Macri’s China woo is nothing new

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Arguably the biggest mover & shaker at last week’s BRICS Summit in Johannesburg was not a “BRIC”, but Argentine President Mauricio Macri. Officially, Macri participated as the President of the G20. However, given Argentina's current economic troubles, the gathering presented a timely opportunity to garner support from Chinese President Xi Jinping (and to a lesser extent Indian Prime Minister Narendra Modi and Russian President Valdimir Putin). Macri and Xi were all chummy (习近平会见阿根廷总统马克里), and Argentine Foreign Minister Jorge Faurie wanted to make sure you saw

Rewind 12 months and Argentina was belle of the ball for international investors, not heads of state. After almost two decades in the preverbal wilderness, President Macri spent the first year of his administration focused on reintegrating Argentina into the global financial system. While never turning his back to China, one could argue his priorities were with Washington D.C. (and New York). This was in stark contrast to his predecessor, who made Argentina the third largest beneficiary of China policy bank lending to Latin America.

To the casual observer, Macri's charm offensive in Johannesburg last week could be interpreted as a pivot back to China. But Macri has continued to work with China even as he brought Argentina out of the international economic doghouse.

Macri steadily courted China (along with traditional decision-makers like the US) to support the International Monetary Fund's $50b, three-year Stand-By Arrangement (SBA) for Argentina that he secured in June to stave off a full-blown economic crisis. On Friday in Johannesburg Macri went out of his way to thank Xi for supporting the deal.

Beyond support for the IMF agreement, Argentine Central Bank BCRA also asked the People’s Bank of China to discuss increasing their bilateral $11b swap facility by another $5b. The ongoing swap facility discussions are likely to be unveiled later this year. Along with agreement to buy more soy, begin importing beef, and spending on infrastructure projects in Argentina, China’s foreign ministry has said the country wants to “help in any way [it] can.” 

Not all Chinese support has flown under the radar. The New York Times’ eyebrow-raising article this weekend about potential dual-use telecommunications equipment at a satellite tracking station in Neuquén has observers worried about Chinese military infiltration in the Pampas. And that follows concerns about the $9b Atucha III nuclear plant deal inked in June contingent on using Chinese technology. This has critics calling Chinese support "charity with nails."

But the biggest announcement may yet still be to come. On the sidelines of the BRICS Summit, Macri and Xi were rumored to be discussing Argentina’s joining the Belt and Road Initiative (BRI). Macri has already agreed to help pursue BRI infrastructure projects. Knowing that diplomats — and Chinese diplomats in particular — like flashy signing ceremonies at international conferences, we wouldn’t be surprised that leading up to the G20 Leaders Summit in late November in Buenos Aires, China and Argentina will probably sign a Belt and Road Cooperation Agreement. That would make Argentina the largest country and economy in Latin America to join the BRI. 

The G20 Leaders Summit is an opportunity to invite the world to Buenos Aires. But no matter who lives there, China appears to have a standing invitation to do business with the Casa Rosada.

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