By Kevin P. Gallagher, Boston University
As Western-backed development banks and the private sector are on the retreat from Latin America, China’s development banks are coming to the rescue, at least for now.
China’s two development banks, the China Development Bank and the Export-Import Bank of China, provided upwards of $29bn to Latin American governments in 2015, according to new estimates published by Boston University’s Global Economic Governance Initiative and the Washington-based think tank The Inter-American Dialogue.
A three-fold increase from 2014, China’s 2015 finance to Latin America was more than the World Bank, Inter-American Development Bank, and the Development Bank of Latin America combined. Read more
China's VP Li Yuanchao and Cristina Fernandez de Kirchner in May
Ask the governments of Ecuador or Venezuela: good relations with China can be really handy when you’re in a financial fix. This is something that Argentina seems to be cottoning onto, if a proposed $10bn loan materialises.
According to reports in local media this week, Argentina’s central bank is negotiating a deal with the Chinese that it hopes might help stem an alarming decline in its foreign exchange reserves. Read more
Whenever the subject of partners for Argentina’s YPF to develop the Vaca Muerta shale deposits crops up, it isn’t long before someone suggests China as a potential investor.
So Carlos Bulgheroni’s admission that the Bridas group, in which his family and China’s CNOOC each own 50 per cent stakes, is planning to invest Vaca Muerta with YPF will have a lot of people sitting up. Read more
Buying banks is “no rose garden. We consider it a battleground”. So says Jiang Jianqing, president of China’s ICBC, the world’s biggest bank (by market capitalisation, deposits and credits).
So far, his takeover of 80 per cent of Standard Bank Argentina appears to have been more genteel – after all, ICBC has a stake in Standard Bank Group in South Africa. Read more
China’s burgeoning moneyed elite provides just the kind of international tourists many countries long to have – just look at the Olympics, where Chinse visitors have proved the biggest spenders.
But Argentina is missing out on as much as $5bn a year in Chinese tourist spending by having visa rules that are too rigid, warns the Argentine-China Chamber of Production, Industry and Trade. Read more
Well, the rumours were partly correct.
Following Monday’s move by Cristina Fernández de Kirchner to renationalise YPF, the chatter among Argentina observers was that China somehow had a role to play in the story.
Why else, as one person put it, would Fernández go ahead and seize the majority stake held by Spanish oil major Repsol unless she thought she could get Chinese oil majors to step in and provide the billions needed to develop YPF’s assets?
But as the FT reported on Tuesday night, it was actually Repsol, not Argentina, that had been talking to the Chinese. Read more
By Jude Webber, Simon Rabinovitch and Richard Stovin-Bradford
In its 2010 results presentation last May, China’s ICBC, which prides itself on being both the world’s largest listed bank and the most profitable, showed this slide of its global operations.
The red dots and flags on the slide (entitled International Strategy: Stronger global service capacity) illustrated the bank’s overseas interests, including 203 institutions in 28 countries and regions, from Canada to Australia, South Africa to Russia. But Latin America was glaringly empty.
No longer. ICBC has agreed to buy 80 per cent of the Argentine operations of South Africa’s Standard Bank for $600m. Read more
A long-term agricultural project between China and Argentina could sow the seed of deeper cultural ties between the two key trading partners. That is the idea of a pilot language scheme being launched as a $1.5bn deal kicks off between the province of Río Negro and China’s top crop producer, Beidahuang, to irrigate unproductive valleys in the Patagonian province and produce corn, soya, wheat, fruit and other crops to be shipped back to China. Read more
By Jude Webber and Richard Stovin-Bradford
Talk has swirled for months that South Africa’s Standard Bank is on the verge of exiting Argentina via a sale to China’s ICBC.
The two sides have been talking and a deal was not believed to be imminent. But Argentine business newspaper El Cronista Comercial on Friday reports that a deal has been reached to sell 80 per cent of the operation to ICBC for $700m to $800m. Clarín, another newspaper, says the Chinese are buying 75 per cent for $700m.
If confirmed, that would be a hefty premium on the price that Standard Bank paid when it bought the Argentine operations of BankBoston in 2006. Read more
Argentina is crossing its fingers that a mission to China in mid-July will yield a coveted prize – the entry of Argentine corn into the Chinese market.
Chinese officials were in Buenos Aires earlier this year on a mission to prepare sanitary controls – a necessary step to opening up what could be a lucrative new market. Argentina is already targeting meat exports and is keen to boost wine sales to China, already a major customer of other Argentine food commodities, like soya oil. Read more
Argentina is China’s top supplier of soya oil and bilateral trade in the commodity was supposed to have got back on track last October after a hiatus when Beijing barred the oil for failing to meet quality standards (industrialists said it was a tit-for-tat measure promoted by Argentine anti-dumping measures).
So it can hardly be good news that China hasn’t bought Argentine oil for months, according to the head of the oil industry chamber in Argentina, Alberto Rodríguez. Read more
China’s global hunt for energy resources on Friday focused on Argentina with China Petrochemical’s $2.45bn acquisition of Occidental Petroleum’s Argentine oil and gas assets.
The parent of Sinopec, China’s biggest oil group, is making its first foray into the country just weeks after announcing plans to buy 40 percent of the Brazilian operations of Repsol, the Spanish oil major, for $7.1 bn. With Chinese companies on the lookout for more energy assets and Latin America very much in their sights, there will be more such deals to come. Read more
Argentina and China have had diplomatic and trade spats this year – but the two countries are too useful to each other not to settle their differences.
Last week, Argentina’s agriculture minister, Julián Domínguez, welcomed his Chinese counterpart Han Changfu to Buenos Aires – and heralded China as “a strategic partner for Argentina to consolidate its position as a large provider of food to the world”. The country is already Argentina’s second-largest trade partner and biggest buyer of Argentine agricultural products, worth some $4.4bn a year. But the bilateral relationship is still not quite flourishing. Read more
Argentina is beefing up trade ties with China – literally. After quietly settling a trade spat in October which had closed the door to Argentine soya oil imports for six months, the two countries are closing a deal that would allow Argentine beef exports to China.
Argentina is hoping to exploit a niche among top-notch hotels and to sell China 50,000 tonnes a year of premium beef. According to the head of the country’s beef promotion institute, Dardo Chiesa, the price could be $20,000 per tonne. Indeed, Argentina sold tenderloin to the Shanghai Expo at $28,000 per tonne, he told the FT recently. At the other end of the scale, Argentina also plans to sell offal. Read more
Being a commodity-hungry emerging power with plenty of cash can be a frustrating occupation sometimes. The goods are out there, the price is right, but getting hold of the stuff (be it oil, copper, wheat…) can be a drag. That’s why China has been building railways in Africa since the 1970s. Now its decided to do the same in Latin America. Read more
Talks in China aimed at settling a dispute over soya oil imports from Argentina have failed to make progress, but Argentina has a powerful incentive to keep pushing for a quick solution: money.
Argentina had been expecting to export 2m to 2.5m tonnes of soya oil to China this year, worth some $1.7bn. Of that, $600m would go straight into government coffers because of high export tariffs. Read more