Argentina's local economy gets Chinese investment boost

China's strong relationship with Argentina is increasingly felt locally, particularly in the more underdeveloped provinces, boosting the local economies, experts said.

Northern provinces like Salta, Jujuy, Catamarca, and Tucuman, are on the periphery of Argentina's national economy. To address this problem, Argentina's northern provinces have been particularly active in engaging directly with China, aware that Chinese investment represents crucial support.

"The northern provinces have been lagging behind the central provinces of the country. They often have fragile primary production structures," said Stella Juste, a researcher at the National Council for Scientific and Technical Research of Argentina.

"However, they have found a point of complementarity with China's interests in the region," she said. "This is extremely relevant for the future of bilateral relations and especially for the economic development of these provinces."

These relationships and connected investments are often fueled by China's Belt and Road Initiative. The BRI has played a key role in extending the depth of China's relationships in Latin America.

Direct efforts by provinces to ramp up their links to China have seen some success. Many have secured Chinese backing for projects, including the Cauchari Solar Park in Jujuy, the largest in Latin America, and the Cafayate Solar Park.

Catamarca and San Juan leveraged their links to China to develop wind farms, said Sebastian Schulz, a researcher at Argentina's National University of La Plata.

"These projects have been accompanied by the creation of genuine jobs, the construction of connectivity networks, and the influx of essential foreign currency for the country," said Schulz, an expert on Chinese studies.

Schulz also linked the growth in renewable energy projects in Argentina's northern provinces to China's new development concepts, which include internationalization and the promotion of low-carbon industries for the next three decades.

Since participating in the BRI in February 2022, the membership has helped Argentina strengthen its relationship with China and has benefited individual provinces.

Such projects have allowed Jujuy to diversify its production base and become a net producer of renewable energy. This is partly a result of the province's connection with Power-China, a developer of power stations around the globe, helping to build and operate the Cauchari Solar Park.

Meanwhile, Argentina is the fourth-largest lithium producer globally, with up to a third of the value it derives from lithium coming from exports to China.

Jujuy, Salta, and Catamarca provinces are the centers of the country's lithium industry. Last year, more than 40 percent of Argentina's lithium exports went to China, compared to 9 percent to the US, reported El Pais.

Between 2020 and 2023, Chinese companies invested $3.2 billion in mining projects in Argentina, including seven lithium projects, it said, citing government data.

"China's actions in Argentina, and Latin America in general, are complex and marked by a diverse presence on the ground. This is a notable characteristic of the relationship," Juste said.

The writer is a freelance journalist for China Daily.