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Argentina Facing China: Modernization, Interests and Economic Relations Model

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Abstract

The article explains the Argentine-Chinese economic relations and identifies the interest’s network with the ongoing modernization processes in both countries. It can be observed that harmony is more important than discord when Argentina accepts the new China’s international division of labor, but when Argentina tends to consolidate the process of economic de-primarization, tensions between both countries tend to emerge. The crisis about crude soybean oil in 2010 is the clearest example to illustrate that trade tensions between both countries will be most frequent if Argentine industrialization continues and the process of policy coordination fails.

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Notes

  1. According to Pierre Salama, “[t]here is no scientific definition of ‘primarization’, but we can say that an economy is primarized if the exports of primary products dominate their total and it is in process of primarization if this segment tends to increase significantly [41].” Inversely, we can asseverate the concept of de-primarization, when the prevalence of primary products decreases their share in total exports in compared with previous times.

  2. Although the economic factor is not the only element that can be used to estimate national power, this paper will focus exclusively on it for the purposes of the analysis being conducted here, with other factors remaining constant.

  3. The German-Chilean economist Ernest Wagemann has used, for first time, the concept of periphery [1]. The argentine economist Raul Prebisch introduced the core-periphery term in the international economic field and its study was continued by other Latin-American authors. In the 1970s, Immanuel Wallerstein included the concept of semi-periphery as an intermediate force between the core and peripheral countries [45].

  4. Argentina clearly is a semiperipheral area in Wallerstein world-system division [45]. But, in this paper, core, semiperipheral and peripheral powers are explained only in economic terms. Argentina increases its power dimensions with addition of political, geographical and social factors, but from an economic point of view, it still remains as a peripheral power. General speaking, it is clear that Argentina is more relevant that Paraguay, Uruguay, Haiti and other small countries, but in economic terms it does not reach the semiperipheral level. In this case, if the G-20 is integrated by the world’s major advanced and emerging economies, the Argentine participation in this group is, at least, questionable.

  5. Jiang Shi Xue argues that: “Because of the China factor, however, Prebisch’s argument now appears to be incorrect. On the one hand, China’s large imports of resources and raw materials have pushed up prices in the world market, greatly benefiting Africa and Latin America; on the other, due to low labor cost, China’s exports of manufactured goods are relatively cheap. As a result, Africa and Latin America’s terms of trade are turning for the better over the last several years” [22].

  6. “Economies are divided according to 2011 GNI per capita, calculated using the World Bank Atlas method. The groups are: low income, $1,025 or less; lower middle income, $1,026–$4,035; upper middle income, $4,036–$12,475; and high income, $12,476 or more” [48].

  7. According to the Oxford Dictionary, the entente is “a friendly understanding or informal alliance between states or factions”. The Entente Cordiale signed in 1904 between France and Britain is the typical example. But, for the purposes of our study, the most important is the Entente Cordiale between the same countries in the first middle part of the nineteen century (1830–1837 and 1844–1847) when there was no formal agreement, but rather a basic consensus in the international politics between the two powers.

  8. The Chinese dictionary defines strategy as “plan or general direction of the war [7].” As in the West, the term is associated with the tactic, defined as “principles and methods of the battle [7].” The strategy, called in Chinese zhanlüe (战略), is composed of two ideograms: zhan (战), which refers to war or zhanzheng (战争), and lüe (略) that means plan, among other uses. The tactic or zhanshu (战术) also comprises the ideogram zhan (战), to which is added the character shu (术), which is understood as art, method or skill. That is, both have the character war as base, but one relates to the general planning, the other is the art or method of struggle, combat or battle.

    On the other side, to form a military alliance or aligned in Chinese means jiemeng (结盟). Separately, the character jie (结) means to unite, bind or form, while meng (盟) means alliance. From that China executed a peaceful diplomatic orientation in the early eighties, which was not aimed to unite military allies but partners, and that is jieban (结伴), which ban (伴) means precisely partner or teammate in Chinese. This is the origin of the concept of strategic associative relationship (战略协作关系) or strategic partner (战略伙伴) in the Chinese language.

  9. In 2011, the restrictions to imports applied by the Argentine government and the impact of the world crisis caused the share of the country’s industrial sector to drop from 31 to 26 percent.

  10. Huang Long Zhi also envisioned this problem, noting that, according to Chinese data, the situation would be unsustainable over time [18].

  11. In recent Argentina trade reports released by the INDEC, the item “China” includes Hong Kong and Macao, a situation that was not previously registered. Although both enclaves are already under Chinese sovereignty, the data inclusion mitigated the impact of the deficit with China, to the extent that sales to Hong Kong had surpluses of US$ 261 million in 2009 and US$ 89 million in the first four months of 2010 [19]. While these figures do not substantively alter the values mentioned, the inclusion of both enclaves appeared just since the beginning of Chinese surplus in bilateral trade. Anyway, the “INDEC Informa” report still continues to record disaggregated data from China, Hong Kong and Macao, a practice that should be continued by the institute to maintain the credibility of its records.

  12. The Dutch disease refers to the discovery of deposits of oil and natural gas in the North Sea and the significant increase and sudden wealth of the Netherlands in the 1960s. This good fortune had repercussions in other sectors of the economy, as foreign currency earnings and the appreciated guilder hurt the competitiveness of non-oil exports. Although it relates to the discovery of some natural resource, it can spread to other events that generate foreign currency income, as the remarkable surge in natural resource prices, foreign aid or foreign direct investment [13].

  13. See China será el mayor agroimportador mundial dentro de cinco a diez años, in América Economía, 11-07-2011, http://www.americaeconomia.com/negocios-industrias/china-sera-el-mayor-agroimportador-mundial-de-cinco-diez-anos. Accessed on 6 December 2011.

  14. Non-renewable resources are those whose reserves will inevitably end up at some point as it is not possible to produce, grow or regenerate to sustain its consumption rate. This means that the consumption of non-renewable resources exceeds the capacity of nature to recreate. Examples of non-renewable resources are oil, gas, coal, minerals, timber and water.

  15. The ownership structure of the company is as follows: 26.00 percent of state-owned, 25.00 of provincial owned, 25.46 of the Petersen group, 6.45 of Repsol group and 17.09 percent of other companies.

  16. In the first article of memorandum of understanding between Argentina and China about cooperation in trade and investment, Argentina government recognized China's market economy status and declares its decision not to apply any discriminatory treatment to imports from China.

  17. Argentine dumping measures applied to air conditioners, tires, sunglasses, bearings and parts thereof, pesticides, flasks, stainless steel tubes, tapes, playing cards and microwave ovens [16].

  18. The term "dialogue" describes a state of the linkage not yet institutionalized. It should be clarified that the term "dialogue" when applied to the negotiation process, is a vague notion that represents the state of the linkage, which consists of diplomatic talks aimed at signing of a preferential tariff agreement or a free trade agreement between the MERCOSUR and this Asian country.

  19. A study of feasibility to sign a FTA has been done between MERCOSUR and South Korea in 2006. This kind of agreement would damage the MERCOSUR automotive complex, and requires that Korea removes the high tariffs on agricultural imports. However, according to this report, given the structures of trade and tariffs both MERCOSUR and Korea, a possible scheme of trade liberalization tend to deepen existing patterns of specialization. Nevertheless, the study also shows the existence of potential gains in intra-industry trade [4, 21].

  20. Free Trade Area of the Americas. In Spanish called ALCA: Área de Libre Comercio de las Américas.

  21. According to the United Nations, in 2010 China's population amounted to 1,341 million. The organization estimates that in 2015 would be 1,369 million; in 2020, 1,387; and in 2025 would be 1,395. In 2030, China's population would drop to 1.393 million [44].

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Acknowledgments

The author is thankful to National Scientific and Technical Research Council of Argentina for support to conduct this research. He also wishes to thank the comments and suggestions of an anonymous reviewer and Juan Uriburu Quintana for his comments to the latter English version of this article.

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    Eduardo Daniel Oviedo

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Oviedo, E.D. Argentina Facing China: Modernization, Interests and Economic Relations Model. East Asia 30, 7–34 (2013). https://doi.org/10.1007/s12140-012-9184-1

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