Argentina and China strengthen cooperation with yuan swap agreement

The Chinese ambassador in Buenos Aires, Zou Xiaoliwas the one who first spoke and celebrated, through the swap, continue strengthening cooperation between Argentina and China and emphasized the importance of the president’s trip Alberto Fernandez to the Asian giant.

“All this was reflected through the official visit of Alberto Fernandez to China and a series of documents that make emphasis on relationships bilateral. China continues to support Argentina in defending the sovereignty of its economythat’s why we work on the swap, so that companies can use the yuan to reduce costs and improve a political environmenthe added Xiaoli.

“We have been working tightly and tightly for to exchange information and data”, concluded the diplomat.

Imports in yuan: the Government enables approvals to decompress the dollar

For his part, the Minister of Economy, Sergio Massathanked Chinese diplomacy, the government of Xi Jiping alreadyl People’s Bank of China at the opening of his address.

“From the worst drought in historyArgentina must maintain the reserves of its central bank robust. That challenge that reality imposes on us forced us to rethink and redefine the import strategy together with the IMF”, the Tigrense began by saying.

“Argentina has a swap with China that works, not only as a strengthening instrument of the reserves, but it functions as a financial and commercial instrumentMassa added.

Through this agreement, in May 1,070 million dollars that were going to be paid in US currency will be replaced by yuansince they are imported from China, assured the head of the Treasury.

Besides, since May there will be 790 million dollars that will stop being imported in that currency and they start to be brought in yuan, taking advantage of the activation of the swap with China.

Massa’s disobedience, Kirchner’s fury and opposition inflation

“This improves the perspective in terms of net reserves, gives us greater freedom, gives us the ability to function in the BCRA, as in these days when speculators forced us to intervene. Maintain the level of activity and the level of economic functioning that Argentina needs”, said the minister in reference to the agreement established for foreign trade.

“This is defending the value of the Chinese origin and that of the Argentine reserves. We also detect triangulation operations in which a modality was used to pay cheaper in China for what was paid more expensive in Argentina”, that with the swap, according to Massa, will also have stricter control.

“A national lithium company is not the way” for the development of the sector, assured an expert

“This cooperation gives us dynamics and the possibility of moving forward in what has to do with not only producing with Chinese intermediate goods, but rather export to a large part of the countries of our region”, concluded Massa.

The context

The measure is part of the announcement made by Massa through his Twitter account in which he ensures that the “State will use all the tools” available to order the situation. In this sense, the announcement of this Wednesday is added to the intervention in the market, the loans from multilateral organizations and the renegotiation with the IMF.

The activation of the swap with China for imports, then, will save dollars that will go to the BCRA coffers and also, expedite the importation of many goods for different activities that make up the national economy.

It should be noted that last month Brazil and China reached an agreement to set aside the US currency for all kinds of bilateral trade, a move similar to the one executed france for the purchase of liquefied gas in yuan.

The detail of the measure

• In the meeting, in which the President of the Central Bank also participated, Miguel Angel Pesceit was indicated that as of May there will be an average of US$ 790 million of imports of goods of Chinese origin that will begin to be paid in yuan.
• The measure is part of the inspections and notices carried out by the Customs to companies that made imports of merchandise of Chinese origin, but remanufactured from Uruguay and Europe in which the request for SIRAS in yuan was recorded exponentially.
• The Customs inspections point to the maneuvers of over-invoicing of imports that some companies carry out to earn dollars abroad. They analyze whether the reason for rebilling from Uruguay corresponds to a maneuver to avoid paying abroad with yuan – logical situation if China were paid directly – and thus be able to access dollars avoiding the use of yuan.

• So far this year, 4,803 destinations for US$ 287,781,648 of imports of mmerchandise manufactured in China and remanufactured from European countries. In this way, it stands out that only three countries concentrate 60% of the triangulated operations for 172 million dollars.
• Furthermore, the main imported goods are capital goodsl (machinery and turnkey factories) and the companies analyzed are mainly from the pharmaceutical, oil, telecommunications and automotive sectors.
• Also, 1,790 destinations were analyzed for US$ 205,907,898 of imports of goods made in China and re-invoiced from Uruguay. In this case, only 10 companies concentrate 49% of the triangulated operations for US$ 100.3 million and the two main companies areThey are from the agrochemical sector and concentrate 27% of the total operations.
• None of the products originating in China had an “additional” added value in Uruguay; all were rebilling operations.

SE