Understanding why China is in Argentina will help us understand the dangers of Climate Change and the changing face of global power.
Surprisingly, the People’s Republic of China has a large presence in the South American republic of Argentina. For example, Chinese institutions provide Argentina’s government with $11 billion worth of currency swaps to bolster the country’s economy.
In addition, Chinese companies are financing and building two hydroelectric dams in southern Argentina and a rail link across the country’s agricultural heartland, Reuters reports. Meanwhile, the Chinese military is operating a space monitoring station in the Argentine region of Patagonia, Reuters claims.
How China Dominates Argentina
The reason for China’s interest in Argentina today is the same reason, Great Britain was so interested in Argentina in the 19th Century. To explain, the reason is food, specifically soybeans.
In particular, over 25% of Argentina’s export earnings worth $17 billion come from soybean exports to China, Brook Larmer estimates. Moreover, half of the ships that leave Argentina’s ports are full of soybean products heading to Asian, Larmer writes in The New York Times Magazine.
Moreover, Argentina is now so dependent on China that President Mauricio Macri has signed over 30 agricultural and investment deals with the People’s Republic, Larmer notes. In fact, sociologist María José Haro Sly observes, “Macri has now signed more deals with China than the two previous governments combined.”
Ironically, Argentine voters elected Macri on an anti-China platform in 2015. However, once in office, Macri discovered China was the only nation willing to “help” Argentina overcome its economic problems. Those problems include a mountain of debt and inflation rates of up to 50%.
In fact, Macri even publicly objected to the use of the term “predatory Chinese economic activity,” by Sarah Huckabee Sanders at the G-20 Summit in Buenos Aires in 2018. Importantly, Sanders is U.S. President Donald J. Trump’s (R-New York) press secretary. Thus, Argentina now listens to China rather than America.
Why China is in Argentina, its the Soybeans
China’s voracious appetite for soybeans explains its interest in Argentina. In fact, China uses one-third of the world’s soybeans or 4.2 billion bushels a year, the American Farm Bureau Federation estimates.
Consequently, the People’s Republic bought 135,814 tons of US soybeans in January 2019, Reuters estimates. The Chinese
China is now the world’s workshop with 20% of its manufacturing output worth $20.10 trillion in 2015, the Brookings Institute estimates. Moreover, Standard Chartered analysts, predict China will surpass America as the world’s largest economy next year in 2020, MarketWatch reports.
Notably, the Chinese-built rail link will move up to three million tons of grains to ports by 2025 and 2030 million tons of grains by 2030, Reuters reports. In addition, to soybeans the railroad between Rosario and Buenos Aires will move wine, corn, grain, and beef.
An Empire Built on Soybeans
That economic success and the modern Chinese Empire rest on soybeans. However, China imports most of those soybeans. In addition, a voracious pest called the armyworm is feasting on China’s soybean crop, CNBC reports.
Under those circumstances, China is developing close relationships with soybean growers like Argentina and Brazil. In particular, Beijing wants to end its dependence for soybeans from its greatest geopolitical rival the United States of America. Notably, the plan was working before the armyworm, China imported no US soybeans in November 2018, Larmer estimates.
Consequently, China is beefing up its naval power to secure the trade routes and food supplies. For instance, the Chinese navy is constructing a full-sized American style aircraft carrier to project its power around the world, Foreign Policy reports.
China is the New Britain
Strangely, the scenario of Argentina as
During the 19th and 20th Centuries Argentine beef was one of Great Britain’s primary food sources. Argentine beef fed the factory workers in Britain’s factories, the armies of the British Empire, the sailors of the Royal Navy, and the soldiers in the trenches in World War I.
Meanwhile, Argentine cattle barons became so wealthy that the expression “rich as an Argentine” went viral in Europe. To explain, the rich and obnoxious Argentine rancher was a familiar figure in Paris and London.
Not surprisingly, one of the Royal Navy’s main missions in the 20th Century was to protect the sea lanes between Britain and Argentina at all costs. In addition, during World War I, the Royal Navy cut Imperial Germany off from Argentine beef and American grain with the Starvation Blockade. Tellingly, Germany lost the war.
Moreover, Britain built the Argentine railways the Chinese are now rebuilding, The London School of Economics’ LSE Business Review notes. Notably, Argentina “lost its creditworthiness” through the British rail joint venture. Hence, history could repeat itself in Argentina with China as the new Britain.
China as the New British Empire
Like 19th Century Britain, China is now the world’s greatest manufacturing power and a rising center of finance.
In fact, China is now Latin America and the Caribbean’s biggest trading partner, China Daily reports. In 2018 “China’s trade with Latin America and Caribbean countries went up 20% year-on-year in the first nine months, reaching $228.6 billion,” Ministry of Commerce spokesperson Gao Feng told the press.
Meanwhile, Chinese companies invested $387 billion in Latin America in 2018, China Daily estimates. In addition, Chinese companies signed Latin American contracts worth $164.2 billion in 2018 and made $112.9 billion from Latin American contracts.
Consequently, China now dominates Latin America economically like Britain did in the 19th Century. Thus, China can conquer Latin America without mobilizing a single People’s Liberation Army soldier.
Why Climate Change Drives Chinese “Investments” in Latin America
Interestingly, fear of Climate Change is probably driving China’s push in Argentina.
To elaborate, agronomist Jerry Hatfield believes today’s biggest agricultural region the American Midwest could be too hot to grow soybeans as early 2035. In detail, Hatfield studies the effects of Climate Change on crops at the US Department of Agriculture’s National Laboratory for Agriculture and the Environment.
“Either we’re going to change the crops that we produce or we’re going to have to think about how we genetically manipulate that plant to have a higher tolerance to higher temperature,” Hatfield tells the MIT Technology Review.
Will Climate Change Drive Chinese Expansion in Argentina?
An obvious place to grow those soybeans is all the empty land in southern Argentina where China is building hydroelectric dams. Moreover, some of that land could be far enough south to avoid some Climate Change effects.
In addition, Argentina is the gateway to the empty lands of Antarctica. Notably, the Chinese government operates four research stations in Antarctica and is building a fifth, Larmer notes. In addition, over 8,000 Chinese tourists a year visit Antarctica, and most of them go through the Argentine city of Ushuaia.
Currently, it is too cold to grow crops in Antarctica but Climate Change could make agriculture on the Southern continent possible. Perhaps the Chinese want to claim the new crop land first.
Therefore, Argentine soybeans show China is close to becoming the world’s dominant economic power. America had better take notice and act before the United States finds itself a second-rate power.
Originally published at https://marketmadhouse.com on May 12, 2019.