China wants Milei to pay the swap and threatens to stop buying soy and meat

Furious over Mondino's contacts with Taiwan, Xi Jinping's government activated the swap payment mechanism and increased imports of soybeans and corn from Brazil. Preference to Australia and Uruguay for meats.

The serious diplomatic incident caused by the secret meeting of Foreign Minister Diana Mondino with the representative of Taiwan in the country could cost Argentina dearly. The Chinese government is currently evaluating implementing drastic retaliation such as demanding payment of the multi-billion dollar swap and stopping buying soybeans and meat from the country, sources familiar with the bilateral tension told LPO.

According to the sources consulted, the Asian giant has already taken the first steps to execute the payment of the swap section that the Alberto Fernández government spent, for about 5 billion dollars plus interest of around 6 percent. The tension reached such an extreme that the sources did not rule out that China would even move forward with the embargo on exports to collect money.

The activation of this payment process can last months and even years in the special times of the Chinese bureaucracy, which perhaps thus offers the Milei government a window to drastically rectify its anti-China stance.

Tension escalated after LPO exclusively revealed Mondino's meeting with Taiwan's trade representative, Miao-hung Hsie. A meeting that not only outraged the career diplomacy of the Palacio San Martín, who considered it a major clumsiness, but also the Minister of Economy, Luis Caputo, who, in need of funds, seeks to reactivate the swap.

But the retaliation for what they consider a violation of their sovereignty, as the Chinese embassy itself in Buenos Aires made clear, could be even more serious: the communist government had already decided to start prioritizing Brazil in its purchases of soybeans and corn.

Geopolitics plays no small part in these decisions. President Lula maintains a strong alliance with China, while the Milei government did not wait a month to announce that it was withdrawing from the BRICS, the bloc that makes up both powers.

The decision of Xi Jinping's government to direct its purchases of soybeans and corn to Brazil has already begun to be noticed. Shipments of Brazilian grains reached 8.79 million tons, which represents more than 40% of imports of these grains from the People's Republic of China.

The sources consulted revealed that China is also analyzing stopping buying meat from Argentina and replacing those shipments with Australian meat and live cattle from Uruguay. In addition, it would suspend the procedure to lift sanitary barriers for poultry products and the purchase of meat offal, which had begun to be negotiated during Sergio Massa's visit to Beijing.

The closure of the Chinese market would be a devastating blow for the Argentine meat industry, which sends almost all of its exports to the Asian giant.

On November 21, two days after the runoff, the Chinese Foreign Ministry warned that it would be "a huge mistake in the president-elect's foreign policy to break relations with larger countries, such as China and Brazil," in reference to Milei's own statements that He called both nations "communist" and promised to break relations, a step that once taken he tried to moderate. These are Argentina's two main trading partners.

China is the country that has grown the most as a trading partner of Argentina in the last 15 years and has become an extremely relevant supplier of goods and machinery essential for the productivity of the Argentine industry.

"Breaking relations with our main commercial partners can lead us to a triple productive, social and financial implosion," Sabino Vaca Narvaja, former Argentine ambassador to China, told LPO. "China accounts for more than 90% of soybean exports, eight out of every ten kilos of meat exported in August of this year and approximately 60% of seafood, barley, sorghum and poultry," he added. According to foreign trade data published by Indec, in 2022 Argentina exported to China for 8,015 million dollars, which is equivalent to 9% of its total foreign trade. Meanwhile, in the first half of 2023, the latest data available, 2,711 million dollars were exported, equivalent to 8.1% of the total, drought through.

"The impact of diplomatic relations can be really very important in provinces such as Jujuy, Catamarca, Chaco, Entre Ríos, La Pampa, Santiago del Estero, San Luis and Formosa, where China accounts for up to 30% of its exports," Vaca warned. Narvaja and stressed that "breaking relations with China would make us Argentines lose millions of jobs." In fact, according to official data, Catamarca sold 45.4% of its total exports to China, Jujuy 28.52%, Chaco 28.29%, Entre Ríos 27.6%, Santiago del Estero 22.2 % and La Pampa 20.1%.

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