Argentina’s provinces deepen relations with China

Dialogue Earth, 7 de febrero de 2025

While diplomatic relations between Argentina’s national government and China remain ambiguous, provincial leaders have been bypassing Buenos Aires to bolster links with Beijing. These subnational efforts are mobilising investment opportunities in natural resources, energy, infrastructure and trade expansion.

They have been yielding varying degrees of success as the provinces navigate several challenges, including a lack of China knowledge among provincial leaders, as well as preparation on the part of trade missions headed to China. Economic constraints at the national level also continue to cast a shadow.

An ambiguous relationship

During his 2022-2023 election campaign, Argentina’s president Javier Milei said he would not maintain diplomatic ties with China, dismissing it as “business with communists”. Upon assuming the presidency in December 2023, Milei cancelled Argentina’s entry into the Brics bloc (made up of 10 countries including Brazil, Russia, India, China and South Africa) at the eleventh hour. As Milei’s term has progressed, however, pragmatism has recomposed the China-Argentina relationship.

During his first year in office, Milei benefitted from several of China’s actions. For example, following initial hesitancy over the new government’s stance, in June 2024 China accepted the renewal of its multi-billion-dollar currency swap line, which had been negotiated with Argentina’s previous administration. This allowed Argentina to delay the repayment of USD 5 billion in dues. Milei later declared China “a very interesting trading partner, because they don’t demand anything”. And during Brazil’s G20 summit in November, Milei met China’s president Xi Jinping for the first time, bolstering their relations.

However, the close ties between Milei and US president Donald Trump cast doubt upon the extent of Argentina’s near-term relations with China. For example, the new Atucha III nuclear power plant uses Chinese technology, and so may be seen to conflict with US interests. An existing Chinese aerospace base in the western province of Neuquén, and the suggestion that Huawei could work on Argentina’s 5G network, have thrown up similar tensions.

Provincial pragmatism

Dialogue Earth spoke to Stella Maris Juste, an international relations expert and researcher at Argentina’s National Scientific and Technical Research Council (Conicet). She says that the relationship between the provinces and China “has managed to weather the shifts in national politics and even in the provinces themselves, not only during the presidency of Milei, but also previously under [former president] Macri”.

Juste chalks this down to complementary interests: “The provinces need to attract investment, create jobs and improve infrastructure, while China seeks to improve access to key natural resources, such as lithium and other minerals, and also greater penetration of renewable energy and ports industries.”

In the provinces, China has found reliable interlocutors to sustain the relationship in these turbulent times Diego Cagliolo of the sustainable development NGO Argentina Global In 2024, provinces’ finances became more strained as the state’s defunding measures grew. Total transfers to provincial and municipal governments fell by 19% year on year, according to the congressional budget office.

“In the provinces, China has found reliable interlocutors to sustain the relationship in these turbulent times,” explains Diego Cagliolo, who manages Asia relations at Argentina Global, a sustainable development NGO. “That is why Wang Wei – the Chinese ambassador – visits the provinces, and the governors in turn visit the [Chinese] embassy.”

Indeed, throughout 2024, there were numerous overtures from provincial leadership to China, usually via Argentina’s Chinese embassy.

For example, in August, the vice-governor of Catamarca province toured Zijin Mining’s copper facilities, including its clean energy and battery research centre.

In September, Córdoba’s governor led the Institutional and Commercial Linkage Meeting between his province and Chinese businesses, where Ambassador Wang announced a Chinese car company’s interest in establishing a factory in Córdoba. Representatives of the Industrial and Commercial Bank of China (ICBC) and China Energy International Group attended.

In October, the governor of Santa Cruz visited China, signing an agreement with fishing company Hong Dong to develop fisheries in his province. Subsequently, a delegation from the Fujian Chamber of Commerce visited Santa Cruz to discuss a coal export agreement with Chinese state-owned coal mining firm YCRT.

Wang also visited La Pampa province to meet its governor at the end of May, accompanied by representatives of companies including Shanghai Electric Power, wind turbine manufacturer Goldwind, and ICBC.

The governor of Buenos Aires province met with Wang in February after agreeing in November 2023 to a USD 1.25 billion investment by China Potassium Chemical Group. The company is set to construct two fertiliser plants in the port city of Bahía Blanca. In addition, investments in Buenos Aires’ renewable energy, agricultural development and ports have been discussed with officials from Sichuan province, and the Chinese agricultural machinery firm Ruiyuan Holdings is considering an investment. In November, Wang was in Neuquén province to meet its governor. Also in attendance were representatives from large Chinese companies covering construction, railways and roads, engineering and equipment manufacture, oil and gas, and telecommunications.

Multi-level relations

“China has a long tradition of establishing multi-level relations with countries, including subnational agreements, but also through links with universities and think-tanks,” explains Oriana Cherini, an international relations researcher at Conicet. “In this context, China found Argentina’s provinces to be fundamental and stable allies.”

According to 2023 data compiled by Argentina’s Rosario Stock Exchange, China was the primary international trading partner of Jujuy, Chaco, Santiago del Estero, Catamarca, La Pampa and Entre Ríos. It was also the second-biggest trading partner of Santa Fe and Buenos Aires provinces.

Case study: Jujuy

The province of Jujuy in the north-west is often cited as a test case for Argentina’s subnational relationship with China. It is home to one of China’s biggest renewable energy projects in Argentina, the 315-megawatt Cauchari solar park. The project was mostly financed by the Export-Import Bank of China, and built by PowerChina, Shanghai Electric Construction and eastern China’s Talesun.

Pablo Palomares, Jujuy’s secretary of international relations, calls Cauchari a substantial step forward for the province in its relationship with China. “Jujuy knew how to approach and respond… in terms of commitment and seriousness,” he says. “A good project was drawn up, which is why it was able to overcome [Argentina’s] macroeconomic crisis.”

This relationship has also been reflected in other types of agreements, such as the Safe and Interconnected Jujuy initiative. Signed off in 2019, this programme involves the Chinese telecommunications company ZTE providing Jujuy with security cameras, fibre-optic cables, software and hardware.

In 2020, expert in China-Latin America relations, Margaret Myers, noted: “Chinese officials and other actors made upwards of 13 trips to Jujuy province, and Jujuy and Argentine national government officials made at least 11 visits to China” in the preceding five years.

Key to the relationship between Jujuy and China is lithium. For example, the Cauchari-Olaroz salt lake lithium project is controlled by Ganfeng Lithium, a company based in east China. The project has a production capacity of 40,000 tonnes of lithium carbonate equivalent per year.

Another project Jujuy embarked upon with China is its solar-powered tourist train, which runs through the Quebrada de Humahuaca Valley. And in May 2024, a diplomatic delegation from Jujuy signed an agreement with Gotion, headquartered in the eastern Chinese city of Hefei, to build a 200-megawatt solar plant in southern Jujuy.

Lithium and other minerals

Argentina’s strong federal character extends to the provinces being in control of their own natural resources. This means the strong growth experienced by the lithium sector and the rest of the metalliferous mining industry is having a direct impact on subnational relationships. This contrasts with Chile, for example, where the national government ultimately controls natural resources.

Other mining provinces besides Jujuy are also experiencing more dynamic links with China. In neighbouring Salta, the Mariana lithium-potassium brine project, under construction since 2022, is controlled by Ganfeng Lithium.

Ganfeng also part-owns the Pozuelos-Pastos Grandes lithium project in Salta, which is in the feasibility stage; in September, Ganfeng’s home province, Jiangxi, signed a letter of intent to deepen its cooperation with Salta. In addition, China is participating in lithium extraction at Salta’s Arizaro and Diablillo salt flats through Tibet Summit Resources, while Revotech Asia owns the Sal de los Ángeles project at Diablillo.

In Catamarca, north-western Argentina, a large lithium project is being developed: Tres Quebradas, owned by Zijin Mining. Catamarca has also been discussing improvements to the San Francisco Pass with Zijin, which would facilitate lithium exports from Coquimbo port in Chile.

Catamarca Mining and Energy (Camyen), which is owned by the provincial government, announced in 2022 that PowerChina would finance four solar plants in the province. Built by Shanghai Electric Power Construction, they will have a combined capacity of 600 megawatts. Construction is expected to begin this year.

In Argentina’s west-central San Juan province, China’s Jinko Solar developed the Iglesia-Estancia Guañizuil solar park, inaugurated in 2019. In addition, the Chinese company Shandong Gold has a 50% stake in the province’s Veladero gold and silver mine.

The challenges

Diego Guelar, the Argentine ambassador to China from 2016-2019, believes the provinces have a fundamental role to play in making an investment attractive to China. He says they have the capacity to provide local support and insights, helping to smoothen cooperation. However, he adds that “a large number of trade and business missions from provinces [that go] to China are not properly prepared”.

Guelar says while the provinces have control over their resources and foreign policy, and that China is generally interested in investing and trading with Argentina, getting projects off the ground is complex: “It requires prior preparation and, in many cases, sovereign guarantees from [Argentina’s national government], which also need to be negotiated. But it also requires knowledge of how the Chinese operate. This expertise is often lacking in the leadership at the national level, let alone in the provinces.”

From a more structural point of view, Stella Maris Juste sees the relational asymmetries deepening between Argentina and China at the subnational level, to China’s advantage: “The flipside of investments in territorial connectivity, energy production and currency swaps can be seen in trade deficits, extractive agriculture, the difficulty of expanding the basket of exportable value-added products, and financial dependence.”