Argentina has become a testing ground for the Chinese yuan in trade and investment – MercoPress

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Argentina has become a testing ground for the Chinese yuan in trade and investment

Saturday, October 16, 2021 – 09:15 UTC

Argentina’s exports to China in the first seven months of 2021 reached US $ 3.35 billion, mainly grains and meat, while imports totaled a surplus of US $ 3.35 billion for Beijing.

Following several currency swaps through which China helped bolster Argentina’s depleted international reserves, President Alberto Fernandez’s administration stepped up relations with Beijing and, a year ago, authorized the transactions between the two countries in yuan.

Argentina’s central bank has not provided information on these transactions, but analysts estimate that most of the two-way trade that reached US $ 10.2 billion in the seven months of this year was done with the currency. Chinese.

When China is pushing for its currency to play a bigger role in global finance and trade, Argentina has in fact already become a testing ground for such aspiration. However, as a member of Mercosur, the initiative has so far been limited to Argentina.

With a country and its people accustomed to working and protecting their peso savings by converting them to U.S. dollars given Argentina’s endemic financial crises, it’s hard to see Argentines switching to yuan, among other reasons due to the insufficient liquidity and in the Americas, the greenback is king. . This should not, however, be an obstacle to international experimentation with the yuan in trade and finance, at least in countries in great difficulty.

According to Michel Alaby, consultant in international relations, Argentina needs the currency exchange mechanism to ensure its reserves, especially with a large trade deficit with China, and for Beijing it is a promising testing ground

Argentina’s exports to China in the first seven months of this year reached US $ 3.35 billion, mainly grains and meat, while imports totaled US $ 6.9 billion. According to Alaby & Asociados, the balance difference must be paid in US dollars, which means that China eventually received US $ 3.35 billion from Argentina.

In 2020, Argentina’s sales to China totaled US $ 10 billion out of a total of US $ 54 billion, and imports were equivalent to 20% of the US $ 42 billion of all overseas merchandise purchases.

Mercosur partner Brazil still remains Argentina’s largest trading partner, but China is increasingly difficult as it has multiplied global trade five times since 2003. And just as important, China and its currency have become the main source of funding for Argentina’s ambitious private equity program ranging from hydroelectric dams to trains and nuclear power plants.


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