Over the past decades, Argentina’s leaders adopted an anti-China political rhetoric whilst prioritizing alliances with the United States and the West. Over time, however, Argentinian presidents have realized the necessity of implementing a pragmatic adjustment towards Beijing, given Buenos Aires’s substantial economic and trade reliance on the world’s second-largest economy. Consequently, Argentina’s current president, Javier Milei, has called for a reform of the country’s foreign policy toward China, alongside maintaining cooperative relations with the United States. The president also recently announced his intention to visit China in January 2025. This shift raises questions about the motivations and reasons behind Milei’s positive reorientation toward China as well as its potential implications.
Characteristics of Argentina-China Relations
Relations between Argentina and China were marred by notable tension when President Javier Milei took office in late 2023, because of his statements and stances against Beijing, which stirred discontent in the latter. The main features of this relationship are as follows:
1. Scathing Criticism:
During his presidential campaign, Milei made several critical remarks about China, vowing that he would not strengthen ties with any communist country and that he would manage international relations through the private sector instead. In his remarks about Beijing, he even went on to say, “would you trade with an assassin?”
During the World Economic Forum in Davos in early 2024, Milei also criticized socialism and heavily state-dependent economies like China, describing them as a threat to the West. Foreign Minister Diana Mondino’s official visit to Beijing, aimed at defusing recent tensions and mending relations with the Chinese government, also backfired when she said upon her return that “all Chinese people look the same”, which Beijing labeled as racist.
2. Economic and Trade Cooperation:
Buenos Aires maintains strong economic and trade relations with China, which has invested billions of dollars across various sectors, in addition to financing dozens of infrastructure projects in Argentina. China also exports food supplies, industrial products and crucial minerals like lithium to the Latin American country. In 2022, the latter officially joined China’s Belt and Road Initiative to attract more investment into its economy.
In June 2024, China agreed to renew currency swap lines worth 35 billion yuan ($5 billion) with the Argentine Central Bank, making them valid through July 2026. The Argentine government emphasized the importance of this step for managing the flows of the country’s balance of payments. Bilateral trade between Argentina and China has also surged significantly, with Argentine exports to China increasing almost eightfold, from $1.09 billion in 2002 to $7.93 billion in 2022. Meanwhile, Argentine imports from China rose by more than fifty-three times, from $330 million in 2002 to $17.5 billion in 2022. Argentina’s main exports to China include agricultural products, beef, and barley, while its imports from China consist of various high-value-added manufactured goods, including phones and computers.
3. Argentina’s Rejection of BRICS Membership:
On December 29, 2023, Argentina officially announced that it would not join the BRICS bloc of emerging economies, a decision Milei justified by stating that the timing was not suitable. Argentina had been among six countries invited in August 2023 to join the bloc, which includes Brazil, Russia, India, China, and South Africa, and was scheduled to join as of January 1, 2024.
4. Alignment with the United States:
Milei’s foreign policy has included several steps to align more closely with Argentina’s ally, the United States. This has involved halting the plan to join BRICS, purchasing US-made aircrafts for the Argentine Air Force instead of Chinese or Indian aircrafts, and fostering ties with Washington’s allies. The president has also sought to rebuild trust with American investors and expressed enthusiasm for Trump’s potential return to the US presidency.
Additionally, Milei has worked to strengthen military cooperation with the United States, as demonstrated by the inauguration of an American naval base in April 2024 in southern Argentina. The new base is intended to monitor global navigation through the Strait of Magellan, which connects the Pacific and Atlantic oceans, thereby hindering China’s ambitions to freely navigate these maritime passages without US consent.
Divergent Motives: The Shift in Milei’s Stance on China
The positive shift in President Milei’s position towards China did not emerge out of nowhere; rather, it resulted from a combination of factors and dynamics, as outlined below:
1. Argentina’s Economic Crisis:
Argentina is currently facing a severe economic crisis that has led to stagnant wages, rising living costs, and reduced government subsidies. Argentina’s annual inflation rate, the highest globally, is expected to reach around 124% in 2024, with the figure reaching 237% last August. Poverty rates have also surged to approximately 53%.
Analysts believe this crisis has led Milei to adjust his stance towards China, not just as part of a pragmatic approach to remedy Argentina’s economic difficulties, but also because of challenges of disengaging with China under current circumstances. One indicator of this shift is Milei’s announcement that he would not tamper with existing trade agreements with Beijing, maintaining bilateral trade relations as they are and continuing the $18 billion currency swap agreement.
2. Positive Policy Shifts Towards China:
In April 2024, Milei declared that private sector businesses could continue trading with China. Recently, the Argentine president referred to China as an “interesting trade partner,” stating that he was “pleasantly surprised” about relations with Beijing and thanked the Chinese government for renewing the currency swap agreement, which enabled Argentina to meet its obligations to the IMF.
Argentine Foreign Minister Diana Mondino has also played a role in easing tensions, emphasizing that Argentina will not sever ties with China but will instead work to enhance private trade between the two nations. In January, Mondino met with China’s ambassador to Buenos Aires, Wang Wei, and both parties underscored the significance of their countries’ decade-old comprehensive strategic partnership. Mondino also met with Chinese Foreign Minister Wang Yi in February 2024 during the Munich Security Conference to affirm both nations’ commitment to maintaining robust relations.
3. Beijing’s Positive Stance on Bilateral Relations:
Despite Milei’s criticisms, China has adopted a pragmatic approach to prevent relations with Argentina from deteriorating further. President Xi Jinping pledged to work with Milei to foster the development of bilateral relations and congratulated him on his election. Furthermore, statements from Beijing expressed China’s willingness to collaborate with Milei’s government to achieve stable, sustainable growth in the comprehensive strategic partnership between the two countries.
4. Washington’s Reluctance to Meet Milei’s Demands:
Some observers suggest that Milei’s shift toward China stems from his disappointment with the US response to his proposals. Indeed, Milei may have misread the nature and dynamics of US foreign policy, expecting that full alignment with Washington would suffice to secure financial support and investment, which is unrealistic.
Potential Implications
This positive shift in President Milei’s stance on China implies several potential consequences, which can be outlined as follows:
1. Positive Outcomes for Argentina’s Economy:
Milei’s anticipated visit to China in January 2025 is expected to yield economic benefits for Argentina through bilateral agreements and memoranda of understanding. This could open the door to Chinese investment in critical sectors of Argentina’s economy, such as lithium mining, given that Argentina possesses 21% of the world’s known lithium deposits—a key component in electric vehicle batteries. Additionally, Argentine exports to China are likely to expand as the economy recovers, while imports of Chinese-manufactured goods, including electronics and vehicles, may also increase.
2. Potential for Argentina’s Reconsideration of BRICS Membership:
Another possible outcome of Milei’s more favorable stance toward China is the re-evaluation of Argentina’s decision to decline BRICS membership. It is anticipated that President Xi Jinping may attempt to persuade Milei of the economic benefits of joining BRICS, especially given Argentina’s acute economic crisis, which necessitates cooperation with major international powers, notably BRICS countries. The upcoming BRICS summit in Russia, scheduled from October 22 to 24, 2024, may issue a decision or statement to readmit Argentina as part of China’s strategy to expand its influence in South America and the Global South.
3. Challenges of Balancing Relations with China and the US:
Milei’s revised stance towards China could raise concerns in the United States, which prefers to see Argentina distance itself from China. The president’s position therefore presents various risks for his country, as the latter still requires US economic assistance, particularly in regards with renegotiating its $45 billion IMF debt. Simultaneously, Milei needs China’s vast market, which is critical for Argentina. This scenario presents Milei with the challenge of balancing foreign relations between China and the United States amid increasing competition between these two major powers.
4. China’s Growing Influence in Latin America:
Improved relations between Argentina, a major regional power, and China could mark a significant victory for Beijing in its competition with the United States for influence in Latin America. China’s growing influence is highlighted by recent developments, including Colombia’s recent decision to join the Belt and Road Initiative, reflecting Bogota’s strategy to diversify its international alliances beyond its traditional dependence on the United States, its main trade and military ally. Similarly, Peru has proposed alternatives allowing Chinese ships entering Peruvian ports to bypass satellite tracking requirements.
In conclusion, while Argentina-China relations appeared strained upon Milei’s inauguration, economic realities and shifting dynamics in the relationship with Washington have prompted Buenos Aires to adopt a more cooperative approach towards Beijing. This is likely to pave the way for a resolution of any future disputes between the two nations, driven by their mutual commercial, investment, and geopolitical interests. Consequently, both countries are likely to work toward appeasing recent political tensions and stabilizing their relations, rooted in realpolitik considerations and mutual economic interests.
