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NY Times, Feb. 3, 2019
What Soybean Politics Tell Us About Argentina and China
By Brook Larmer
It should have been easy, traveling through Argentina, to find a bottle
of soy sauce. My sons, born and raised in Asia, have a habit of
seasoning their food with a few drops of it, and Argentina happens to be
one of the world’s leading producers of soybeans. Flying over the
country’s heartland — the fertile expanse known as the pampa húmeda — we
could see endless fields of the legume. Over the past three decades,
soybeans have gone from being a tiny part of Argentina’s
agriculture-dependent economy to occupying nearly 50 percent of its
cultivated land. Yet in every restaurant we visited, my sons’ requests
for soy sauce were met with a quizzical look and a shrug: No hay.
(“There is none.”)
The vast majority of Argentina’s soy products are exported, mostly to
China. Rising Asian demand — for soy sauce, tofu, animal feed — has
fueled the explosion of the soybean industry across Argentina, Brazil
and Paraguay. The pattern is a familiar one for Argentina. A century
ago, it became one of the world’s wealthiest countries on a per-capita
basis by shipping the pampa’s abundant yields of grain and beef to
Europe. The opulent 1929 Beaux-Arts building that houses the Board of
Trade in Rosario, Argentina’s agricultural capital, evokes those days of
grandeur. Today, however, it is the price of soybean futures that
dominates the electronic tickers on the wall. Last year, Argentina
exported $17 billion in soybean products, more than a quarter of its
overall export earnings. Half the ships leaving the country are now full
of soy goods — beans, meal, oil, etc. — and heading to Asia. “The old
saying in Argentina is still true: ‘With a good harvest, we are
saved,’ ” says Patricia Bergero, the board’s deputy director for
economic research. “Our economy is very dependent on soybeans and China
— perhaps too dependent.”
The beans, however, are just the beginning. Over the past decade, China
has more than doubled its overall trade with Latin America and the
Caribbean, to $244 billion in 2017, elevating China past the United
States as the region’s top trading partner, a stunning development in
America’s own backyard. Early on, China focused on gobbling up the
resources it needed to feed its voracious economy: oil from Venezuela
and Ecuador, copper and iron from Peru and Chile, soybeans from Brazil
and Argentina. In the past few years, though, Chinese engagement has
spread and deepened, especially with left-leaning governments that are
in financial trouble and looking for an alternative to American
influence. In Argentina, the president, Cristina Fernández de Kirchner,
turned to China in 2014 after her government defaulted on $100 billion
of international debt. In addition to offering $11 billion in currency
swaps to increase Argentina’s depleted reserves, China began rebuilding
a rail line across Argentina’s agricultural heart, constructing two
hydroelectric dams and erecting a space station in the arid plateau of
northern Patagonia.
When the conservative businessman Mauricio Macri succeeded Kirchner in
December 2015, he seemed eager to do something few other leaders have
dared: to push China away. Macri immediately suspended construction of
the two dams in southern Patagonia, citing the lack of transparency and
environmental impact surveys. Three months later, the Argentine Coast
Guard sank a Chinese fishing boat that refused to leave the country’s
territorial waters. The resistance didn’t last long. Not only did China
quickly reduce its soybean imports by 30 percent in the first seven
months of Macri’s government, but Chinese officials also reminded Macri
that its investments in Argentina were linked. The dam contracts even
had default clauses stipulating that the suspension of work would
trigger the suspension of China’s railroad project, too. It was all or
nothing. Did Macri want to end up with nothing?
Two other factors intensified the pressure: Argentina’s worsening
monetary crisis and the election of Donald Trump. “When Macri took
office, his government hoped to sign a trade agreement with the United
States,” one Argentine government adviser told me. “Once Trump won, all
hopes were banished. The calculus changed.” America’s trade
protectionism diminished Argentina’s chances of having what people there
call “carnal relations” with Washington. By early 2017, Macri traveled
to China on a state visit. Resistance had turned into acquiescence. “His
positions changed quickly,” says María José Haro Sly, an Argentine
sociologist who has studied China-Latin American agricultural relations.
“It’s funny, but Macri has now signed more deals with China than the two
previous governments combined.”
The shift in attitudes was evident at the G-20 summit meeting in Buenos
Aires late last year. Trump and Macri had a cordial one-on-one meeting;
American support had been crucial for Argentina to obtain a $56 billion
loan package last year from the International Monetary Fund. But when
Trump’s press secretary, Sarah Huckabee Sanders, said the two leaders
had discussed “predatory Chinese economic activity,” Macri felt
compelled to object. “That comment ... was not representative of
Argentina’s view,” one of his deputies told The South China Morning
Post. “We value our relationship with China very much and have a very
important commercial relationship with China.” Pleasing two superpowers
is complicated. “At first, Macri tried to distance himself from China,”
says Andrés López, the head of the economics department at the
University of Buenos Aires. “But after seeing how hard that is, he’s
trying to find equilibrium between China and the United States.”
When Macri met with China’s president, Xi Jinping, a couple of days
later, they celebrated China’s role as Argentina’s most critical trading
partner, investor and financier, the basis of their newly christened
“comprehensive strategic alliance.” (It’s not as intimate as “carnal
relations,” but a step up from the marriage of convenience that
prevailed before.) In December, Xi and Macri signed more than 30 new
agriculture and investment deals, including another $8.6 billion
currency swap that makes China the biggest noninstitutional lender in
Argentina. The swap functions as a no-interest loan that helps keep the
government afloat and tamp down Argentina’s almost 50 percent inflation
rate. The atmospherics of the meeting were even more telling. When the
Argentine polo association presented Xi with a horse, the Chinese leader
smiled delightedly as Macri fitted him with a red polo helmet emblazoned
with the five yellow stars of China’s flag.
Macri isn’t looking his gift horse in the mouth, either. Despite his
tough initial stance, Macri’s financially hobbled government is now
embracing Chinese investments in oil, infrastructure and mining. Beijing
is moving quickly to control the lithium fields in northern Argentina
and Chile, which in 2017 accounted for almost half of global production
of the element, which is used in batteries. In January, Macri traveled
to southern Patagonia to reinaugurate the construction of the two
Chinese-funded hydroelectric dams that he suspended three years ago. It
was a humbling turnaround, but he was spared greater embarrassment when
the larger dam — once named for Néstor Kirchner, the former president
and husband of Macri’s rival, Cristina Fernández de Kirchner — was
rechristened Condor Cliff.
In the city of Ushuaia, on the icy spine of Tierra del Fuego, a
restaurant named Bamboo has a sign, in Chinese, that advertises the
place as “the southernmost Chinese restaurant in the world.” Ever since
Beijing approved Antarctica as a tourist destination about a decade ago,
the number of Chinese visitors making the journey has jumped from zero
to more than 8,000 a year (making up about 16 percent of all tourists to
Antarctica in 2018). Almost all of them go through Ushuaia, where they
crowd around Bamboo’s seafood buffet, which promises flavors that taste
almost like home.
The rise in Chinese tourism to Antarctica is driven not just by exotic
travel plans but also by strategic government priorities. Despite its
geographical location far from the poles, China promotes itself as a
polar power, maneuvering for influence over both the Arctic and
Antarctic. Last year ground was broken on China’s fifth research station
on Antarctica. Beijing emphasizes its desire to help govern the fragile
continent, but analysts say a central objective is to gain access to
Antarctica’s oil and mineral deposits — and to establish bases that will
help China develop superior GPS technology, giving it an edge in the
space-based arms race. (The Chinese space station in Argentina’s remote
Neuquén province is also meant to advance China’s space-and-satellite
technology.)
For all its geostrategic interests, China’s relationship with Latin
America is still driven by basic commodities, and soybeans have become a
symbol of superpower competition. As a result of the trade war and the
retaliatory tariffs China placed on American soybean products, China did
not import a single soybean from the United States in November. Brazil
and Argentina have leapt into the gap. Despite a drought that reduced
harvests by 40 percent last year, Argentina still exported seven million
tons of soybeans to China. (To feed its crushing facilities, Argentina
also became, weirdly, the largest importer of American soybeans in 2018,
buying $1.3 billion of beans from desperate United States farmers.) This
year, after abundant rainfall, Argentina expects to export 14 million
tons of soybeans, double the level from two years ago — almost all of
them will go to China.
When my family reached Buenos Aires, we realized that there were lots of
Chinese-run grocery stores that sold soy sauce to the growing Chinese
immigrant community. On the road, however, our predicament wasn’t
resolved until we stayed at a small Korean-run hotel in the remote
southern Patagonian town of El Calafate. When the Korean owner’s
daughter heard about our sons’ hankering for soy sauce, she made sure to
slip us a tiny glass bottle in a double plastic bag before our trip to
the glaciers. We carried that bottle with us for the rest of our
journey, pulling it out surreptitiously to put on our rice and eggs. It
was only near the end that I realized that the soy sauce was, of course,
made in China.
Brook Larmer is a contributing writer for the magazine.
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