Why Did China Withdraw From a $6.5 Billion Deal With Argentina?

This development occurred just ten days after Javier Milei took office as the President of Argentina. Milei, who ran a campaign critical of China, had proposed cutting ties with the nation.

The report suggests that China’s action is contingent upon President Milei’s expression of a willingness to cooperate with China.

Furthermore, Wang Wenbin, a spokesperson for the Chinese Ministry of Foreign Affairs, did not confirm the specifics but stated, “China will cooperate with Argentina based on equality and mutual benefit.”

For Argentina, grappling with a dollar deficit and near international default, this agreement with China has been a crucial financial support. Its suspension could have significant implications for Argentina’s economic stability.

However, the political landscape shifted dramatically with Milei’s victory. During his campaign, Milei expressed that he will not trade with communist countries, explicitly calling out China.

This indicates a potential shift in his approach towards China, moving from a campaign platform of severance to seeking continued economic cooperation.

Infobae suggests that for the currency swap to resume, Argentina would need to demonstrate a clear goodwill or friendly attitude towards China.

However, the South China Morning Post predicted that achieving a favorable outcome with the IMF might be difficult without the buffer of the currency swap with China.

It reflects how changes in a nation’s leadership and policies can directly impact its international economic relationships.

It serves as a case study for other nations in how political changes within a country can influence its international economic agreements.

The actions taken by both countries in the coming weeks and months could have long-lasting effects on their bilateral relations and potentially influence global economic patterns.

Decisions made in one country can have far-reaching effects, influencing international economic relations and the global financial landscape.

This move, which takes effect immediately, aims to boost global commerce and end-consumer spending, potentially bolstering the economic ties between China and Argentina.

The recent cuts on Argentine products are a part of this policy, reflecting China’s adaptive approach to its local market demands and international trade strategies.

With tariffs dropping from 13% and 15% to zero, this move is poised to benefit Argentina’s agricultural sector substantially, as per the South China Morning Post.

Meanwhile, the fisheries sector sees a mixed impact, with the 2% tariff on frozen shrimp remaining, but other seafood items enjoying lowered tariffs.

The South China Morning Post describes that products such as infant formula and dulce de leche continue to enjoy reduced tariffs, enhancing Argentina’s export potential and contributing to its economic growth.

The tariffs on orange juice, for example, have been lowered from 30% to 20%, with similar eased tariffs in the animal feed and pet food sectors. 

As a major trade partner for Argentina, China’s role has significantly evolved. Diplomatic relations between Argentina and the People’s Republic of China were established in 1972, at a time when China’s global role was mainly seen as a counterbalance to Soviet influence.

However, there was a lack of clarity regarding the specific applications of the technology and the data that would be collected.

The Diplomat explains that Its potential dual-use capabilities for both civilian and military purposes have raised concerns about its true function and objectives.

Entry to the facility is by appointment only. There are limited opportunities for local authorities and media representatives to tour the facility, contributing to community concerns about the base’s true function, as per the Diplomat.

The Lowy Institute explains that it dictates non-interference by the Argentine government in the station’s operations and requires Argentina to notify China of any actions that might affect the station, raising questions about sovereignty and jurisdiction.

The suspension of the currency swap deal, tariff reductions and the space station agreement reflect the evolving economic and political landscape between the two nations, serving as examples of the intricate balance in global diplomacy and trade.