At campaign rallies, Argentine presidential candidate Javier Milei took out a chainsaw to the cry of “Tremola la casta!” while he promised to cut relations, “for leftists”, with China and Brazil, his country’s main trading partners. Once he became president, Milei has softened his speech with Beijing.
The Chinese media, which consider Milei a Trumpist figure in the same rank as former Brazilian president Jair Bolsonaro, are not mistaken. The chainsaw of the People’s Republic of China, unlike yours, is not a stage prop. The Asian giant buys more than three-quarters of Argentina’s beef exports, 93% of its soybeans and much of its lithium.
For now, China is content to observe. But according to the Buenos Aires press, there are already signs of a change in position as a reaction to Milei’s first decisions. In this way, the vital currency exchange agreement signed with the previous Minister of Economy, Sergio Massa -losing rival to Milei-, would be in abeyance. Specifically, a tranche equivalent to 6.5 billion dollars in yuan.
This agreement, with which Xi made it clear who was his favorite, was key for Argentina to be able to negotiate with the International Monetary Fund in turn.
Weeks before the election, Milei responded to a question about China by saying that he would not trade “with murderers”. China does not forget, but it is pragmatic. It is not the outrageous but what begins to transcend that will mark their actions.
It is almost a given that Milei will not activate Argentina’s entry into the BRICS in January, requested by his predecessor, Alberto Fernández, and accepted at the group’s meeting four months ago in South Africa. A decision with political weight, but with economic logic, since three of the five Brics (China, Brazil and India) are also among the top five markets for Argentine exports.
Argentina’s participation in the New Silk Roads, which it joined last year, is also up in the air. Contrary to what you might think, China is not a top investor in Argentina – unlike Spain – but it does stand out as a source of financing. Among the projects that depend on it, stand out the fourth Argentine nuclear reactor, two hydroelectric plants in Patagonia, a photovoltaic park and expansion plans for freight and passenger railways.
Of all of them, the one that worries Washington the most is the Atucha III reactor and has expressed the importance it attaches “to the lithium triangle, which concentrates 60% of the world’s lithium between Argentina, Bolivia and Chile”.
Three Chinese groups are working on the exploitation of Argentine lithium and one of them, precisely, is behind the decision of the Buenos Aires branch of the Bank of China to make the first investment in yuan in Argentina for some expenses of the company itself. The same bank had opened accounts in yuan the previous year.
A set of symptoms that allowed Massa, a few months ago, to joke about the potential “Argentine Republic”. Milei represents a change in the cycle, with strong gusts of wind in favor of the United States and its companies.
The new Minister of Defense would have communicated to the head of the Argentine Air Force that the decision on its new fighter-bomber (a US bid, an Indian bid and a Chinese bid, with an advantage for the latter) would be prey Argentina would opt for second-hand American F-16s offered at bargain prices by Denmark, with great incentives from Washington.
The victory of the ultra-right postpones the advent of “Argenxina”. Beijing fears that more will come after this setback, since Milei has promised little less than to stop public works. A death sentence for projects that in most cases were already incurring long delays due to budget problems due to inflation. While China thinks long term, in Argentina the price of a dish can change twice a day.
In recent months, Chinese financing allowed Argentina to pay the IMF, strengthen its Central Bank reserves and pay for imports of Chinese manufactured products.
In any case, Xi congratulated Milei in a letter on his election and Milei thanked him on Twitter with “sincere wishes of well-being for the people of China.” Its chancellor, Diana Mondino, would also have bitten her tongue, to request from the Beijing emissary during the investiture an extension of the yuan exchange agreement. China observes and is observed. The chainsaws continue to fly.
