29/05/2020

The importance of China in Argentina's development

When we thought that the international system could not become more complex and uncertain, 2020 “surprised” us simultaneously with a health crisis and a global economic recession. Against this challenging global scenario, in which the trends that already characterized the pre-pandemic world seem to accelerate, calibrating the variables of our foreign policy that contribute to the development in a proper manner emerges as one of the great national priorities. The role of the strategic relationship with China is, without a doubt, a central axis of this task.

Big investments in banking, energy, telecommunications, the agro-industry, infrastructure and cargo transportation sectors; financial SWAPS; joint ventures and business associations for the food export, services and agricultural technology; air connectivity and tourism; exploitation of mining resources such as lithium and gold; development of solar parks and hydroelectric dams; increasing nuclear and space cooperation. The volume and density of the agenda that Argentina built during the last decades with Beijing, both from the public and the private sectors, is an asset in our external strategy that we must put in value.

In terms of trade ties, investments and finances, as well as political and macroeconomic cooperation in different global governance schemes, the strategic relevance of our relationship with China is in a situation of relative parity comparing to the one we have with other major extra-regional partners, including the United States, the European Union and Japan. This situation offers us an acceptably balanced starting point, a certain room for maneuver and more alternatives in the future regarding our options for international insertion.

Let us briefly put into context the (re)emergence of China as a world power. The nineteenth century of colonial humiliation and isolation of Mao's China until the 1970s are very much present in Beijing’s contemporary strategic thinking. Together with the lessons accumulated over four decades since Deng Xiaoping's reforms and with almost two decades of experience after formally joining the World Trade Organization, these are elements that systematically nourish China’s external actions. The idea of ​​a "strong China" has become a reality, where a worldview resulting from the ancient alchemy of cultural and philosophical ideas and principles, such as Confucianism, Marxism-Leninism, Maoism, and capitalism, converge.

Thanks to its economic weight and its importance as a global investor and as a global productive, commercial and financial center, for the first time in history these new Chinese values ​​are of importance to the international community.

Beijing's new stage as a more assertive global actor has been characterized in recent years by the deployment of ambitious initiatives that symbolize the Chinese way of understanding development. The paradigmatic example is the Belt and Road Initiative, which implies the consolidation of its geo-economic space through the internationalization of companies and the Chinese currency. It is complemented by plans such as "Made in China 2025", whose goals aim to redirect the economy from labor-intensive manufacturing to high-tech industries and knowledge-based services. The low-cost manufacturing export model that fueled the extraordinary growth "at Chinese rates" depleted several years ago and is an outdated postcard of the Asian giant's international economic profile.

Thus, as the debates on decoupling and deglobalization scenarios continue as a result of the Sino-American strategic competition, the scope and meanings of "globalization with Chinese characteristics" merit a careful analysis of what it represents for Argentina in terms of development opportunities.

In a context of reconfiguring the rules of the game and global power transition like the one we live in, the more options we are able to explore and while it is still possible to do so, the greater the potential future profits. And meanwhile, the short-term situation would seem to present some windows of opportunity to deepen the economic link with China vis a vis a set of interrelated structural and conjunctural dynamics.

On the one hand, China's great strategic challenge is and will remain to be for a long time to supply a growing demand for food with scarce resources. Beijing must guarantee food security for 20% of the world's population with just the 7% of freshwater resources and the 10% of the planet's arable area. In this sense, consolidating itself as a reliable partner for the provision of raw materials, food and agricultural technology, the Argentine agribusiness ecosystem is positioned to become the main platform to multiply partnerships, trade and bilateral investments.

Likewise, and closely linked to the above, Argentina competes with countries that, due to the political impact of the pandemic, are having friction with Beijing, which may enhance the structural situation of complementarity between Argentina and China as a net food exporter and importer, respectively. A change in political attitudes and a tightening of the diplomatic tone of China are beginning to show, as a result of inquiries from the part of the United States, Brazil and Australia, which resulted in impacts on the quality of the bilateral relationship and direct trade effects. These 3 countries, together with Canada, are responsible for supplying more than half of the Asian giant's agri-food purchases.

To conclude, a reflection on the enormous structural asymmetries always present in this debate. In his book “Skin in the game”, Nassim Taleb approaches the problem from a perspective of political and business ethics, affirming that "it may not be ethically required, but the most effective, shame-free policy is maximal transparency, even transparency of intentions".. In that regard, China has been consistent over the past few years. In its White Papers of 2008 and 2016 regarding our region, as well as with the proposal to explore the impact of an agreement with Mercosur, the Asian giant has been explicit about its interests and intentions. The questions that remain unanswered are if we know what we want from China and if we will be able to coordinate a common position with our neighbors, with whom we can add critical mass and promote common interests, which will thus be better served than if we continue acting individually to achieve relative advantages in this context of strong asymmetry.

Norberto Pontiroli is an internationalist, founding member and Secretary of the Argentina Global Foundation, and Director of the Latin American Committee of the Argentine Council for International Relations (CARI).