Javier Milei on the campaign trail, eight months ago: “Not only am I not going to do business with China, I am not going to do business with any communist.”
During his relatively short but surprisingly meteoric political career, Argentina’s faux libertarian President Javier Milei has not exactly been shy about his feelings toward the People’s Republic of China. On the campaign trail, he told Tucker Carlson that he would never trade with China, which was then Argentina’s second largest trading partner, due to its government’s left-wing, authoritarian proclivities:
Not only am I not going to do business with China, I am not going to do business with any communist… I am a defender of freedom, peace and democracy. The Chinese don’t fit in.”
In an interview with Bloomberg, he referred to the Asian nation as an “assassin,” saying:
People are not free in China, they can’t do what they want and when they do it, they get killed. Would you trade with an assassin?
The Chinese government was typically tight lipped in its response. When Milei won the election, Beijing congratulated him.
“We congratulate Argentina on its presidential election and congratulate Mr. Milei on his election,” Chinese Foreign Ministry spokeswoman Mao Ning said at a regular press briefing in Beijing on Monday. “China values its relations with Argentina and we are ready to work with Argentina to continue nurturing our friendship and contribute to each other’s development.”
All of these statements of Milei’s were made on the campaign train. When Milei the candidate became Milei the president, he quickly softened his position, as he has with many of his other more radical positions, such as his pledge to shutter Argentina’s central bank and to dollarise Argentina’s economy. In relation to China, he now said he wouldn’t stand in the way of private business deals between Argentinian and Chinese companies. “We are liberals,” he said. “And if people want to do business with China, they can.”
But his government would not be engaging directly in business with the Chinese government or, for that matter, Chinese state-owned enterprises. Or so his voters were led to believe. But that, it turns out, was also not true.
A Very Sensitive Business
The Milei government is doing some very important — indeed, highly sensitive — business with the People’s Republic of China. That business is printing money.
With official annual inflation still raging at an eye-watering 289% in March — though the monthly rate is gradually coming down as the country’s economy is starved of internal demand by the government’s crushing austerity measures — new high-denomination notes are desperately needed. The highest denomination note currently in circulation is the 2,000 peso bill, which right now (11:26 pm, GMT+1, May 13) is worth just $2.26, according to Argentina’s official exchange rate.
The Central of the Republic of Argentina is about to begin the process of putting into circulation a larger denomination bill: the 10,000 peso note (with a current value of $11.31). The new bill will be distributed progressively to bank branches and ATMs throughout the country over the coming months.
What isn’t getting much attention — for obvious reasons — is the fact that the first batch of the new currency, consisting of 770 million bills, was manufactured not by Argentina’s national mint but by the China Banknote Printing and Minting Corporation (CBPMC), a state-owned corporation that carries out the minting of all renminbi coins and printing of renminbi banknotes for the People’s Republic of China, and which has a rapidly-growing list of government clients from around the world (more on that later).
This, understandably, has raised a few eyebrows among members of Milei’s La Libertad Avanza (Freedom Advances) coalition party. As an article in Clarín notes, some are questioning the wisdom of entrusting the manufacturing of a resource as “sensitive and strategic” as the country’s national currency to a company that is essentially owned by China’s communist government.
The new banknotes were not manufactured in-house by the Argentine Mint for an apparently simple reason: it has unpaid debts with many foreign suppliers of the technologies and resources needed to print new bills. That’s according to government sources cited by the Argentine newspaper El Cronista. A recent article by Clarín suggests that the Milei government’s wholesale slashing of public spending means there may not be enough money in the future either to pay for local manufacturing of most of the country’s banknotes.
In other words, Argentina is likely to become even more dependent on international suppliers for its own physical money supply. And as with so many manufacturing industries today, few can compete on price with the Chinese.
Nick Corbishley 