The diplomatic pivot of the Javier Milei administration towards Washington presents a strategic opportunity for US President Donald Trump to begin diminishing China’s influence in Latin America. Scott Bessent, serving as Treasury Secretary under Trump, articulated this within the framework of mobilizing financial support: “Milei is committed to getting China out of Argentina,” he stated in an interview. Data indicates that the Asian superpower’s investment in this country amounts to US$23.345 billion, with its strategic significance surpassing its numerical value and being allocated across sectors where the United States seeks to establish a presence. Beijing has not only provided financing but has also engaged in the construction and acquisition of assets in sectors that are currently driving Argentina’s recovery, ranging from the Vaca Muerta shale formation in Patagonia to lithium in the northern regions of the country. Nobody believes that the Trump administration will request disinvestment; rather, it aims at “avoiding China making new investments in areas which might be sensitive for US geopolitical interests,” commented international trade expert Marcelo Elizondo. The primary challenge in “removing China” from Argentina lies in the fact that the Asian powerhouse functions more as a lender of last resort rather than a conventional investor. Of that US$23 billion, approximately US$10.6 billion is allocated for financing essential infrastructure projects, such as the rehabilitation of the Belgrano Cargas freight line and vital hydroelectric dams located in the south, as indicated in a document from the Sino-Chinese Chamber of Commerce, which Perfil has reviewed. Since the commencement of the Milei administration, a noticeable cooling of relations has been observed, evidenced by presidential statements and the missteps of officials such as former foreign minister Diana Mondino last year. Consequently, numerous financed projects with China are currently on hold. However, severing the connections entirely would necessitate seeking a new lender prepared to invest billions into projects that the White House has traditionally exhibited little enthusiasm for funding “bricks.”
The complexity of the equation increases when considering the characteristics of strategic resources. China has allocated over US$8.1 billion for the direct acquisition of firms, securing significant stakes in oil companies such as Bridas as well as in gold and lithium resources. Although the United States is lagging in the competition for essential minerals, firms such as Ganfeng Lithium have established their facilities and are already engaged in exports. Of the total US$23.345 billion, approximately US$4.6435 billion pertains to authentic greenfield projects. Dispelling the notion that primary products hold paramount significance, recent investments are predominantly directed towards industrial facilities (US$1.466 billion) and wind energy (US$942 million), with lithium now occupying a tertiary position in terms of construction expenditure. Notably, the Ganfeng Lithium plant in Salta, a US$600 million investment, has already commenced operations and is exporting, while the United States remains in deliberations regarding its entry into the sector. Nevertheless, the examination of the status of these 21 projects reveals that while 10 of them are fully operational – including the US$500 million allocated to Loma Blanca wind farms – the list also features ‘white elephants.’ The megaproject valued at US$1.37 billion for an agrichemical plant and port continues to be mired in administrative uncertainty, while agreements concerning the Portezuelo del Viento dam, estimated at US$712 million, have yet to be finalized. Additionally, instances such as Ambassador Fueguina SA have resulted in bankruptcy.
Among the array of new initiatives, approximately US$2.73 billion, representing nearly 60 percent, constitutes authentic Foreign Direct Investment, wherein Chinese capital undertakes the commercial risk and property rights, as observed in lithium projects and manufacturing facilities. The remaining amount, approximately US$1.914 billion, pertains to turnkey contracts, a framework in which China provides the technology, builds the infrastructure—primarily wind farms and dams—and delivers the completed project, thereby securing the sale of their facilities without being inherently linked to the long-term operational risks associated with Argentina. Another Excel column to which Perfil had access, financing, indicates a greater significance. Of the US$10.616 billion loaned by Chinese banks, nearly 95 percent is concentrated in just two key projects that shape the national logistical and energy framework: the hydroelectric dams in Santa Cruz and the revitalization of freight trains. Approximately US$8 billion has been allocated to the hydroelectric dams Néstor Kirchner and Jorge Cepernic, projects that are currently classified as “under construction,” yet in practice, they have been halted since the onset of the libertarian administration. Their cancellation would signify a technical default on the contracts and result in two incomplete concrete dikes in Patagonia lacking any functional purpose. While smaller initiatives such as the expansion of the Gran Rosario port, costing US$27 million, are already categorized as “completed,” the larger projects continue to be in progress. The situation regarding Belgrano Cargas freight, with an investment of US$2.099 billion that is currently operational, illustrates that Argentina’s northern railway system is already utilizing tracks funded by Beijing. Disabling this scheme would pose a significant challenge for financial engineering.
The direct acquisition of assets in Argentina amounts to approximately US$8.117 billion, allocated solely for the purpose of obtaining shares in the control of firms engaged in non-renewable resources. The allocation is evident: approximately 75 percent (around US$6.05 billion) was directed towards the fossil fuel sector, while mining activities, specifically gold and lithium, attracted an additional US$2 billion. In this context, neither the projects are funded nor the facilities built from the ground up – the essential resource is acquired, as evidenced payment of US$3.1 billion for a 50% stake in Bridas Corp, or Shandong Gold’s remittance of US$1.105 billion to partner with Barrick in Veladero. Nevertheless, certain investments did not endure over time. The classic example is SINOPEC, which – after injecting US$2.45 billion for shares of Occidental Petroleum – ultimately divested its holdings to the local CGC, resulting in a significant disinvestment. Additionally, one must consider the situation surrounding the Sierra Grande mine, an acquisition valued at US$442.5 million that has been stagnant since 2016. The focal point of Chinese investment is found in Patagonia, particularly in the province of Santa Cruz, home to the Néstor Kirchner and Jorge Cepernic dams, which have transformed the region into the largest beneficiary of funding from Beijing. The Northwest has established itself as Argentina’s second strategic hub, driven by lithium and solar energy resources. Between Salta and Jujuy, initiatives such as the Ganfeng Lithium plants and the Caucharí solar park contribute investments exceeding US$1.2 billion, which are crucial for the financial health of the provinces. Mendoza, with oil and mining ventures exceeding US$3.7 billion, and Tierra del Fuego, featuring an electronics hub and petrochemical projects valued at US$1.5 billion, ultimately rely on capital flowing into the nation governed by Xi Jinping. Eliminating China from the equation would certainly suggest the cessation of funding for Patagonia’s most significant public projects, simultaneously stalling the export surge from the northern region.