On September 16, 2011, the foreign press in Argentina had the unprecedented opportunity to interview a Chinese government official. Mr. Yang Shidi, the Counsellor for Commercial and Business Affairs from the Chinese Embassy in Buenos Aires spoke to members of Argentina´s Foreign Correspondent Association (ACERA) and graciously accepted a round of questions from journalists representing international media. According to Dr. Ricardo Rivas, acting President of ACERA, this was the first time in 26 years that a Chinese government official in Argentina has agreed to a meeting with the foreign press.
Mr. Shidi gave his talk quite eloquently in Spanish, only stumbling when it came time to translate investment amounts. During his discourse, he highlighted the 40 years of an ongoing diplomatic relationship between China and Argentina and its important commercial and business dimensions. He explained that the bilateral relationship has been sustained over time despite geographic distance thanks to the development of activities based on mutual respect and mutual benefit. Within the framework of what he describes as a “strategic relationship,” the Chinese diplomat claimed that the economic and commercial activities have benefited both countries. China is now Argentina’s second most important trading partner with bilateral commerce reaching $12.9 billion in 2010, up 12 percent from the year prior. And Argentina is China´s fourth-largest trading partner in Latin America.
China is moving beyond trade and ramping up investments in Argentina. According to Argentinean government figures (albeit a bit questionable these days), Chinese investment in the country as of December 2010 was estimated at $15 billion over the prior three years. China has been focused on Argentina’s petrochemical and agricultural sectors but is also making significant investments in telecommunications, mining, finance, transport, energy, and manufacturing.
Early this year, Occidental Petroleum Corp. sold its Argentinean assets to China Petroleum & Chemical Corp. for $12 billion. China's ICBC (Industrial & Commercial Bank of China), one of the world’s biggest lenders, will soon buy the Argentine branch of South Africa's Standard Bank for up to $800 million. There is currently another deal on the table whereby BP could sell its holdings of Argentine crude producer Pan American Energy worth $7.1 billion to Chinese oil producer Cnooc Ltd. Moreover, the Chinese state company, Heilongjiang Beidahuang Nongken Group, has secured IDB funding to invest $1.5 billion in 300,000 hectares of unused, arid farmland in Rio Negro Province, a 20-year deal that will guarantee food exports to the Asian giant. The majority of funds will go to a sophisticated irrigation system to make the lands cultivable, with other money going toward necessary infrastructure to facilitate export. The Chinese are also planning to invest $2.6 billion to finance the purchase of Chinese railway equipment and technology to resuscitate Argentina's abandoned trains and rails.
The greatest challenge for China in its dealings with Argentina, explained Mr. Shidi, is the lack of mutual understanding owed to culture, distance and language. One of the key priorities for the Chinese government, therefore, is to strengthen understanding on many levels, especially through reciprocal visits at all levels of government. In fact, President Cristina Fernández went to China on an official visit in July 2011; the Chinese minister of foreign affairs visited Argentina in September this year; and the Chinese economy minister has visited twice and is planning another trip to Argentina in the near future, according to the embassy official. The commercial and agricultural ministers have also visited recently. During these official visits, cooperative agreements have been signed in a plethora of areas including agriculture and finance. Most visits are accompanied by eager business delegations.
In July 2011, Argentina and China conducted their eighth bilateral commercial exchange meeting whereby officials exchange opinions and discuss issues affecting commercial relations. The Chinese official expressed the view that both China and Argentina are important emerging countries in the world that share significant future opportunity. Therefore, he recommended that they deal with economic relations from a strategic viewpoint and with a long-term vision. The Chinese, he says, are willing to make the effort to improve cooperation with Argentina to ensure lasting, mutual benefit.
The Q&A period was infinitely more interesting than the diplomat’s formal presentation. While the questions were more provocative than the answers, some of the most interesting responses were heard in relation to questions about China´s demand for primary products in light of the current global economic downturn, China´s unique investment model in Rio Negro Province and China´s developmental assistance to clean up the infamously dirty Riachuelo River in Buenos Aires. Mr. Shidi recognized that the 2008 crisis had affected Chinese demand in 2010 but argued that its orders for agricultural products have already bounced back to 2009 levels. China, he claimed, is not concerned about the current economic uncertainty and its demand remains strong. According to the diplomat, China has no intention of diminishing its current level of purchases from Argentina. With regards to the aforementioned Rio Negro investment, the Chinese official said that it could become a model for Chinese investments in the country.
This is a very clever plan which circumvents any problems associated with pending legislation in the country that could limit foreigners´ from purchasing vast swaths of land. With regards to the Riachuelo water basin, one of the world´s smelliest and most polluted, Argentina is in talks with state-owned China Communications Construction Company Limited to lead the decades-old, floundering government clean-up project. The Chinese diplomat held up this effort to show that China´s engagement in Argentina is not just self-serving, but, rather, China is concerned for Argentina´s environmental and social development as well.
Perhaps the most remarkable thing about the Chinese official’s remarks was that there was nothing remarkable. We have grown used to the idea that China is an active, increasingly relevant player in the country, and in the South American sub-region for that matter. It remains to be seen if China will be able to bridge the cultural gap and allay fears of an asymmetrical relationship defined principally by primary product extraction and cheap manufacturing imports. Chinese investments of late appear to send the message that it is indeed interested in a more strategic, long-term relationship with Argentina.
*Janie Hulse Najenson is a contributing blogger to AQ Online. She is an analyst based in Buenos Aires, Argentina and the editor and producer of Insights from the Field, a quarterly publication promoting perspectives from within Latin America on politico-economic and security issues affecting the region.