There has been a lot of good news and bad news recently about local currency swap agreements between China and other countries.
The good news is that this year's Sino-Russian trade settlement has finally completely gotten rid of third-country currencies, which is a good thing for both China and Russia, Russia has gotten rid of Western sanctions, and China has smoothly promoted the internationalization of the RMB, which is a complete win-win situation, and the local currency swap agreement signed by the two countries has also played a real role.
The bad news is that the China-Argentina currency swap agreement has completely deviated from its original intention, and China may suffer a big loss.
On December 10, Argentine President Milley was sworn in, but less than 10 days after his government was officially operational, there were already voices calling for Milley to step down. Shock therapy caused prices in Argentina to skyrocket, the peso depreciated rapidly, and in ten days, the Argentine peso fell from 400:1 to 800:1 against the dollar, and it is still falling.
On December 18, Milley issued another executive order, declaring a state of emergency in Argentina's energy sector, which means that Milley will take action against Argentina's energy subsidies, and soon, Argentina's electricity and gas prices will make a huge leap, and countless people will not be able to pay their electricity and gas bills.
Milley's purpose in doing this is to prove to the IMF and other international creditors that he is strictly enforcing fiscal austerity so that he can get more loans to pay off his dollar debt. Therefore, the local currency swap agreement between China and Argentina was naturally targeted by him early.
The local currency swap agreement between China and Argentina is like the exchange of credit cards between the two countries: China has granted a credit card of 130 billion yuan, which Argentina can use to buy various commodities in China, and Argentina has granted China a credit of 4.5 trillion pesos to buy ore and grain. The current situation is that the card we gave to Argentina can be used normally, but the card given to us by Argentina cannot buy food and ore, because Argentine companies now only charge US dollars, not pesos, that is to say, under Milley's shock therapy, we have suffered a loss, but this benevolent brother is not satisfied, he wants China to increase the credit card limit, so that he can use the card given by China to cash out and repay the US debt owed by Argentina.
Using Chinese money to repay the debt of the United States, in fact, during the administration of Fernández, Argentina also did such a thing, but at that time Sino-Arab relations were very good, Argentina also planned to buy a batch of "Thunder" fighters, plus Argentina is really difficult, and the credit card we received can also be used normally, so we turned a blind eye at that time. As a result, as soon as this Milley came up, he first said all kinds of anti-China remarks, and with a wave of his hand, he directly changed the purchase of the "Thunder Dragon" to the purchase of F-16, and used shock therapy to make the Argentine peso fall into waste paper, which means that the credit card in China's hand has also become a waste card.
As a result, on December 19, the Argentine media discovered that China had frozen the local currency swap agreement between the two countries.
On December 20, mainland Foreign Ministry spokesman Wang Wenbin responded to the incident: "China insists on carrying out mutually beneficial cooperation with Argentina on the basis of equality and mutual benefit. ”
This is both a warning and a reminder that it is not difficult to thaw the agreement, it depends on Milley's performance.