December 2018. Argentina is organizing the G20 in the middle of a trade war and at a critical moment of its own crisis, which by then is already general in all semicolonial countries.China announces investments of 500 million and a massive swap in yuans to help stabilize the exchange risk of Argentine exports.
September 2020. The crisis has accelerated globally with the covid pandemic. Alberto Fernández promises in national TV a fast recovery based on a solid bilateral trade with China and the complementarity of both economies.
Between both scenes, China had become Argentina’s main trading partner. Soybeans, which ensure the country a positive trade balance even during the worst of the crisis, were joined by investment projects in pork, nuclear energy, lemons, a train to the Vaca Muerta oil field, public works and energy, etc.
Today, China accounts for 85% of Argentina’s meat exports, 63% of the total foreign currency coming in from foreign trade and 45% of the Central Bank’s reserves. This is called dependence. As a whole, trade and investment are not the largest of China’s foreign trade. Not even the volume of sales competes with that of Brazil. But, given the level of dependence generated in such a short time, Argentina has become China’s main strategic ally in the Americas. The consecration of this new status has been the incorporation of the country into the new Silk Road, the Belt and Road project that articulates Chinese imperialist development abroad, to form a integrated economic association.
The integration of Argentina, as a strategic link in the Southern Cone, to the flagship project of the Silk Road and Belt with which China seeks to interconnect its nation with much of the map. A train linking Vaca Muerta to the Atlantic. Financial support. The agreement to multiply pork exports, which is still on course despite environmentalist questions. Access to the vaccine against Covid-19. All of this and more is what China wants and offers, and a large part of it was discussed between Presidents Alberto Fernández and Xi Jinping early in Olivos, when the day on the other side of the world culminated
Fernández’s difficult balancing act
It is not lost on anyone that in the same way that complementarity means dependence, integration means subordination in the development of national capital… and international political alignment. And that, in a context of aggravation of imperialist tensions and tendencies to the formation of blocs like the present one, means getting into a zone of conflict.
To begin with the EU. With a group of countries, led by France, Ireland and Finland, determined to question the ratification of the trade agreement with Mercosur and an increasingly aggressive Germany against Brazil, Argentina is playing quietly so that the agreement is remoulded to leave out part of Brazilian agribusiness or even reach a bilateral or regional agreement apart from Brazil. But we must not forget that the anti-treaty argument in Europe is a hypocritical environmentalism of European cattle producers. Even the British, who are displaced from Vaca Muerta by the Chinese, made a campaign against the Chinese pork agreement. So Fernández and Solá have decided to go extremely carefully. Result: the agreement for pig production with Chinese capital has been delayed until November.
But where the balance has become lopsided has been in relation to Venezuela. Argentina had been releasing dead weight with the Maduro regime and used its incorporation into the group of Lima as a way to placate the United States. But Venezuela is the destination of quite a few Chinese investments in the irregular mining and energy industry. So when the human rights report prepared under Bachelet’s leadership was presented at the OAS, which denounced crimes against humanity committed by the regime, the Argentinean ambassador came to the rescue, relativizing the crimes because of the international harassment… in order to support at the same time the report and a resolution promoted by Russia and China that condemned the US blockade. A very difficult, uncomfortable and fragile balance.
Yuanization: first Argentina, then the rest of the world
China wants to turn the yuan into an international reserve and payment currency, displacing the dollar and the euro. Achieving this would mean achieving the capacity to create a global economic bloc… and a source of income for the state, extra profits for its capital and global advantages for its companies, monopolized for long decades by the US and its currency.
With an endemic capital flight as in all semi-colonial countries, the BCRA (Central Bank of the Republic of Argentina) does not have the power to control the value of the peso. When it threatens to take less action to increase the volatility of prices and therefore increase the risk of speculators, the only message it manages to convey is that it is running out of reserves … so that the rush to sell pesos and buy dollars increases.
But the currency is fundamental for a state and a national Argentine capital living, in fact, from redistributing the results of its export sector. So the SWAP – a price guarantee for the exchange of the peso into yuans, up to a given amount – agreed by Macri with China, is implemented and extended. The government spurs on by giving tax exemptions to export and import operations with China (it is typical of semi-colonial countries to have high taxes and duties on both imports and exports) and by creating financial tools to make future sales at yuan prices. And finally, the new scheme is launched. Argentina is the first American country to set foot into China’s monetary orbit.
Argenchina and the workers
The government will no doubt peddle that gaining tools to stabilize the exchange rate will favor workers by reducing the continued erosion of the value of their wages. This is not true. The change of imperialist boss can give Argentine capital some peace, but it does not solve its problem, which is structural and does not depend on either the structure of ownership (it would be the same if everything were nationalized, as seen in Cuba) or the currency. In fact, chinification may bring for some time a certain truce to the foreign exchange market, but it has not changed the tendency to pauperization suffered by the workers. In 2019, poverty went from 35 to 37% of the population, and the average per capita family income of the richest 10% went from being 16 times more than that of the poorest 10%, to 19 times more than that of the poorest 10%. That was before the pandemic. Afterwards… even the Ministry of Social Development takes the disaster for granted as something self-evident. Even Pérsico, the Popular Economy’s pope, celebrating poverty, changa and maximum precariousness, has come out of the closet again.
And there is more of it, even less visible but not less dangerous. At the global level we are beyond the trade war. The US openly attacks the technological and trade bases of China’s development and encourages its allies to confront China while China threatens the US with war if it crosses certain red lines.
This tension is already being militarized in South America since pro-Sur’s constitution. And it can only get worse if Argentina consolidates itself as China’s main regional ally. The spectre of continental war, although it is sometimes fading, is still on the horizon and points to all that capitalism -whether of Chinese, American, European or, if necessary, autarkic allegiance- can offer the working class: to sacrifice workers to death.