China.
• Points 3, 6 and 7 of the second Policy Paper are relevant to Argentine side. Point
3 acquires high-quality capacity and advantageous equipment from China. Point
6 is to have access to the China–Latin America Cooperation Fund as part of
the multilateral sources of capital. Point 7 is to use cooperation with trade and
investment promotion institutions and business associations to ease interaction
between the Argentine private sector and China. In addition, Argentina acceded
to the Belt and Road Initiative and the AIIB.
• The main recommended mechanism is attracting direct or indirect investments
from China and avoid using loans or currency swaps as far as possible. However,
the agreements signed during President Macri’s visit to China contradict this
idea. In addition, in November 2017, Sinopec, a flagship company of the Chinese
economy, sold its oil assets in Argentina for US$600 million and it could bring a
negative impact on investment plans in Argentina of other Chinese companies.
• Investment projects must be transparent and ecologically sustainable
(eco-investment) to avoid creating doubts about the cost, environmental or other negative
impacts, as happened with the two dams on the Santa Cruz River.
Eduardo Daniel Oviedo is a Researcher at the National Scientific and Technical Research
Council (CONICET) and Professor at the National University of Rosario (UNR), Argentina. He completed
his Post-Doctoral Studies at UNR after receiving a PhD in Political Science at Catholic University of
Córdoba, Argentina. He also holds a Master’s Degree in Law from Peking University, China and a first
degree from UNR. He is author of the books Argentina and the East Asia, China in Expansion, History
of the International Relations between Argentina and China, and about two hundred articles written in
Spanish, English or Chinese. He has served as the Chinese translator for several of Argentina’s Presidents
between 1996 and 2010. Dr Oviedo has been a Visiting Professor at a number of universities in Latin
America, Europe and Asia.
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