Argentinian foreign chief visits amid strained ties

Mondino’s Beijing trip sparks speculation she wants to get China to renew a currency swap

Argentinian Foreign Minister Diana Mondino will start a four-day visit to China tomorrow after relations came under heavy strain since President Javier Milei took power in December.

Mondino will be accompanied by financial officials – including Central Bank President Santiago Bausili and Secretary of Finance Pablo Quirino and the foreign ministry’s secretary of international economic relations Marcelo Cima – triggering speculation that she may be hoping to convince Beijing to renew a currency swap to boost Argentina’s dwindling foreign reserves.

Milei, an economist and a right-wing libertarian, threatened to cut off ties with China during his campaign and since taking office, has strongly pivoted towards the United States while pursuing radical economic reforms.

After taking the office, he cancelled the previous government’s plan to join the Brics bloc of emerging economies and has also expressed support for Israel and Ukraine.

Earlier this month, his government sent a delegation of scientists and experts to inspect China’s deep space observation station in Neuquen province in Argentina’s south after US officials described it as a military installation.

In another move that highlighted Milei’s tilt to the West, Argentina formally requested to join Nato as a global partner last week, days after sealing a deal to buy F-16 fighter jets from Denmark.

Gonzalo Ghiggino, a researcher at Argentina’s National Scientific and Technical Research Council, said “the real reason” for Mondino’s visit is to extend part of the currency swap between the two countries’ central banks that is due to expire in June.

“This is for the moment the most important issue – vital for Argentina – between the two countries,” Ghiggino said.

The country has been mired in an economic crisis since 2002 and defaulted on its sovereign debt for a ninth time in 2020. There have been growing fears that another default will take place under Milei’s watch.

Its US$18 billion swap line with China is the main source of foreign reserves for its central bank’s depleted coffers, but US$5 billion of this is due to expire in June.

The deal is also the biggest yuan swap line in the world, as Beijing is steadily pushing a wider use of yuan to counter the dominance of the US dollar and to expand its global influence.

“The Argentine government has a serious problem finding financing from other sources. Even the IMF said no to a new loan,” Ghiggino said. “If the Chinese government doesn’t agree to extend the expiration date, the Argentine government could face a very strong crisis.”

Jiang Shixue, a professor at Macau University of Science and Technology, said Mondino’s visit should help stabilise relations.