With Argentina and Beijing cementing their partnership in the Silk Road Initiative and Beijing supporting Argentina’s claim to the Falklands, the infiltration of the Middle Kingdom into Latin America is undoubtedly evident.
Often referred to as a model of South-South cooperation, the growing economic asymmetry between the two nations tells a different story. Traditional relations between Buenos Aires and Beijing center on trade, but over the years Beijing has extended its sphere of influence to all of South America, particularly Argentina.
Many facets have been added to their bilateral relationship:
Sino-Argentinian trade has grown tremendously over the past 20 years. Recently, China overtook Brazil as Argentina’s top trading partner. Initially driven by soybean and beef exports, the bilateral relationship has extended to Beijing, being involved in various joint development projects in the region.
According to CAB, Argentina’s exports to China increased at a rate of 13.5% and China’s exports to Argentina increased at a rate of 12.3%. Beijing mainly imports soybeans, minerals and other commodities while exporting a wide range of higher value-added Chinese goods and services.
Over the years, Beijing has moved away from traditional local markets and expanded its presence in Argentina by heavily funding the latter’s infrastructure needs. Argentina has received Chinese funding for a total of 11 projects ranging from railways and dams to solar power and nuclear power plants.
Argentina has been in a financial crisis for a very long time. The President of Argentina feels that a closer alliance with China will allow it to strengthen its monetary reserves and promote new infrastructure projects in the country.
Beijing is funding the Santa Cruz Hydroelectric Project, a $4.7 billion dam project that is currently in limbo but is expected to employ more than 2,500 citizens when launched. It also funds and provides technical support to one of South America’s largest solar farm projects, Cauchari. This strengthens China’s position in the race to become a global leader in clean energy technology, a title India is also vying for.
Recently, Argentina became the newest participant in China’s Belt and Road Initiative, an ambitious infrastructure project aimed at expanding China’s economic and political influence by financing infrastructure projects around the world. The land was handed over in 2017 when Xi called the region a “natural extension” of the BRI shipping route.
Analysts to believe BRI membership could attract more Chinese investment in sectors such as alternative energy and national and regional projects such as financing railways and roads for intra-country and inter-country connection.
The relationship between the two nations has faced challenges when it comes to agriculture. Beijing began its expansion by attempting to purchase large tracts of land in the Patagonia region. After continued apprehensions and heightened outrage from environmental groups and constitutional experts in Argentina, he gradually turned to existing agribusinesses in the region such as Noble Group Ltd. and Nidera. China is growing as a dominant agricultural trading house and engaging in ventures like these is a step in that direction.
Argentine pork has become an important commercial product, alongside soybeans, after the outbreak of African swine fever (ASF) in China affected its domestic pork industry. This led to China’s ambition to make Argentina one of China’s top pork suppliers. The plan is to turn Argentina into a pig powerhouse with the installation of 25 pig farms through Chinese investment amounting to a whopping $3.5 billion.
But it has also been met with huge protests from local Argentine environmentalists who see the move as a recipe for disaster. According to the biologist Guillermo Folguera“China is externalizing the risk of a repeat of outbreaks such as African swine fever by moving production overseas.”
Argentina is part of the “lithium triangle” and becomes extremely important for China to meet its domestic needs.
Recently, the Chinese mining company Zijin Mining Group Co Ltd has announcement that it will invest $380 million to build a lithium carbonate plant in Argentina. Called “white gold”, lithium is essential for the production of electric car batteries.
According to According to Benchmark Mineral Intelligence (BMI), as electric vehicle (EV) sales increase in China, demand from EV battery manufacturers has increased dramatically, pushing the price of lithium carbonate in China to an all-time high of 41,925 $ per ton. This sudden increase in demand has led to Beijing’s interest in Argentina’s lithium reserves.
China is also diversifying its investments into other minerals such as gold and copper, and possibly even silver and uranium in the future.
Argentina’s strategic position as a gateway for China to strengthen its influence in the region is another factor for China’s increased bilateral efforts.
In recent years, China has established itself as an important player in the global arms trade, and Latin America happens to be an important market for Chinese military hardware. In 2015, then Argentine President Christina Fernández de Kirchner announced her government’s intention to purchase Chinese weapons systems for approximately $1 billion. According to to Evan Ellis, “Chinese arms companies, such as the Aviation Industry Corporation of China (AVIC), China Shipbuilding Industry Corporation (CSIC), China National Electronics Import & Export Corp (CEIEC), and China’s North Industries Corporation (NORINCO) expanded their position in the Latin American and Caribbean arms markets.
With the return to power of the Peronists in 2019, the government is discussing possible acquisitions of a series of defense equipment, including JF-17 fighter jets, for which China is ready to opt for co-production and sharing. of its technology.
China also plans to win the tender for the construction of a polar logistics vessel that Argentina wishes to build to support the maintenance and resupply of Argentine stations in Antarctica from Ushuaia.
The Chinese company Huawei established its first Argentinian subsidiary in 2001 and has since dominated the telecommunications sector in Argentina, employing more than 500 employees. Huawei also happens to be one of the world leaders in 5G technology and plans to build Argentina’s 5G network.
While major countries like the US and UK have banned Huawei, citing security fears, Argentina is hold talks with the telecom giant as it explores its options for adopting advanced 5G technology.
China has also demonstrated a huge presence in Argentina’s space sector. In 2015, China received approval to establish a space surveillance and tracking station in Argentina’s Neuquén province. The project has repeatedly come under scrutiny with accusations that it is an opaque deal.
While Beijing has repeatedly dismissed accusations of a security threat and reiterated that the space station is aimed at peaceful space exploration, US defense officials have raised concerns that the Chinese military can monitor and possibly target US and allied satellites.
According to Argentinian international analyst Felipe de la Balze, “the base could jeopardize Argentina’s international relations”. It is an agreement that limits Argentina’s sovereign control over its land, provides tax exemptions and allows free movement of Chinese workers bound by Chinese law. In addition, the Patagonian space station is managed by the China Satellite Launch and Tracking Control General (CLTC). The CLTC falls under the PLA Strategic Support Force.
China Great Wall Industry Corporation (CGWIC) with the Argentinian company Satellogic, announcement its plan to launch 90 satellites to create an Earth observation constellation.
As the examples mentioned above show, Chinese penetration in Argentina has gone beyond traditional economic engagements. With the return of the Peronist government, the ties are expected to strengthen as the focus shifts to growth-oriented policies.
The dragon has reached Washington’s backyard, and there seems little the United States can do to stop the growing political, economic, and strategic engagement we are witnessing. While greater engagement means more development for Argentina, it also brings security concerns and contests of influence in the South American region. As US Secretary of State Rex Tillerson noted, “Latin America does not need new imperial powers that seek only to benefit their people.”