Belt and Road Initiative in Argentina

Date: 01 May 2022

The Belt and Road Initiative (BRI) is a development strategy and framework, proposed by Chinese President Xi Jinping, that focuses on connectivity and cooperation. It is open to countries across the world and often improves the infrastructure and trade where implemented.

Country Partnership

One of the most recent countries to join the BRI is Argentina. China and Argentina celebrated 50 years of cooperation as of the start of 2022. Their diplomatic relations have increased considerably over the past decade with China assisting on many infrastructure projects and Argentina officially joining the BRI in February.

Argentina has historically had power failures, which lead to air conditioning failures, food spoilage, dark schools, factories, businesses, and more. The primary focuses of the infrastructure built by Argentina and China are power and transportation.

Hydropower Dams

Condor Cliff and La Barrancosa hydropower dams are being jointly constructed by China Gezhouba Co. and Argentinian firms Electroingenieria S.A. and Hidrocuya S.A. The plan is to complete them in April 2022, although there seem to be many delays. Construction materials are being bought from Argentina where possible to boost growth of local industries.

Up to 20,000 local residents have been employed during construction and received good pay alongside China-supported training. Once completed, these dams will boost the nation's power supply by 6.5% and be able to supply electricity to 1.5 million households. This boost to domestic energy production will also allow Argentina to save over $1 billion annually in oil imports.

Nuclear Plant

Construction is starting on Agrentina's 4th nuclear power plant with assistance from China. The plant will have a 1,200 MW energy capability. The three existing plants, Atucha I (362MW), Atucha II (745MW) and Embalse (656MW) have a combined 1,763 MW capability and provide 7.5% of Argentina's energy. The new plant will create about 7,000 direct jobs.

China is financing 85% of the $7.9 billion loan, a preferential interest rate, and a grace period for the 8-year duration of the project. These type of loan terms are common when China invests in foreign projects, they often fund 85% or more of the cost with a grace period until the project is completed and operational.

Solar Power

Shanghai Electric Power Construction Company, SEPCC, built a solar power plant near Cachari in the Jujuy providence of Argentina at the cost of $390 million, which is 85% financed by China. The loan by China is for $331.5 million and will be repaid with an interest rate of 3% annually.

Residents benefit from employment opportunities as well as stable energy supplies, which helps mitigate local migration to larger cities. As of September 2020, the plant started providing power and is already helping 160,000 families.

The profit from the plant is being used to revitalize the region. Over 2,000 km of roads are going to be built as well as 258 brand new schools, the modernization and repairs of another 700, and training for teachers. This will allow Jujuy to build in 4 years more than 1/3 of the schools built in Jujuy in over 150 years.

The Jujuy Solar Plant is owned and managed by JEMSE, an Argentinian company. Indigenous communities who own the land where the plant is built on will receive 2% of the annual profits, which could be around $1 million. This project, as many others, provides the locals a career outside of agriculture. Many of them are now part of the specialist electromechanical operation and maintenance teams.

Wind Power

Chinese company Goldwind has worked on the Loma Blanca Wind Power Projects. Construction started in 2017 and was completed early 2021. There are five wind farms and 109 turbines that add enough energy to power 360,000 households and about 1,000 jobs during construction as well as many remaining after completion.

Rail

In 50 years, Argentina's rail infrastructure has received no investment of any kind. China is changing that.

The goal of the rail investments are twofold - to improve the rail itself as well as the rolling stock. These improvements will increase carrying capacity and speed of trains for both freight and passengers.

Argentina wants to renovate 10,000km of rail via various projects. China is financing at least 70% of many of them. Some of those include the 1,700km Belgrano Cargas cargo line, linking the main export port and the northwest breadbasket, San Martin and General Urquiza Cargas lines, as well as the passenger lines of Roca, Sarmiento, Mitre, and Norpatagonico, and many more. Additionally, Argentina is purchasing locomotives and cars from China to best utilize the improved rails.

As various portions of the rail renovations are completed, Argentina is seeing immediate growth in their shipments. 700km of the Belgrano Cargas line has been completed and there was a 27% increase in tons of cargo from Jan-Apr 2018 to 2019. In 2015 it took trains 18 days to travel from Salta to Rosario. As of 2019 that time has been cut down to 8 days.

Freight rail improvements help revitalize many farms in northern Argentina and improve the livelihoods of the workers. When corn and soybeans are delivered by truck, the capacity is low and the cost is high. This makes Argentina's grain prices less competitive and hurts the workers. Additionally, the rail improvements have created thousands of jobs across the country and Chinese technicians are training their Argentinian counterparts on maintaining the line themselves.

COVID

During early-mid 2020 it was difficult to acquire masks, ventilators, gloves, and other PPE as COVID-19 spread across the world. Argentina was able to acquire some of this equipment from China through 42 flights and five vessels in a mixture of purchases and donations.

Additionally, Argentina has purchased 6 million vaccine doses and continues to obtain more. China is even helping Argentina with local production of vaccines. Sinergium Biotech, an Argentinian lab, was under discussion to produce vaccines.

Conclusion

Overall, Argentina has seen many benefits due to its cooperation with China. The energy and transportation infrastructure improvements are massive, leading to less migration to large cities, jobs outside of agriculture, less reliance on international investments, reduced occurrence of power outages, and more. The projects are owned by Argentinian companies, or the government, which allows the country to benefit the most from the improvements as opposed to the projects being foreign owned.