MercoPress. South Atlantic News Agency

China to help Argentina finance imports, ambassador says

The signing of this memorandum has created more favorable conditions for deepening cooperation between the two countries, Ambassador Zou Xiaoli said

China's Ambassador to Buenos Aires Tuesday said in an interview published by the local newspaper Ámbito that his country was willing to “promote financial support to Argentina for the payment of imports.”

China is currently the second-largest economy in the world, as well as Argentina's second trading partner. In that scenario and following Argentine President Alberto Fernández's recent trip to Beijing after which the country joined the Silk Road, Ambassador Zou Xiaoli addressed the new scenario:

“The Memorandum of Understanding for the joint construction of the Belt and Road signed by China and Argentina has marked a milestone in the history of the bilateral relationship and has been an encouraging development for cooperation between China and Latin America and the Caribbean. The objective is to explore the potential and expand the space for cooperation to achieve common development and shared prosperity. The signing of this memorandum has created more favorable conditions for deepening cooperation between the two countries. It also aims to define infrastructure construction as the primary basis for cooperation to jointly promote the construction of national and regional trunk roads, opening up maritime-rail intermodal transport channels, [thus] increasing maritime routes and frequencies, as well as expanding collaboration in civil aviation. All of this focuses on trade and investment facilitation to build an enabling business environment, seeks to increase investments, undertake collaboration in production chains in agriculture, forestry, livestock, and fisheries, advance cooperation in hydroelectric, wind, solar, nuclear, and other clean energies, and strengthen collaboration in emerging sectors such as information technology, space technology, biology, environmental protection, oceanography, and tourism.”

The diplomat also explained that ”financial support for the payment of Chinese exports to Argentina will also be promoted. SWAP cooperation will be intensified in order to encourage greater use of national currencies in bilateral trade and investment to facilitate companies of both countries to reduce transaction costs as well as exchange rate risks, thus creating a good policy framework promoting the use of national currencies, and, in turn, encouraging financial institutions responsible for Renminbi (RMB) settlement operations in Argentina to play a greater role.”

Financing is one of the main hurdles facing the Fernández administration. In the first two months of 2022, foreign trade yielded a cash surplus of US$ 2,007 million, which can be explained because there were lower payments abroad after changes introduced by the Federal Administration of Public Revenues (AFIP) in February to the way of measuring the Economic Capacity Coefficient (CEF) of the companies, leading AFIP to slow down authorizations of access to foreign currency.

In March, the Central Bank announced it was joining the import authorization process together with AFIP. According to the Central Bank's Exchange Balance, in the first two months of this year, the surplus in the exchange of goods was reduced by 20% in relation to the same period of last year when it reached US$ 2,496 million, which is in line with analysts' estimates for 2022.

Consultants Abeceb foresee a trade balance of around US$ 12 billion for 2022, 18% below 2021 figures, with “exports slightly above those of 2021 and imports growing at a higher rate.”

(Source: Ámbito)