Monday, December 08, 2014

Argentina and China

One of the most interesting developments in international politics is the rise of China. The "realist" theorists of international relations like my man Stephen Walt say this is more-or-less inevitable. The US has been the unquestioned hegemon of the world since 1945, and even more so since the fall of the Soviet Union. (One of Walt's more recent takes is available here, Pay No Attention to that Panda Behind the Curtain Foreign Policy 04/23/2014

But everything changes. China just recently passed the US as the largest economy in the world. And the tendency of growing powers is to expand their influence, which will have to come at the (relative) expense of the existing hegemon, the United States. The neoconservatives have been trying since the 1990s to make China a new bogeyman to justify more wars and the ensuring profits for military companies.

One aspect of China's expanding influence is seen in South America, particularly with Brazil and Argentina. I noted in a post last year (One of those things that are easy to miss 07/22/2013):

China and other countries have been successful with development models that differ in major ways from the stock prescriptions of neoliberalism, the approach long known as the Washington Consensus, the model being applied by German Chancellor Angela Merkel to the economies of Cyprus, Greece, Ireland, Italy, Portugal and Spain. Whether the notion of a "Beijing Consensus" suggested by José Pablo Feinmann will catch on, I don't know. (Cuadro de situación Página/12 03.06.2012
Since then, the BRICS have set up a new bank that can be an alternative sources of funds from the International Monetary Fund (IMF), whose neoliberal austerity policies have done such remarkable damage in the world, especially in the developing world, not least in Argentina.

Tomas Lukin in El vínculo con el gigante asiático Página/12 08.12.2014 presents two commentators looking at China's relations with Latin America and what Feinmann calls the Beijing Consensus, a phrase that contrasts with the neoliberal "Washington Consensus."

Econommist Federico Vaccarezza looks back at the history of Great Britain's and then United States domination, and suggests that China will not show American-style approaches to destabilization and regime change. In the present and near future, that's probably true. But it may not always be true.

He also takes note of an important event this year for Argentina, in which China agreed to a currency swap with China that bolstered Argentina's dollar reserves that are necessary both for the government's import-export policies and for maintaining credibility on debt repayment. He also says that a Chinese infrastructure investment in the Argentine state (province) of Santa Cruz is "la inversión más grande jamás realizada fuera de sus fronteras" ("the biggest investment ever made outside its borders").

Another economist, Ariel Slipak, writes that China is particularly interested in importing basic commodities like oil and soy from Latin America. He also thinks that China will invest in Latin American industrialization. But it's also possible that the profitable export of commodities in some Latin countries may wind up diverting resources from industrial projects, what the Argentine government calls re-industrialization. Slipak explains that Chinese manufacturing exports to Brazil are already displacing Argentine imports to Brazil. And he suggests that Cristina Fernández' government may be understating the risk to Argentina's re-industrialization program from that source.

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