Four ways China is a major economic driver in Argentina

HERE are four ways China has emerged as an economic force in Argentina:

Cheap financing

In the last 10 years, China has established itself as one of Argentina’s biggest lenders, financing a total of about US$18.2 billion in projects, mainly infrastructure, with interest rates typically between 3 and 4 per cent, according to the Inter-American Dialogue, an organization that tracks Chinese state lending to Latin America.

Argentina and Brazil accounted for 91 per cent of total Chinese lending to Latin America in 2017.

Investment in infrastructure

This year is on track to see the most investment by China in Argentina since Macri took office in 2015, totalling at least US$1.9 billion, according to Argentine government data reviewed by Reuters.

Since 2015, China has spent US$3.6 billion, most of it on transportation and infrastructure projects, says Argentina’s investment and international trade agency. Currency swap

The financial ties extend to a currency swap between China and Argentina.

The two countries are expected to seal a deal this weekend to expand the credit line to nearly US$19 billion.

Once signed, it will make China the biggest non-institutional lender to Argentina.

The swap comes at a time Argentina is looking to boost its reserves and balance its budget.

Major trading partner

Argentine exports to China, its second-biggest trading partner, have nearly quadrupled since 2001, driven by soybeans, its biggest cash crop, as China aims to secure the food supply for its population of 1.4 billion.

Argentina’s exports to China are growing at a much faster rate than to its other main trading partners, Brazil and the United States, data reviewed by Reuters shows.

Argentina recorded its biggest trade deficit with China in its history last year at US$7.7 billion, surpassed only by its deficit with Brazil, which was US$8.6 billion in 2017. — Reuters