Economy Minister Sergio Massa announced today that a commercial trade mechanism that will kick off on Friday which will allow Chinese companies doing business in Argentina to trade and invest directly in yuan.

Until now, Chinese companies had to use intermediates such as purchasing dollars with the Chinese currency or through financial dollar rates like the blue chip swap rate.

Massa made these announcements on Wednesday night (9 a.m. Argentina time) after a meeting with officials from the Chinese mining company Tsingshan Holding Group —the world’s largest producer of stainless steel— in the roof of the company’s skyscraper, located on the northside of the Bund neighborhood, along the Huangpu river.  

The decision Massa anticipated will add an incentive to exporting in yuan, and contribute to the strategy of “de-dollarized” financial operations between the two countries. “This measure will eliminate any intermediate, and will also moderate prices and result in a more truthful trade balance between Argentina and China,” Economy sources told Télam.

The measure will also contribute to “protecting” international reserves, as it aims to prevent fraudulent maneuvers that “stole reserves from the Central Bank,” the sources added.

“In the view of the Chinese Ministry of Commerce, Chinese exports to Argentina are less than what Argentina gets from China as commercial trade input,” said sources from the Economy Ministry. “Why? Because there is a triangulation from two financial centers: Montevideo and Florida.” 

The most recent example is a legal complaint made by Customs against Uruguayan fintech d-Local, which is currently being investigated for allegedly overstating imports for US$400 million to wire money overseas.

Massa revealed today that he has already ordered the head of the Customs Office, Guillermo Michel, to search for law firms with US jurisdiction to “litigate in the US” against the company, which is listed on Wall Street

Regarding the operational details of the new commercial trade system in yuan, Massa himself gave away some details of the measure to the board of Tsingshan mining company.

He also said that this Friday he will make a detailed presentation about this system in a meeting with 40 companies that will take place in Beijing.

In conversations on this issue, Massa also said that before reaching this decision they had implemented other measures such as a spot market – a financial market in which financial instruments or commodities are traded for immediate delivery– and a futures market –in which delivery is due at a later date – in yuan.

—with information from Télam