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July 27, 2017
Friday, May 19, 2017

Slow boat to China

Our editorial a fortnight ago on President Mauricio Macri’s Washington encounter with his United States colleague Donald Trump concluded by saying that Argentina needed to find a balance between the subservience of the 1990s and the gratuitous hostility of the Kirchnerite administrations — while that latter hostility was certainly not extended to Beijing, much the same could now be said about Macri’s trip to China in terms of striking a balance.

The media coverage of that visit tends to fall into two extremes. The mainstream media largely gush over the mega-investments promised since 2014 (if not 2004), the vast Chinese market of 1.3 million consumers and even the prospect of South-East Asian countries joining the party. This optimistic vision overlooks such inconvenient facts as one of the biggest Chinese investment deals (the Santa Cruz hydro-electric dams agreement) containing a cross-default clause whereby in the event of cancellation, Chinese credit for the Belgrano railway project dries up and the reality is that these dams are halted by a Supreme Court ruling ordering an environmental impact study —the bullish view of the Chinese market equally ignores the fact that Argentina imports from the world’s leading industrial power more than double the US$5 billion dollars or so of largely primary exports while the excitement about South-East Asia forgets that these countries are much stronger candidates for Chinese outsourcing than distant and costly Argentina. Yet opposition attempts to belittle the whole visit with the somewhat racist phrase of “a tall Chinese story” seeking distraction from domestic problems with entirely imaginary overseas gains are completely wrong — if only because the previous Kirchnerite administrations did much to boost the relationship with China (with Macri’s own father as one of their spearheads). Indeed if there is such a thing as a “state policy” in Argentina, it should be that saying no to China is simply not an option, especially with US protectionist attitudes. Would Macri’s critics be happier if he echoed Trump’s xenophobic rhetoric towards the main US rival (not entirely borne out in practice)?

Macri’s efforts to reconnect Argentina to the world are probably the most positive aspect of his administration yet in his obsessive quest for investments, he might ask himself why he is asking a country with only two-thirds of Argentina’s per capita income instead of looking to domestic savings and why that nation has over US$3 trillion in foreign currency reserves as against US$50 billion in the Central Bank here. Perhaps Macri can gain as much from his Chinese visit by simply looking and learning instead of chasing deals.

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