Strong ties with China benefit Argentina, say experts

Source:Xinhua Published: 2015-12-2 16:14:53

Promoting strong ties with China can benefit Argentina's finance, trade and economy, experts said Tuesday.

In separate articles published in Argentine daily La Nacion, experts offered their insights into the advantages of continued close cooperation with China.

The announcement Monday that the International Monetary Fund (IMF) has included China's currency, the RMB, in its Special Drawing Rights (SDR) basket of currencies is big news not only for China, but also for Argentina, whose foreign currency reserves include a substantial amount of the RMB, financial expert Javier Blanco said.

In an article "An announcement that instills optimism into Macri's economic team," Blanco wrote that Federico Sturzenegger, future head of Argentina's central bank (BCRA) and Alfonso Prat-Gay, the incoming finance minister, as well as Mauricio Macri, Argentina's new president-elect, must be among those who most welcomed the IMF's decision.

The currency swap that funneled the RMB to Argentina's reserves, said Blanco, "provides the BCRA with the option of converting the portion of the reserves it maintains in RMB, if needed, to help calm the market."

Horacio Busanello, CEO of Argentine grain producer and exporter Los Grobo, meanwhile, underscored the potential of expanding trade with China and made some recommendations how Argentina can make the most of its ties with the Asian giant.

Like China, Argentina and other Latin American countries should think and plan for the long term, said Busanello, author of "China, the great challenge: Conqueror or strategic partner."

In an interview with La Nacion, Busanello said, "The cooperation agreements signed (with China) ... are a step in the right direction ... but I think what we lack is a long-term vision. China knows what it wants in the next 30 years. They tell you, you read it, they publish it. Does Argentina know what it wants in the next 30 years?"

"When you negotiate with a power that has 5,000 years of diplomacy (and) a super efficient bureaucracy that knows what it wants, and you negotiate with just a short-term perspective, you're unbalanced," Busanello said.

To strengthen its hand, Argentina should negotiate as part of a regional bloc, such as Mercosur, the author said.

Mercosur, or the Southern Common Market, is a sub-regional bloc composed of Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela.

Busanello added that "Mercosur provides you with a different stature and weight."

China's growing domestic market represents untapped trade potential for Argentina, especially in beef and dairy exports, but only if the South American country improves its position as a supplier, he said.

Busanello recommends approaching China's smaller regional markets first, such as "Shanghai and Beijing, two cities that together have more inhabitants than Argentina."

"If instead of mapping out a national strategy for China, you map out a local strategy, you gain the trust of the authorities and the Chinese consumers," he said.

No matter which approach is used, said Busanello, "the relationship with China should be part of a public-private (sector) effort."

Busanello's opinion was echoed by Juan Manuel Karg, a political expert at the University of Buenos Aires.

In a recent interview with Xinhua, Karg said "in the last 10 years, the China-Argentina ties have become strategic for both countries."

Emerging economies, such as China, he said, "are the ones that will be driving global growth over the next five decades."

Therefore, he said, Argentina must try to make achievements in promoting its ties with China.

Posted in: Diplomacy

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