Argentina sealed the deal on China’s Belt and Road Initiative. This will provide the country with more than 23 billion USD worth of investments across different sectors.
Alberto Fernandez, the president of Argentina, went to Beijing yesterday to participate in the opening ceremony of the Winter Olympics 2022. This was not just his only agenda for the three-day trip.
President Alberto Fernandez and Xi Jinping, the president of China, also conducted a bilateral meeting to discuss matters involving the economic cooperation and integration of Argentina into China’s Belt and Road Initiative. A memorandum of understanding has already been signed, and the deal between the two countries is expected to be finalized within the day.
The agreement between the two countries “guarantee financing for investments and works for more than 23.7 billion USD, generating a new milestone in the bilateral relationship that in the last 15 years has expanded and strengthened notably.”
The financing from China will be given to Argentina in two tranches of 14 billion USD and 9.7 billion USD. This will be made available to Argentina on the condition that they sign up for China’s Belt and Road Initiative.
Santiago Cafiero, the foreign minister of Argentina, says that working with China will provide Argentina with the appropriate financial resources that will enable the country to greatly increase local work. By doing so, the economy in Argentina will be strengthened, and more jobs will be available for Argentine citizens.
This funding from China will be used to execute hydropower and railway projects. Apart from that, these will be used to intensify cooperation in trade, industry, infrastructure, and efforts to combat the COVID-19 pandemic.
President Fernandez also said that he was willing to take part in China’s efforts to produce COVID-19 vaccines and would provide the support needed in doing this.
Not only that, cooperation between the two countries in the following sectors was also agreed upon: climate change, digital economy, space, technology, education, agriculture, public media, and nuclear energy.
In relation to agriculture, a five-year plan was initiated between the two countries. China is the second-largest economic partner of Argentina, with the country importing tons of Argentine soybeans and beef. Both countries are under a currency swap deal. This deal benefits Argentina since it can boost its foreign reserves, especially at a time when the country is facing dwindling reserves and is trying to revive the economy.
Xi Jinping assured officials that Argentina would also benefit from the development opportunities created by China. They will provide aid to the country so that its exports can be expanded and its industries can be upgraded.
What is China’s Belt and Road Initiative?
China’s Belt and Road Initiative, also referred to as the New Silk Road, was officially launched by Xi Jinping in 2013. This initiative was envisioned to utilize the strengths of China in financing and infrastructure construction to “build a broad community of shared interests” across Asia, Africa, and Latin America.
A vast network will be created throughout different countries in order to connect China with the rest of the world. This will involve the construction of railways, energy pipelines, highways, and border crossings that will pass through the mountainous former Soviet republics, Pakistan, India, and Southeast Asia.
China’s Belt and Road Initiative is not just limited to physical infrastructure. It also includes the construction of fifty special economic zones. These economic zones were planned to become similar to the Shenzhen Special Economic Zone, which was the first special economic zone in the country and was established in 1980.
Creating this network will increase the use of Chinese currency globally. It will also lead to the development of a wider and interdependent market for China, strengthen the country’s economic and political power, and provide a suitable environment for the creation of a high technology economy.
China’s Belt and Road Initiative will ultimately promote connectivity across different countries and allow China’s influence to reach more and more nations.
There are five cooperation priorities on which China’s Belt and Road Initiative is based. These are: policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds. This will promote collaboration across different levels of government and institutions. Similarly, it will reduce barriers related to investment and trade.
It was heavily supported by around 140 nations who signed up to become part of China’s Belt and Road Initiative. This will provide Beijing with opportunities to tap into new markets and further strengthen its global influence.
More than 20 billion USD has already been invested by firms as part of China’s Belt and Road Initiative, according to the Commerce Ministry of China.
Is China’s Belt and Road Initiative a Debt Trap?
Some opposition groups claim that China’s Belt and Road Initiative is a debt trap. The loans offered to developing countries under this initiative are unsustainable since there is no published detailed information about them.
Developing countries may still be encouraged by the huge amount of funding because it provides them with the resources to initiate major infrastructure projects and promote their economic growth. This will, however, leave them in debt to China, which can be used as leverage against them.
This claim comes after the incident of the Hambantota Port Development in Sri Lanka.
The government of Sri Lanka was not able to pay back the loans taken from China to fund the project. Because of this, the port was leased in 2017 to China for 99 years. This is beneficial for China because it gives them a strong presence in the Indian Ocean.
Nevertheless, both the Argentine and Chinese government look forward to working together for the benefit of their countries. The past 50 years of their diplomatic relations will continue in the years to come.
