After taking office, Argentina** Milley faced a severe economic crisis. He hopes to receive assistance from China to ease external debt pressures and inflation. However, instead of meeting his demands, China** suspended the currency swap agreement with Argentina. In order to salvage the situation, Milley urgently appointed an experienced diplomat as the new ambassador to China in an attempt to improve Sino-Arab relations. What is the reason and intent behind this move?
Argentina is a South American country rich in resources and a large population, but it is also a country plagued by an economic crisis. Over the past few decades, Argentina has experienced multiple debt defaults, currency devaluations, inflation, and social unrest. In June this year, Argentina used the renminbi for the first time to repay its foreign debt, showing that it is less dependent on the dollar. Now, Argentina's debt to the International Monetary Organization has exceeded $44 billion, and the country's inflation rate is on the verge of surpassing 150%.
In this context, immediately after winning the election in November last year, Argentine Milley sent a letter to the Chinese leader asking for China's support to accelerate the acceleration of the currency swap agreement between the two countries. A currency swap agreement is an agreement between the central banks of two countries to provide each other's local currency, which can increase the foreign exchange reserves of both sides, improve financial stability, and promote bilateral investment and investment. China and Argentina signed a currency swap agreement back in 2009, which is currently worth $6.5 billion. Argentina hopes to be able to expand this scale so that it can use the renminbi to settle its external debt and reduce the pressure on the economy.
China is an important partner of Argentina and one of Argentina's main investments. With the continuous strengthening of exchanges between China and Argentina, the currency swap quota between the two countries is also expanding. In April this year, Argentina also stopped using US dollars to pay to China** and switched to using Chinese yuan. According to data from the Argentine customs agency, more than 500 Argentine companies have used RMB to pay for goods, and the proportion of RMB transactions in the Argentine foreign exchange market has reached 28%, a record high.
However, Argentina's expectations have not been echoed by China. According to a number of reports in Argentina, China** has suspended its currency swap agreement with Argentina. Although this news has not been confirmed by China and the Chinese Embassy in Argentina, it has also caused dissatisfaction and dissatisfaction in Argentina. Many Argentines believe that Millet has not effectively responded to the economic crisis, but has relied too much on Chinese aid, which has damaged Argentina's sovereignty and interests.
In the two weeks that Milley took office, he issued more than 300 decrees to reform the economy in one go, and even cut down half of the departments. His aim was to restore the vitality and confidence of the economy by cutting spending, increasing taxes, and improving efficiency. However, far from improving Argentina's economy, Milley's approach has made matters worse.
Now more than 10 provinces in Argentina have declared a state of economic emergency, and prices in Argentina continue to soar, with 73% of beef and 140% of zucchini, and oil prices and housing prices are still continuing. Argentina's own currency, the peso, has also depreciated by 54%. It can be seen that Milley's "shock **" at this moment will undoubtedly not work. He needs to address the root causes from within, rather than relying on external forces.
Of course, Milley also knew in his heart that he could not completely give up cooperation with China. China is an important strategic partner of Argentina and one of Argentina's main markets. Argentina needs China's support to deal with debt negotiations with the International Monetary Fund, as well as sanctions and pressure from other countries such as the United States and the European Union. As a result, Milley recently made an important decision by appointing an experienced diplomat as the new ambassador to China in an attempt to improve Sino-Arab relations.
Argentina's new ambassador to China, Marcelo Suárez Salvia, is a 26-year diplomat** who has served as an Argentine diplomat in the United States, the United Kingdom, Brazil and other countries, and has also participated in the negotiation of currency swap agreements between Argentina and China. He is considered to be an expert who is familiar with China and a bridge to communicate with China. It is reported that he has submitted an application to China for a position and hopes to work as soon as possible. This also shows that Milley attaches great importance to Sino-Arab relations and sincerity to China.
Although China has always said to the outside world that it will persist in developing Sino-Arab relations and promoting the deepening of cooperation between the two countries, it is also an ironclad fact that Milley made insulting remarks about China during the election campaign. He has criticized China's behavior in the South China Sea and has said that he will revisit Argentina's agreement with China. Even if he said after taking office that he would continue to promote bilateral relations between China and Argentina, it was based on the current situation of Argentina seeking China. Therefore, it is still unclear whether Milley is sincere or false about China. Therefore, China also needs Milley to show more sincerity to strengthen the relationship between the two countries. In addition, Argentina's use of RMB to repay international debts is indeed conducive to improving the status and use of RMB in the international community, but on the other hand, it will also allow RMB to bear more exchange rate risks in the foreign exchange market.
With these factors in mind, China will certainly not accede to Argentina's request to expand the size of the currency swap. However, China's attitude towards its partners has always been open, inclusive, and mutually beneficial. For Milley, blindly relying on external forces is certainly not the best option, and it is still necessary to solve the problem from the internal root cause in order to cure the root cause.
In the face of the economic crisis, Argentine Milley is eager to change its ambassador to China in order to improve Sino-Arab relations and win China's support. However, instead of meeting his demands, China** suspended the currency swap agreement with Argentina. The reasons and intentions behind this move are both internal to Argentina and external to China. Argentina needs to show more sincerity to win China's trust and cooperation. China also needs to weigh the pros and cons before deciding whether to continue to deepen cooperation with Argentina. The relationship between the two countries needs to be further communicated and coordinated.