Despite Argentina’s assertions to the contrary, the bailout from the United States government seems to be contingent upon certain conditions: they are seeking to eliminate China’s presence in Argentina. However, given Argentina’s substantial annual exports to China and the potential for significant infrastructure projects, one must consider whether President Javier Milei would genuinely sever these ties—and whether such a decision would be financially viable. This dispute is under careful observation in the region: China ranks as a principal trading partner for numerous Latin American nations, with many of these countries engaging in both commercial and military cooperation agreements with Beijing. The U.S. government is currently advocating for a shift in that direction: Treasury Secretary Scott Bessent remarked following his initial meeting with Milei that the United States is opposed to Latin American nations engaging in mining rights agreements in exchange for aid from China, similar to practices observed in Africa — a description that China has firmly rejected. U.S. President Donald Trump has characterized Milei’s Argentina as a “beacon” for the region, raising inquiries regarding potential implications for its neighboring countries.
The financial support package from the U.S. aims to prevent a financial crisis in Argentina as the country approaches the mid-term elections on October 26. The U.S. has intervened directly in Argentina’s currency market to support the peso; however, specific details regarding the bailout continue to be unclear. Trump and Bessent indicated this week that the backing would hinge on Milei’s party achieving favorable outcomes in the national mid-terms — although Bessent subsequently moderated this stance, stating that Argentina would merely need to implement “good policies.” During a lunch meeting in Washington on Tuesday, relations with China were a significant topic of discussion between Milei and Trump. “You can engage in some trade, but it is certainly inadvisable to exceed that,” Trump stated. “Certainly, [they] shouldn’t engage in any military-related activities with China.” Should that be the case, it would indeed be a source of considerable discontent for me. Recently, U.S. Treasury Secretary Scott Bessent remarked that Milei was “committed to getting China out of Argentina.” However, he clarified on Tuesday that his comments pertained specifically to “ports, military bases, observation facilities that have been created in Argentina” and emphasized that U.S. assistance “is not predicated on” the closure of the country’s US$18.5 billion currency swap with China.
The Chinese embassy in Argentina criticized Bessent’s remarks in a public statement, asserting that his comments reflect the “Cold War mentality” of certain U.S. officials “who appear to function solely with the intention of confronting and intervening in the affairs of other sovereign nations.” China ranks as Argentina’s second-largest trade partner, following Brazil, and serves as the foremost supplier of imports to Argentina, while also being the primary destination for Argentine beef and soy exports. “Eighty percent of Argentine meat exports goes to China,” stated Alejandra Conconi. Significant Chinese initiatives in Argentina encompass the development of two hydroelectric dams in Santa Cruz, which have remained inactive since 2020, alongside a contract for the construction of Atucha III, poised to be Argentina’s fourth nuclear power facility. China possesses a scientific deep space observation facility located in Neuquén province, a fact that has led skeptics to assert that it operates under a veil of hermetic secrecy. Currently, there are no Chinese military bases or ports established in Argentina, nor are there any plans for such developments at this time.
The deterioration in relations did not originate with Trump. Instead, it seems to be grounded in Milei’s personal perspective: the president made provocative statements regarding the Asian powerhouse prior to his arrival at the Casa Rosada. “Not only will I not trade with China, I will not trade with any communist,” Milei stated in September 2023, following his victory in the presidential primaries. Relations with China have deteriorated since Milei assumed the presidency, as noted by Patricio Giusto. However, he remarked that, considering the president’s earlier statements, “it could have been worse.” Despite the anti-communist rhetoric, Milei reversed his stance in mid-2024, describing China as “a very interesting trade partner” during an interview following the negotiation of the currency swap renewal, which had been suspended when he assumed office. Two months later, Milei engaged with Chinese President Xi Jinping for the first time at the G20 summit in Brazil. The discussion centered on fostering constructive cooperation among the nations and enhancing their commercial relationships. While there have been no significant new economic announcements, several trade agreements have been signed. These include the resumption of Argentine poultry exports, the initiation of nut exports, and the establishment of a crucial tax agreement with China.
One of the primary areas of focus has been the completion of the two dam projects, which have faced delays attributed to insufficient funding from the Argentine side. The Milei administration has commenced discussions aimed at resuming projects; however, tangible progress remains elusive at this stage. “If Argentina now states, ‘We are withdrawing from this project, we have no interest,’ it is likely that China will opt not to invest any further capital in other initiatives,” Giusto remarked. Will Milei sever ties with China in favor of Trump? “It is challenging to envision how that would be implemented in practical terms,” Giusto stated. China serves as a significant contributor of capital across various industries, including energy, railroads, lithium, and mining. “For Argentina to drop any of them right now would be absurd.” Conconi asserted that Bessent and Trump’s remarks were designed to “intimidate” Chinese investors; however, it is highly improbable that China will cease its investments in Argentina. Argentina is unable to function independently of China. “Without its imports, the national industry would not function,” she stated. China serves as a significant provider of agricultural and construction machinery, as well as industrial equipment such as motors and electrical transformers, solar panels, trucks, and components for trains.
Conconi posits that any prospective actions by Milei to reduce commercial ties with China are unlikely to halt current investments; however, they “could decelerate them or place new agreements and investments on hold.” China is not expected to unilaterally breach any contracts; however, it would likely respond with retaliation if it perceives an attack, Giusto added. “Could Argentina find a method to impede Chinese investments?” Indeed, one must consider the potential benefits. He noted that possible retaliatory measures could encompass the termination of contracts related to the dams and the space observatory, in addition to implications for trade. “Would the U.S. substitute all of that? Will they initiate purchases of soy and beef from us?” Giusto asserts that Argentina ought to maintain its commercial relations with both China and the U.S., while ensuring that Milei’s personal opinions remain separate from these dealings. Most countries prioritize practical considerations over ideology. In this instance, there exists no strategic approach. Milei is currently seeking assistance driven by necessity and desperation. Giusto and Conconi highlighted that engagement with China is not solely the responsibility of Argentina’s national government: rare earth minerals and other natural resources are under the jurisdiction of the provinces, not the national government, and provincial governors are likely to seek to safeguard any Chinese investments and projects in these sectors. Conconi noted that governors across the political spectrum are eager to engage in cooperation with China. “The outcome hinges on the decisions made by Milei,” Giusto stated. “Should he choose to expel China from Argentina, or impose restrictions or a ban on China, it is likely that we would witness a response that could surpass mere commercial retaliation.”