[GMDaily] Cui Shoujun: China and Argentina Join Hands to Create a New Model of “South-South Cooperation”

Invited by Argentinian President Mauricio Macri, Chinese President Xi Jinping attended the 2018 G20 Buenos Aires summit from November 30 to December 1, then paid a state visit to Argentina and proposed a new strategic plan to comprehensively promote the development of Argentina-China relations. In recent years, as China deepens cooperation with Latin America, the tacit understanding of bilateral strategic cooperation between China and Argentina is growing with each passing day, just like a graceful tango dance, establishing a new model of mutually beneficial and win-win cooperation for “South-South cooperation”.

Summit diplomacy brings about great-leap-forward development of Argentina-China relations

Argentina is a major country and emerging market country with great influence in Latin America. With an area equivalent to 1/3 of China and a population of less than 43,000,000, Argentina boasts abundant natural resources. From the late 19th century to the early 20th century, relying on its unique agricultural and animal husbandry resources from Pampas, Argentina exported a large amount of grains and beef to the world, ranking among the top 10 richest countries in the world, known as the “granary and butchery of the world”. In 1913, the per capita income of Argentina reached USD 3,800, higher than France and Germany, attracting a large number of European immigrants. However, after a military coup in 1930 ended decades of economic prosperity, frequent military interventions and debt crises exacerbated its economic recession and slowed down its modernization.

After entering the 21st century, driven by the commodity trading boom, Argentina achieved fast growth in the first decade and returned to the world arena. During this period, Argentina-China economic and trade cooperation also enjoyed leapfrog development, and both countries established a strategic partnership in 2004. With the deepening of political, economic and cultural exchanges, both countries upgraded their bilateral relations to a comprehensive strategic partnership in 2014 and signed a number of strategic cooperation agreements. In the presidential election held at the end of 2015, Mauricio Macri from “Let's Change” coalition, a center-right political party, won the election, breaking the political pattern of the Argentine left-wing political parties taking office in turns.

Since then, intensive summit diplomacy has promoted the continuous development of bilateral relations between China and Argentina. China always believes that both countries are in a similar stage of development and face common development tasks. Argentina needs to develop its relations with China in economic, trade, finance and politics. From 2016 to 2017, three summits attended by leaders from both countries played a key role in increasing confidence and resolving doubts between both sides. The first summit took place during the Nuclear Security Summit held in Washington, DC in April 2016. Leaders from both countries reached a basic consensus on how to resolve bilateral differences and contradictions. The second summit was the G20 Hangzhou summit held in September 2016, where both countries signed an additional agreement for China’s construction and peaceful use of the deep space exploration station in Neuquén Province, Argentina. The third summit was Mauricio Macri's visit to China in May 2017 to attend the Belt and Road Forum for International Cooperation. Both sides signed a series of bilateral agreements for completing a number of infrastructure projects funded by China in Argentina. Both countries announced that they would take their comprehensive strategic partnership to a whole new level and Argentina would fully support the construction of the “Belt and Road”.

Led by the summit diplomacy, Argentina-China relations have not been affected by the sudden change in Argentina's political ecology of “left wing retreats and right wing advances”, and achieved further development.

Mutual benefit and win-win cooperation brings about fruitful results of Argentina-China cooperation

Latin America is the natural extension of the 21st Century Maritime Silk Road and an indispensable and important participant in the construction of the “Belt and Road”. Led by the “Belt and Road” Initiative, China-Latin America relations have achieved remarkable results in the past five years. Statistics from the China Customs indicate that the trade volume between China and Latin America in 2017 reached nearly USD 260 billion, up by 18.8% year on year. China is an important export destination for Latin American commodities, with growing imports of agricultural products and manufactured goods from Latin American. The bilateral trade structure is undergoing continuous optimization. According to the statistics from the Ministry of Commerce, China's direct investment in Latin America has reached more than USD 200 billion, making Latin America the second largest destination for China’s ODI.

In terms of the development of Argentina-China relations, infrastructures, trade and investment and financial cooperation are three major driving forces for joint development of both countries.

First, cooperation in infrastructure construction. The shortage of existing infrastructures and lack of increment are “bottlenecks” that restrict Argentina's sustainable economic development. Soon after taking office, Mauricio Macri launched a large-scale three-year infrastructure construction plan in July 2016, which included 224 bidding projects of the transportation sector involving roads, railways, airports, ports and so forth, with a total investment of more than USD 33.2 billion, aiming to greatly improve and upgrade services and modernization level of transportation infrastructures in Argentina. In August 2016, China promised to invest USD 25 billion in Argentina within next five years to help Argentina with infrastructure construction, including large-scale projects such as Atucha Nuclear Power Plant, Belgrano Freight Railway, and Water Pipelines in Entre Ríos Province and Gas Pipelines in Córdoba. China's accumulated capital and technical advantages in infrastructures will undoubtedly help Argentina to bridge the long-troubled “gap” in infrastructures.

Second, economic and trade cooperation. Argentina is a major agriculture and animal husbandry country, and China is a major manufacturing country, thus the bilateral trade between China and Argentina is highly complementary. In 2017, the bilateral trade between Argentina and China totaled USD 13.81 billion, up by 12.1% year on year. Soybeans, crude oil, meat, seafood, leather, vegetable oil and so forth are major commodities imported by China from Argentina. By the end of 2016, the stock of China's ODI in Argentina reached USD 1.94 billion. In 2017, China's ODI in Argentina was USD 83.4 million, making steady progress. It is worth noting that Argentina is the third largest soybean grower in the world, only next to the U.S. and Brazil, and the direction of global soybean flow is changing due to the impacts of international politics under growing Sino-US trade friction. According to the statistics released by the China Customs, the quantity of soybeans imported by China from Brazil in October this year has doubled compared to the same period last year, and therefore the cooperation between China and Argentina in agricultural products may be further deepened in the future.

Last but not the least, financial cooperation. In recent years, Argentina's economic growth was extremely unstable and even declined due to the slump in global commodity prices. The “neoliberalism” economic policies cannot resolve debt crisis and inflation caused by financial liberalization. Since 2018, Argentine Peso has depreciated by more than 50%. As early as 2015, the central banks of China and Argentina reached a Bilateral Local Currency Swap Agreement worth RMB 70 billion, aiming to facilitate bilateral trade settlement and provide liquidity support to financial markets. As Argentina is short of foreign exchange reserves to pay due debts, China agreed to extend the bilateral agreement in 2017 to help Argentina to get through the debt crisis. In early November 2018, the Central Bank of Argentina announced that the Bilateral Local Currency Swap Agreement with China was nearly doubled to RMB 130 billion. The bilateral local currency swap can not only contribute to Argentina’s bail-out, but also enhance friendly relations between both countries and promote RMB internationalization.

To sum up, adhering to the principle of mutually beneficial and win-win cooperation is the cornerstone for Argentina-China cooperation, and seeking common development is the continuation of the “South-South cooperation” spirit in the bilateral relations. The Global South is a major force driving economic growth of developing countries and prosperity of the global economy. The Argentina-China summit is a milestone in leading the development of China-Latin American relations and the promotion of “South-South cooperation” in the new era. Facing the growing backlash brought about by trade protectionism, further strengthening South-South cooperation and firmly promoting the multilateral trading system with WTO as its core is the only way to advance global growth.

(Cui Shoujun is the Director of Latin American Research Center, and the Research Fellow of National Academy of Development and Strategy, RUC)

Original link: http://epaper.gmw.cn/gmrb/html/2018-12/02/nw.D110000gmrb_20181202_1-08.htm