After Milley took office, his first distress letter was sent to China
Sure enough, as soon as Milley, the "madman" in Argentine politics, came to power, he immediately changed his stance on China, and this "gorgeous U-turn" was unexpected by the West. From the previous complete resistance, to the current desperately hugging the Chinese thighs, the front and back are like two people. As the new president of Argentina, his dramatic remarks are nothing more than two words: Asking for money! Many people have expressed their incomprehension, but is China really willing to exchange the real money in its hands for the Argentine peso, which may become "waste paper" at any time? If we carefully analyze the real situation behind this incident, we will find that it is impossible for China to make a loss-making transaction.
According to a report by the Argentine newspaper "Nation Daily" on December 13, senior officials of the new Argentine government revealed that the new president Javier Milley has sent a letter to the Chinese leader and met with the Chinese envoy, requesting that the scale and amount of currency swaps be further expanded on the basis of the agreement signed between the previous Argentine government and China. The purpose of this move is to repay the debt of the IMF that is about to mature.
According to the British "Reuters", in January this year, Argentina and China have officially expanded the currency swap agreement, Argentina has about 130 billion yuan of foreign exchange reserves, while there is also 35 billion yuan of disposable quota. But this is still far from enough for the terminally ill Argentine economy. On the day of his official inauguration, Milley addressed his supporters, claiming that "shock therapy" must now be used to alleviate the economic crisis, but in stages, but the key problem is that Argentina has no money right now.
Should China agree to expand the scale of China-Arab currency swaps?
And at this very time, the IMF is still "digging a hole" for Argentina. Expanding the size and size of foreign exchange reserves is a key clause in Argentina's major debt agreement with the International Monetary Fund (IMF). This means that Milley will either expand exports as soon as possible and earn more foreign exchange, or he will borrow more foreign debt and continue to follow the old path of "borrowing new debts and paying off old debts". Obviously, Milley is not willing to repeat the mistakes of the past, although he is a little "crazy", but his IQ is still online. As for the big hole dug by the US and Western financial institutions, he is not ready to jump into it en masse with the Argentine people. Therefore, if it wants to avoid falling into the development trap that Western countries have long designed, it may be the only way for the Milley government to get out of the economic development dilemma at the moment.
In this regard, the website of Argentina's "Page 12" newspaper described that the new President Milley vowed before the election that he would no longer cooperate with China and was not ready to join the BRICS organization. However, as soon as he came to power, his stance on China took a 180-degree turn. He also wrote a personal letter and personally met with the Chinese envoy, and reaffirmed his adherence to the one-China principle and the in-depth development of exchanges and cooperation between the two countries in the economic, trade, and people-to-people fields.
So, in the face of the new Argentine government, which is turning its face faster than turning a book, should China further expand the scale and amount of currency swaps on the basis of the 130 billion yuan already agreed?
First of all, we must be clear that currency swaps are not about exchanging RMB for "waste paper". In June this year, China and the Arab States reached an agreement to exchange 130 billion yuan for 4.5 trillion pesos, valid for three years. This is not actually sending money to the other party for nothing, but more like the credit card you usually use. It's just that here, the two sides are mortgaged with state credit and in kind.
In other words, China has opened a state-level credit card for Argentina with a limit of 130 billion yuan, which Argentina can use to purchase materials from China and also use yuan to repay debts. After three years, the amount of money used will be returned with interest. Therefore, some people on the Internet say that Argentina exchanged pesos for yuan, which is inaccurate, because Argentina will also return the yuan at that time. Even if the peso completely collapses by then, it will not affect China's collection of the principal and interest it deserves, unless Argentina is gone.
Second, if we look at China's current stage of development, China should agree to expand the scale of swaps. This large-scale transaction of hundreds of billions of dollars is an important step to promote the further internationalization of the renminbi and become a global currency. If Argentina is able to break free from the shackles of the dollar, do everything in its power to remain independent, and embark on the path of financial freedom in the process of deep cooperation with China, other countries will inevitably follow. When the time comes, the renminbi will become a veritable global currency. Whether it is direct local currency settlement or RMB cross-border payment, it will come naturally without our vigorous promotion. So even in the case of Argentina, China may not make any money, but the long-term benefits are much greater than the immediate benefits. This should be the true intention of the Chinese side to make it clear that it will view China-Arab relations from a strategic and long-term perspective.