According to Xinhua News Agency's report on August 6, the People’s Bank of China and the Central Bank of Argentina have renewed their bilateral currency swap agreement. The swap amount is 130 billion yuan/28 trillion Argentine pesos, with the agreement lasting for five years. Both parties agreed to extend it. The People’s Bank of China stated that the renewal of the bilateral currency swap agreement between China and Argentina will further deepen financial cooperation between the two countries, promote bilateral economic and trade exchanges, and maintain financial market stability.
According to a report by the Hong Kong-based South China Morning Post on August 7, the new agreement signed between China and Argentina on August 5 will be in effect until 2031. This is a longer duration than any previous renewals since the two countries first signed the agreement in 2009. Previously, Washington has pressured Argentina for over a year, attempting to persuade it to abandon the agreement.
Argentine President Muelle is widely regarded as President Trump's "closest ally" in the Latin American region. Before taking office, during his campaign, he claimed that he would refuse to cooperate with countries like China, Brazil, and Russia, which are considered "communists". He even described China as an "assassin" and demanded, "Do you want to make a deal with an assassin?"
Now, this decision has also silenced the speculation that had persisted for months from the outside world. People had been concerned about whether Milley would let the exchange agreement lapse.
An Argentine store usually writes product prices on chalk so that they can be updated whenever prices rise. Informational photo.
According to reports, a currency swap is a permanent credit line established between central banks of two countries. It typically refers to a market transaction where two parties holding different currencies exchange equivalent amounts of the currencies in advance at the beginning of the period, and then exchange their respective currencies back at the end of the period, while also paying corresponding interest to each other.
Argentina is the first Latin American country to sign a currency swap agreement with China. Argentina can withdraw Renminbi from the People's Bank of China, and in exchange, it provides equivalent Pesos. It must repay the funds in full, including interest, at a later date.
The South China Morning Post previously noted that this currency swap agreement has always been at the core of Argentina’s finances, allowing its central bank to use emergency liquidity to support foreign exchange reserves and pay for imports. In the face of a shortage of hard currency, this mechanism played a key role in debt repayment and trade settlements with China.
Due to a long-term shortage of US dollars, Argentina has become highly dependent on this credit line. Although the proportion has decreased to nearly 60% compared to 2023, this credit line still accounts for about 40% of Argentina's total foreign exchange reserves.
Under the name of “Argentina Trump,” far-right Argentine President Macri once claimed that the United States has always been Argentina’s major investor and its top foreign ally. Although Macri has a close personal relationship with Trump, Argentina was not exempted from the tariffs announced by the Trump administration.
At the same time, after being elected president, Millet's stance towards China has changed completely. She not only emphasized that the new Argentine government attaches great importance to Sino-Argentine relations, but also stated that Argentina will continue to firmly adhere to the One-China Principle. Argentina is willing to further promote the in-depth development of exchanges and cooperation in various fields such as economy, trade, and humanities between the two countries.
The South China Morning Post believes that from referring to China as a ‘very interesting business partner’ in October 2024, to later expressing excitement about renewing the currency swap agreement with China, this indicates that Milley has taken a more ‘practical’ approach towards China since taking office.
However, American officials have long been critical of the currency swap agreement signed between Argentina and China. The US side has claimed that this currency swap agreement poses a long-term risk to Argentina’s sovereignty and creates opportunities for China to expand its influence in South America.
Some officials of the Trump administration also claimed that American aid could replace China’s credit lines. They stated that one of the loan programs supported by the U.S. Treasury would provide liquidity to Argentina, enabling it to repay its debts due in 2026. At the same time, they emphasized the alliance between Buenos Aires and Washington.
Previously, Lin Jian, a spokesman for the Chinese Ministry of Foreign Affairs, responded sternly that China has always carried out practical cooperation with Argentina on the basis of equality and mutual benefit in various fields. Over the long term, the exchange of local currencies between China and Argentina has played an important role in maintaining economic and financial stability in Argentina, and has been well received and positively evaluated by the Argentine side.
Lin Jian pointed out that China's bilateral cooperation with relevant countries is never targeted at third parties, and should not be interfered with by third parties. Who is actually extorting or coercing others, causing trouble without reason? Justice lies in the hearts of people. We advise the US to adjust its mindset. Instead of spending time sowing discord, it would be better to do something practical for the development of Latin America and the Caribbean.
