Following the government’s recent
agreement with the International
Monetary Fund (IMF), officials travelled
to China this week, seeking to agree
an extension to a currency swap between
both countries – a way to boost
the Central Bank’s foreign currency
Leading a large delegation of officials,
Central Bank chief Guido Sandleris
and Finance Minister Nicolás Dujovne
arrived in Beijing on Wednesday for
a host of meetings, including one between
Sandleris and China’s Central
Bank head Gang Yi.
According to reports in the local financial
press, the Central Bank chief
asked his Chinese counterpart to extend
an existing currency swap between
the nations by an extra US$9 billion,
or 60 billion yuan. If agreed,
Argentina’s exchange with the Asian
giant would reach US$20 billion, topping
up the US$11 billion agreed between
both countries in October 2014.
Based on that accord, the Central
Bank would be able to use the funds
when it considers most convenient.
That means it could use them to intervene
in the exchange market.
The talks with China come in the
wake of the agreement with the IMF,
whose executive board recently approved
a US$56.3-billion credit line for the
country, secured as part of a revised
agreement. Argentina will receive
about US$35.8 billion throughout the
remainder of this year and all of 2019,
representing a near US$19-billion increase
from the original arrangement
with the Fund.
In their meeting, Sandleris and Yi
also discussed the “international financial
scenario” and the new monetary
plans implemented by Argentina, while
reviewing the preparations for the G20
summit in Buenos Aires, according to a
press release from the Central Bank.
The government officials also met
with representatives from the Chinese
Popular Bank, China International Corporation,
Sinosure (a state firm that
gives credit insurances for exports),
China’s Development Bank and the
Export-Import Bank of China (also
known as Exim Bank).
Seeking new funds for Chinese projects
in Argentina, Sandleris and Dujovne
told investors that the balance-ofpayments
crisis was now behind the
nation and that the country would see
an economic recovery after April, when
the recession would come to an end.
Chinese president Xi Jinping is due
to attend the G20 Leaders Summit in
Buenos Aires at the turn of the coming
month. During his visit, he is expected
to put the final touches on agreement
to construct a new nuclear plant in Argentina,
set to be built in 2022 with
entirely Chinese funding – anticipated
to be around US$9 billion.
Over the past decade, Argentina’s
relationship with China has substantially
deepened. In just the last few years
alone, the countries have signed more
than 20 treaties. Argentina now enjoys
what is called a “comprehensive strategic
alliance” with the Asian giant, a diplomatic
status with Beijing that few
countries have access to.
The close relationship has also led to
a rush of Chinese investment in the
country. A total of US$20 billion in loans
have been granted to finance a number
But though China has guaranteed
funding for key energy and transportation
works projects, such as dams and
nuclear power plants, Argentina has
authorised contracts for works projects
without a prior tender process, opening
the door to Chinese labour, a move that
has met with criticism from the Argentine
Industrial Union (UIA).
The relationship between both countries
is longstanding, dating back to the
Kirchnerite era. The current administration,
which took power in 2015, was
not initially less than enthusiastic about
having a close relationship with Beijing.
President Macri initially questioned the
previous government’s ties with Beijing,
citing the type of contracts signed
and an apparent lack of transparency.
However, the president later backtracked
on that position, given his
government’s intense need of foreign
investment. As part of that shift, Macri
visited China last year and signed a
number of deals, mainly focused on
energy and transportation. For example,
Beijing is set to fund public works
projects related to the San Martín
freight train line.