Following weeks of escalating tensions between both countries, Foreign Minister Diana Mondino held a meeting with China’s Ambassador in Argentina Wang Wei on Friday — the first since President Javier Milei’s inauguration.

During his electoral campaign, Milei repeatedly said that he would sever ties with China, described the government as an “assassin” and claimed the country’s people were “not free.” Two days afterb Milei’s victory, China responded that cutting ties would be a “serious mistake.”

Then on December 22, Agustín Romo, a lawmaker from Milei’s party, met with representatives of Taiwan’s trade office in Argentina. The Chinese government contends that Taiwan is part of its territory and other countries rejecting the island’s independence claim is a condition for maintaining diplomatic ties. Romo posted on X that Taiwanese representatives gifted him 300 Christmas hampers for “those in need.” 

“Taiwan is ranked number one on the index of economic freedom,” Romo said. “An example for the free world.”

Five days later, some media outlets reported that Mondino herself met with Miao-hung Hsie, Taiwan’s representative in Argentina, although a spokesperson for the Foreign Ministry told the Herald that the encounter never happened. 

“Taiwan is a red line when it comes to its relations with other countries,” said Santiago Notarfrancesco, a specialist in contemporary China and founder of Argentina-China business platform Negocios con China. “And the Chinese diplomacy makes this clear every chance it gets.”

The day after the alleged meeting, Chinese Ambassador Wei published a column stating that Taiwan is part of China. “Safeguarding national unity and territorial integrity is the sublime right of all sovereign countries,” he wrote.

Signs of a deteriorating relationship between both countries surfaced when Argentina delayed naming its ambassador in China, with Milei appointing Marcelo Suárez Salvia two weeks after being inaugurated. A source from the previous administration with knowledge of the relationship between both countries told the Herald that China read that as a sign of disrespect and non-reciprocity from Argentina.

At the end of 2023, Milei formally announced that Argentina would not be joining the BRICS economic bloc of developing countries, which includes China. With that decision, Argentina lost the possibility of getting financing from the BRICS New Development Bank. The previous administration had gotten the approval from all of its members after protracted and difficult negotiations, a person who participated in them told the Herald. On the campaign trail, Milei indicated that his government would pursue closer relations with the United States, Israel, and the “free world.” 

“At this time, the foreign policy management seems to be over-ideologized,” Notarfrancesco said on Friday, speaking to the Herald before Mondino’s meeting. “I think that Argentina is going through a very deep crisis and that it needs a lot of intelligence and pragmatism.”

Risk, uncertainty, conciliatory U-turn

Observers had said that Milei’s stance on China was dangerous since it’s Argentina’s second-largest trade partner after Brazil. As of August 2023 (INDEC’s last available figure), Argentina exported US$3.5 billion worth of goods to China and imported US$9.6 billion last year. Notarfrancesco said that Argentina’s impolicies with China could have commercial repercussions.

“During the COVID-19 pandemic, the Australian government proposed to start an investigation to see if China was responsible for the virus,” Notarfrancesco said. “And what China did was raise the taxes on Australian barley and ask for the renewal of all the sanitary certificates for all of its meat exporters.”

Since 2020, Argentina has maintained a currency swap with China for US$6.5 billion, which the South American country uses mainly to finance Chinese imports. The previous administration also used the swap to pay for some of its maturities with the International Monetary Fund, a decision in line with China’s goal to “internationalize” the yuan. Argentina currently has record-low net international reserves, negative US$9.3 billion according to the consulting firm Ecolatina.

On December 19, the REDD Intelligence news agency published a report saying that China had frozen the agreement. That month, Milei wrote a letter to Chinese President Xi Jinping asking him to accelerate the renewal of the swap. A diplomatic source in the previous administration told the Herald that the suspension of the swap was not “ideological” from China’s side, but pragmatic — since the swap is an agreement between both countries’ central banks, Milei’s promise to eliminate Argentina’s monetary authority could mean that the South American country would never pay China back.

The source added that Economy Minister Luis Caputo does not see eye to eye with Mondino on the matter, since he negotiated the swap when he was a part of Mauricio Macri’s administration. A spokesperson for the Foreign Ministry refused to comment on whether the swap was part of Mondino’s and Wei’s conversation on Friday.

Friday’s meeting seemed to indicate that Milei may not fulfill his campaign promises regarding China for now. An Argentine Foreign Ministry’s press release said that China would continue to finance Argentine infrastructure in the framework of the Belt and Road Initiative. It also questioned the recent “unfounded press reports” and reaffirmed “the bonds of friendship” between the two countries. Moreover, it defended the “One China principle” — a rejection of Taiwan’s independence claim.

“There is no doubt about the importance of the commercial exchange between both countries, being China the second Argentine commercial partner, the second destination of our exports, and the first origin of imports in the country,” Mondino said in the communiqué.

In the coming week, Chinese Premier Li Qiang and Milei will be attending the Davos World Economic Forum, where both are scheduled to give special addresses on Tuesday and Wednesday respectively.