An Argentine Food and Wine exhibition at the 4th China International Import Expo in Shanghai, east China, November 7, 2021. /VCG
Editor's note: Hamzah Rifaat Hussain, a former visiting fellow at the Stimson Center in Washington and former assistant researcher at the Islamabad Policy Research Institute, is a TV anchor at Indus News in Pakistan. The article reflects the author's opinions and not necessarily those of CGTN.
As a testament to the significance of the Belt and Road Initiative (BRI) globally, both Argentina and China pledged deeper integration into the BRI, which is bound to yield dividends for countries in Latin America.
With the meeting between Chinese President Xi Jinping and his Argentine counterpart Alberto Fernandez resulting in a comprehensive deal on the sidelines of the Beijing 2022 Winter Olympics, Argentina is presented with plenty of opportunities for an economically stable future. Much of the speculation related to countries resisting China's Silk Road have also been laid to rest, with Buenos Aires acknowledging the benefits of partaking in an arrangement that seeks to rescue an economy shrouded in debt.
The truth is that Argentina needs to significantly improve its economic performance, as its status as one of Latin America's most powerful economies has been waning over the years. Having carried debt worth $324 billion, amounting to 90 percent of its GDP in 2020, it is critical for Buenos Aires to find an investment framework that can boost productivity and simultaneously create jobs and enhance exports.
The decision to seal a Silk Road deal with China is a testament to the trust invested in Beijing for economic support and runs contrary to the discredited narrative that Chinese infrastructural projects result in debt traps in developing countries with economic stagnation. Argentina's securing a Silk Road deal with China is bound to yield dividends in the long run as well. Note how the government acknowledged that strategic decisions made in Beijing, which are anchored in the memorandum of understanding signed between the presidents of both sides, allow Buenos Aires to sign diverse agreements and guarantee investments for more than $23.7 billion.
This is critical for a country witnessing significant devaluation of its national currency and contrasts with the IMF's plans, which have contributed rather than alleviated debt quagmires which increased from $160 billion in 2001 to $323 billion in 2020.
People walk around the Chinatown in the barrio of Belgrano, Buenos Aires, Argentina. /VCG
The 50th anniversary of diplomatic ties between the two sides has presented opportunities for Argentina where China is willing to share developmental strategies that can stimulate domestic economic growth, increase exports and promote a higher standard of living for its citizens.
Investments in railways, ports and highways for Argentina are also key to ensuring that peaceful, apolitical connectivity can materialize, which is precisely what the BRI offers. The five-year plan for agricultural cooperation, for example, enables Argentina, which historically had one of the strongest agrarian economies in South America, to once again benefit from investments into this flailing sector.
China is Argentina's second-largest trading partner in the region after Brazil and has been a key market for exports such as soybeans and beef. Being an integral part of the BRI also allows Buenos Aires to access vital funds, including two tranches of $14 billion and $9.7 billion that can aid job creation, the implementation of hydropower projects, investments in the digital economy and nuclear energy. Such comprehensive support is precisely what is needed.
In a sign that historical reliance on the IMF and the U.S. for economic support was not resulting in tangible benefits to the national economy, Fernandez expressed an interest in expanding ties with countries such as Russia and China by offering the former a door to enter Latin America in a more decisive way. This tilt clearly demonstrates that economic assistance from the United States has continued to be detrimental to long-term prosperity for many states.
Conversely, the BRI continues to gain massive traction globally as the best possible framework through which a shared destiny based on economic connectivity for the international community can materialize. For Argentina, sealing a Silk Road deal is both timely and opportune.
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