Argentina: Is China Nostalgic for the Macri Era?

by Patricio Giusto*

Argentine President Alberto Fernández and Chinese President Xi Jinping at the Great Hall of the People in Beijing, China / Casa Rosada / Wikimedia Commons / Creative Commons license

Argentina’s return to Peronism with the victory of President Alberto Fernández and Cristina Kirchner in 2019 has not led to a rapprochement between Argentina and China as widely predicted. After the first half of the Fernández’s presidency, relations with China are riddled with unfulfilled promises, political and bureaucratic obstacles, detrimental economic measures, and other challenges. To some extent, paradoxically, Beijing might be missing center-right President Mauricio Macri’s times (2015-2019).

Fernández and other key figures of the Argentinean government frequently refer to the country’s “deep friendship” and “strategic relationship” with China. Under Fernández, Argentina has just joined the Belt and Road Initiative (BRI) and, according to the official line, bilateral links are very strong. Of China’s top priorities for the relationship, however, almost nothing has been accomplished with Fernández. Fierce political struggles within the Fernández coalition have contributed to an erratic foreign policy that lacks of a comprehensive strategy on China. Mounting U.S. pressure on certain critical issues has also been a factor.

  • When Fernández traveled to Beijing to sign the BRI agreement three months ago, the two governments announced more than $13 billion in infrastructure investments, but they have released no details on projects or their financing.

The energy sector has been particularly messy for China with Fernández in charge.

  • An $8 billion nuclear power project with Hualong One technology has stalled as Argentina tries to renegotiate the financial conditions during a severe economic crisis – and faces tough diplomatic pressure from Washington to abandon the project. The Santa Cruz hydroelectric dams, the largest Chinese investment project in Argentina, have suffered constant economic restraints and union strikes for two years. An Argentinian financial default has provoked the total interruption of Chinese finance. PowerChina filed an official complaint about handling of its bid to build a Chihuidos hydroelectric dam in Neuquén province. The Belgrano II thermal power plant project with China’s CNTIC – financed by the U.S. EXIM Bank – has mysteriously never started. The oil company Sinopec, weary of economic volatility and strikes, sold its assets in Argentina in early 2020, affecting its operations.

The Argentinian government has slowed other forms of cooperation, apparently for security reasons, as well.

  • Buenos Aires announced, for example, that it alone would fund the Antarctic Logistics Pole project in Tierra del Fuego province that it had discussed with China. It has not acted on the long-awaited purchase of Chinese J-17 fighter jets and wheeled armored vehicles because of financial constraints and U.S. pressure, according to Ministry of Defense sources.
  • On another flagship project, management the Paraná-Paraguay waterway, the country’s most strategic fluvial corridor, Fernández decided to nationalize part of the operation and determined that only a Belgian company was a qualified partner.
  • In the agricultural sector, Fernández has also dismissed a Chinese investment project estimated to be worth $3.7 billion to develop the pork industry through the installation of mega-factories in different parts of the country.

Some Fernández policies have hurt Argentina’s interests directly as well. He suspended beef exports to China last year – supposedly to curb domestic inflation – but inflation continued to rise while Argentina lost hundreds of millions of dollars from exports and hurt Chinese buyers’ confidence. The country’s bilateral trade deficit with China reached a record $7.3 billion in 2021, after having decreased to $2 billion a year in Macri’s times.

The repeated friendly rhetoric and gestures between Argentinian and Chinese counterparts do not conceal the fact that the relationship under Fernández has been full of obstacles and frustrations for Beijing. President Macri’s international approach was openly pro-West and he had clear ideological differences with China, but there is no doubt that relations then were much more fluent and fruitful for both Argentina and China.

  • The second half of Alberto Fernández’s term is likely to be similarly plagued, with the critical issues blocking progress unlikely to be resolved. Argentina’s economic situation will almost certainly continue to worsen, depriving it of resources to hold up its side of any deal with China. U.S. pressure will continue being a key factor, aimed at restricting cooperation with China in critical issues for Washington’s agenda, such as telecommunications and defense. On the other hand, the two countries’ desire to find ways to cooperate will remain strong no matter who wins the Argentinian presidency in 2023, and China – if patient enough with the ups and downs of the relationship – will continue to be an irreplaceable partner for Argentina.

June 1, 2022

* Patricio Giusto is executive director of the Sino-Argentinian Observatory, an advisor to the Argentinian National Senate, and a visiting professor at Zhejiang University. He is also a researcher and associate professor at Pontifical Catholic University of Argentina.

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