In recent decades, some Argentine presidents initially adopted a contrary approach regarding their country’s relations with China, prioritizing an alliance with the United States and the West and adopting an anti-China political discourse. However, over time, these presidents became increasingly aware of the necessity to shift their perspectives towards Beijing, given their country’s significant economic and trade reliance on the world’s second-largest economy. This realization compelled them to retract their anti-China rhetoric for political realism considerations, ultimately changing their stances towards China. Current Argentine President Javier Milei is not an exception to this pattern; he has called for reforming his country’s foreign policy towards China while maintaining cooperative ties with the United States.
This raises questions about the motives and reasons behind Milei’s positive shift in stance towards China, especially in light of his recent announcement of plans to visit China in January 2025, and the potential implications of this transformation.
Features of Relations:
The relationship between Argentina and China was marked by notable tension when President Javier Milei took office in late 2023, reflected in his negative statements and positions towards China, which incited anger from Beijing towards Buenos Aires. Key features of this relationship include:
Milei’s Criticism of China:
During his presidential campaign, Milei directed numerous criticisms towards China, stating he would not enhance political relations with Beijing or any other communist country, and emphasizing that he would manage relations through the private sector. He famously claimed, “trade is impossible with a killer.” Additionally, during his participation in the World Economic Forum in Davos earlier in 2024, he criticized socialism and economies heavily reliant on state control, like China, labeling them a threat to the West. Despite Argentine Foreign Minister Diana Mondino’s official visit to Beijing aimed at calming recent tensions and re-establishing closeness with the Chinese government, she made a controversial remark upon returning that was deemed racist by Beijing, saying, “the Chinese look alike.”
Economic and Trade Cooperation:
Argentina shares robust economic and commercial ties with China, which invests billions of dollars across various sectors of the Argentine economy and finances numerous infrastructure projects. In return, China secures food and essential mineral supplies, such as lithium, and markets its industrial products in Argentina. In 2022, Argentina officially joined China’s Belt and Road Initiative to attract more investment to its economy. In June 2024, China agreed to renew currency swap lines worth 35 billion yuan ($5 billion) with the Argentine Central Bank until July 2026, a step the Argentine government deemed crucial for managing the country’s balance of payments. Bilateral trade between Argentina and China has significantly increased, with Argentine exports to China soaring about eightfold from 1.09billionin2002to1.09billionin2002to7.93 billion in 2022. Meanwhile, Argentine imports from China increased more than 53-fold, from 330millionin2002to330millionin2002to17.5 billion in 2022. Argentina’s main exports to China consist of agricultural products, particularly soybeans, beef, and barley, while it imports higher value-added manufactured goods, including phones and computers.
Argentina’s Rejection to Join BRICS: On December 29, 2023, Argentina announced it would not join the BRICS group of emerging economies, which President Milei justified by stating the timing was inappropriate for full membership. Argentina was among six countries invited in August 2023 to join the bloc, which comprises Brazil, Russia, India, China, and South Africa, with Argentina slated to join on January 1, 2024.
Closer Ties with the United States:
Milei has adopted several steps to align more closely with the United States, halting plans to join BRICS and purchasing American-made aircraft for the Argentine air force instead of Chinese or Indian planes. He has also worked to rebuild trust with American investors and expressed satisfaction with Donald Trump’s candidacy for the U.S. presidency once again. Additionally, Milei has enhanced military cooperation with the United States, evident since the initiation of a U.S. naval base in southern Argentina in April 2024, intended to monitor global shipping in the Strait of Magellan linking the Pacific and Atlantic oceans. This development may hinder Chinese ambitions to operate freely in maritime passages without U.S. approval.
Diverging Motives:
Milei’s positive shift towards China did not occur in isolation but is the result of various motivations and considerations:
Argentina’s Economic Crisis: Argentina currently faces a severe economic crisis, increasing the hardships for its population amid stagnant wages, soaring living costs, and reduced government support. Annual inflation, the highest in the world, is projected to reach approximately 124% in 2024, having hit 237% last August, along with poverty rates rising to about 53%. Some estimates suggest this crisis has compelled Milei to adjust his positions towards China, not only due to his pragmatic approach to addressing the economic challenges his country faces but also because it is difficult for Argentina to detach from China amid the ongoing crisis. Notably, he pledged not to disrupt existing trade agreements with Beijing, emphasizing the continuation of trade relations and maintaining a currency swap agreement worth $18 billion.
Positive Shift of Milei’s Government towards China: Since Milei assumed office, the new Argentine government has softened its stance towards China, with Milei expressing gratitude to President Xi Jinping for congratulating him on his election and stating in April 2024 that the private sector would be allowed to engage in business with China. Recently, Milei described China as an “interesting trade partner,” affirming his positive surprise with the country and thanking Beijing for renewing the currency swap agreement, which assisted Argentina in meeting its International Monetary Fund obligations. Meanwhile, Foreign Minister Diana Mondino worked to ease tensions with China, asserting that Argentina would not sever ties with Beijing but rather seek to enhance private trade between both countries. She also met with Chinese Ambassador to Buenos Aires Wang Wei in January and discussed the strategic partnership between the two nations, established ten years ago. Additionally, she met her Chinese counterpart, Wang Yi, in February 2024 at the Munich Security Conference to reaffirm their commitment to maintain the strength of Argentina-China relations.
Beijing’s Positive Stance Towards Relations with Argentina: Despite criticisms from Milei, China has adopted a pragmatic approach to address his negative positions, focusing on managing relations with Argentina to prevent further deterioration and presenting a positive view of bilateral ties. President Xi Jinping pledged to work with Milei to develop the Argentine-Chinese relationship and congratulated him on his election. Statements from Beijing have emphasized China’s appreciation for the bilateral relationship’s development in a strategic, long-term perspective, affirming its readiness to cooperate with Milei’s government for sustainable and stable development of their comprehensive strategic partnership.
Washington’s Disinterest in Meeting Milei’s Demands: Some estimates attribute Milei’s shift in approach towards China to his disappointment in the U.S. response to the initiatives he proposed. Observers suggest that Milei may have misunderstood the nature and dynamics of U.S. foreign policy, believing that expressing full alignment with Washington would suffice to secure financial support and investment, which does not align with reality.
Potential Implications:
Milei’s positive shift towards China presents various potential implications:
Positive Outcomes for the Argentine Economy:
The anticipated visit of President Milei to China in January is expected to yield positive benefits for the Argentine economy through agreements and memorandums of understanding between the two countries. Such developments could permit China to invest in vital sectors of the Argentine economy, such as lithium mining, where Argentina holds 21% of the world’s known reserves, a crucial component for electric vehicle batteries. Furthermore, Argentine exports of agricultural products, particularly lithium and other minerals to China, are expected to expand in the coming years as the Argentine economy recovers, along with increasing imports from China in electronics, automobiles, and other manufactured goods.
Possibility of Argentina Returning to BRICS:
One potential consequence of Milei’s revised position towards China is the possibility of Argentina reconsidering its decision to reject joining the BRICS bloc. President Xi Jinping may attempt to persuade the Argentine president of the economic benefits of joining BRICS, especially given Argentina’s acute economic crisis, which necessitates cooperation with major international powers, particularly BRICS countries, led by China, a key active force in the bloc. The upcoming BRICS summit, scheduled to be held in Russia from October 22-24, 2024, may issue a decision or statement on Argentina’s reintegration into the bloc, potentially pressured by China to enhance its influence in Latin America and the Global South.
Challenges in Balancing Relations with China and the United States:
The recent shift in Milei’s stance towards China may raise concerns in the United States, which prefers Argentina to distance itself from China or at least minimize its ties to Beijing. Milei’s approach entails several risks for his country, considering its need for U.S. assistance to revitalize its economy, especially regarding the renegotiation of Argentina’s $45 billion debts to the International Monetary Fund, which it struggles to repay. Simultaneously, Milei also needs China, particularly its vast market, essential for Argentina, complicating his efforts to balance foreign relations between China and the United States amid increasing competition between the two superpowers in the current international system.
Increasing Chinese Influence in Latin America:
A positive shift in relations between Argentina and China would represent a significant victory for China in its competition with the United States for influence and dominance in Latin America, given Argentina’s status as a major regional power. China has invested about $155 billion in infrastructure projects in the region since 2005. This increase in Chinese influence is evidenced by several indicators. Recently, Colombia joined China’s Belt and Road Initiative, reflecting its strategy to diversify international alliances beyond its traditional reliance on the United States, its main trade and military partner. Peru has also proposed alternatives that allow Chinese vessels entering Peruvian ports to bypass satellite tracking regulations.
In conclusion, it could be said that relations between Argentina and China, although initially seemingly cool with Milei’s assumption of the presidency, are influenced by economic realities and shifting dynamics with Washington, prompting Argentina to pursue a more collaborative approach with Beijing. This may limit any potential future disputes between the two parties, given their shared commercial, investment, and geopolitical interests. Therefore, it is likely that both countries will work to ease the political tensions that have recently affected their relations as a precursor to stabilizing their partnership, based on political realism and mutual economic interests.
