China needed markets for its products, labour, and raw materials in order to maintain its national economy. Latin America needed funds to develop infrastructure, mining, telecommunications, tourism, agriculture and energy. In fewer places is this story of China’s engagement with the region over the past two decades truer than in Argentina, where it resembles a marriage of convenience.
It is by no means perfect, but such a relationship seemed necessary and envisaged some shared strategic development goals. Today, China is a fundamental ally for Argentina’s national economic growth. But at what cost?
The deficit of Argentina's trade balance with China in 2019 (US$)
On the side-lines of the 2018 G20 Summit in Buenos Aires, China and Argentina signed more than 30 agreements on energy, mining, agriculture, and transport worth almost US$22 billion, according to a recent analysis by our organisation Fundación Ambiente y Recursos Naturales (FARN).
The agreements, which included projects in seven provinces, deepened Argentina’s role in international trade as a supplier of raw agricultural materials and minerals such as lithium, all with a low level of added value.
Argentina’s trade balance with China shows a long-standing deficit, which reached US$2.2 billion in 2019. This is concerning given that it is the country’s second-largest trading partner after Brazil. But the complications and domestic implications of the Sino-Argentine agenda go well beyond the negative trade balance.
Environmental considerations were not included in the agreements signed by Argentina and China, our research found. This calls for concern, especially when Chinese financial institutions such as the China Development Bank do not have strong safeguards in loans. Meanwhile, the Argentine national environmental regulatory framework has weakened.
In order to attract investments, the agreements allow for the direct acquisition of contracts and preferential conditions for companies of Chinese origin. This means that approval procedures – environmental impact evaluations and citizen consultations, for example – can be simplified.
Some of the agreements did mention the importance of compliance. But there are still doubts whether Argentina is institutionally prepared for such deals, or whether the legislation provides an adequate framework to regulate them, not only in environmental terms but also with respect to transparency and access to information.
Argentina’s federal system means that provincial authorities are entrusted to implement national environmental policy. However, they have little power to call for tougher protections in the agreements with China.
Although it is clear that projects should take into account environmental risks and address the lack of civil society participation in the process, some could go ahead regardless. Failing to engage communities can foster tension and conflict, as the advancing dams on the Santa Cruz river in the southern Patagonia region attest.
There is currently a tendency to reverse civic protection standards in Latin America and Argentina is no exception. At the same time, traditional financial institutions have weakened safeguards and new Chinese-led development banks have emerged with little commitment to national regulatory frameworks.
China’s importance for Argentine political and commercial growth is as undeniable as the fact that, in this bilateral relationship, economic needs form the main structural basis while environmental and social issues seem merely decorative.