What it’s costing China: the giant is buying less and less from Argentina and the accumulated deficit in recent years already exceeds IMF debt

Alberto Fernandez and Xi Jinping

The difficulties experienced by the government in increasing the international reserves of the Central Bank in the period of greater liquidation of foreign currency from the countryside and the agri-food sector, the main contributors of the dollar to Argentina, recently led to Christina Kirchner To denounce an “import festival” supposedly the economic team would let him escape.

But beyond the vice president’s complaint, That the Central Bank itself took it upon itself to refute thisNor the government coalition sector that is subject to the President of the Republic Alberto Fernandez Nor the Kirchennes – caught in a conflict that increases political uncertainty and risks to the country – They note Argentina’s shrinking trade surplus in recent months, due to increased energy imports, a sharp drop in sales to China and the consequent increase in bilateral deficits with that country.

This decline occurred despite an increase in the prices of raw materials, a key element of Argentine sales, at least in part due to the “Covid 0” policy and restrictions ordered by Beijing, which reduced operations in the port of Shanghai, the busiest. In the world, the cause of congestion remains.

Between April 2020 and April 2022, Indec recently determined, freight rates for interchange with China became at least 301%, against 85% which increased freight rates for trade with the European Union, 44% of trade with North America and 32% with Mercosur.

Beijing’s reservation policy began in March and had rapid effects on Argentine foreign trade: sales to China, in value terms, fell 21% in April and 24% in May. In this way, the Indec report of the Argentinean Mercantile Exchange identifies, In the first five months of the year, sales to China were lower than in the same period in 2021 and the bilateral deficit amounted to $4,873 million.It is much higher than the deficit that Argentina has with other trading partners, such as Brazil (1,647 million), the United States (1,022 million), Germany (801 million) and Japan (198 million).

The deficit with China by 33% exceeded the total deficit with those four countries and by 52% the surplus of Argentina in its exchanges with the whole world. Although the red duo has increased in recent months, it is a regular in exchange with the Asian giant. It was $8,535 million in the twelve months to May, and $32,916 million since January 2017, a period in which Argentina had a total surplus of $34,469 million, as shown in one of the attached charts. .

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If the appearance extends to 2013, which covers 9 years and 5 months, the red balance accumulated by Argentina in exchange with China is 56,901 million US dollars, almost 30% more than the debt contracted during the Mauritius Macri government with the IMF International.

Trade in goods and credit are of course two different concepts. Imports from China, particularly capital parts, parts and equipment, are important to domestic economic activity, as are imports of the same items from other countries. But comparing the numbers measures the importance of the deficit that he and Argentina had in the exchange with China.

China, in turn, is a major financier, through credit for some of the largest public works being carried out in the country, such as dams on the Santa Cruz River. It also represents support for the Central Bank’s reserves, which as of last Wednesday amounted to $38.231 million in terms of “total” value.

Alberto Fernandez and Xi Jinping, during the President's visit to China last February
Alberto Fernandez and Xi Jinping, during the President’s visit to China last February

These reserves include about 21.5 billion US dollars of renminbi, the Chinese currency, the product of the “currency swap” that was initially managed during the administration Martin Redrado It was extended by about 3,500 million last February on the occasion of the President’s visit Alberto Fernandez to Beijing, where he held a bilateral meeting with the Chinese President, Xi Jinping.

Chile buys more than China

The truth is As a result of the collapse in Chinese purchases from Argentina in the past two months, in the first five months of the year, Argentine sales of the Asian giant fell 0.2% compared to the same period in 2021 and so far this year Argentina has exported more to Chile (USD 2,224 million) than China (2,211 million USD), which absorbed only 6.2% of Argentina’s sales (just under 1 in 16 dollars), but remained the main supplier for our country, with a share of 21.6% (more than 1 in 5) of Argentina’s purchases.

A screenshot from the Marine Traffic website showing today's traffic in the Shanghai port area (Credit: Marine Traffic)
A screenshot from the Marine Traffic website showing today’s traffic in the Shanghai port area (Credit: Marine Traffic)

at the end of April, In a report on the effects of confinement and the Chinese policy of Covid 0 on ArgentinaAnd the Infobae He had reported that the number of ships waiting in Shanghai port had tripled since the end of February.

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Although congestion has decreased in recent weeks, it is still very high, as evidenced by the latest graphic representation of the MarineTraffic website (see above) confirming daily activity and congestion in the world’s seas and ports.

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Freddie Dawson

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