PIED3750 Dissertation

Opportunities and challenges of Chinas presence in Latin America

An assessment of ten years of the Sino-Argentine Strategic Partnership
(2004 - 2014)

Dr Soohyun Christine Lee

28th April 2014
University of Leeds
BA International Relations (International)

Word count: 11,890

Vice-president Li Yuanchao visit to the Argentine National Congress. Buenos Aires, 2013.

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Abstract

The last decade has witnessed a tremendous shift in the global distribution of wealth
in favour of the developing world. This has sparked great expectations within the
South-South grouping for the establishment of a fairer international system.
However, behind the preached discourse surfaced the reproduction of a NorthSouth framework. Such criticism has especially arisen in regard to Chinas dramatic
ascension in Latin America. With a focus on the case of Argentina, this paper
contends that Chinas rise reproduces the historical subordination of the region.
Based upon the realist, liberal institutional and constructivist lenses of the
International Relations discipline, this study highlights the challenges, but also the
opportunities, posed by Chinas new presence.

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Table of Contents

Acknowledgements..i
List of figuresii
List of abbreviationsii

1.

2.

3.

4.

Introduction1
1.1

Purpose..5

1.2

Theoretical framework.6

Argentina, cycles of globalisation and hegemonic powers..8

2.1

Pax Britannica (1862-1947)9

2.2

Pax Americana (1947-2001).10

2.3

Pax Sinica?............................................................................................11

The reproduction of a North-South framework..14

3.1

The Realist view: A Zero Sum Game..15

3.2

The Liberal Institutional view: A Positive Sum Game...22

A nascent South-South imagined community....30

4.1

The Constructivist view: Towards a Smart Partnership?.......................31

5.

Discussion and Conclusion.38

6.

Bibliography.42

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Acknowledgements
First of all, I would like to thank the University of Leeds for granting me the opportunity
to study in Argentina during my year abroad. In Buenos Aires, I have had the chance
to meet a plenty of inspiring people from various horizons and learned much about the
countrys moving history. In addition, I would like to thank Dr Soohyun Christine Lee
for her support and fruitful feedbacks during the elaboration of this project.

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List of figures
Fig. 1 Theoretical Framework7
List of abbreviations
CELAC Community of Latin American and Caribbean States
FDI Foreign Direct Investment
FTAA Free Trade Area of the Americas
FTA Free Trade Agreement
IDB Inter-American Development Bank
IMF International Monetary Fund
INDEC National Institute of Statistics and Census of Argentina
ISI Import Substitution Industrialisation
Latin America Here, used to describe the area comprised of South America, Central
America, the Caribbean and Mexico
M&A Mergers and Acquisitions
MERCOSUR / MERCOSUL The regional trading bloc composed of Argentina, Brazil,
Paraguay, Uruguay, and Venezuela
OAS Organisation of American States
Pacific Alliance The economic alliance composed of Chile, Colombia, Mexico, and
Peru
PRC Peoples Republic of China, also used interchangeably with China
R&D Research and Development
SOE State-Owned Enterprise, also referred to as national champion
South America Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana,
Paraguay, Peru, Suriname, Uruguay, and Venezuela
ToT Terms of Trade
UN United Nations
WTO World Trade Organisation
ii | 2 0 0 5 6 6 9 4 3

Opportunities for South-South cooperation in trade, investment but also in other

matters are emerging () There are also challenges, especially when it comes to
avoiding reproduction of a centre-periphery pattern in which the region becomes over
dependent

in

primary

products,

something

ephemeral

in

the

long

run.

- Xulio Rios preface in Hardy, 2013, p.XII

1.

Introduction
In the last decade, the emergence of a new geography of trade between developing

countries has given rise to expectations of a fairer international system. Indeed, the so
called South-South trade is now growing twice as fast as the one between developed
nations (Hardy, 2013, p.12). Such transformation is the consequence of a structural
and irreversible shift in wealth to the emerging economies (OECD, 2010). This change
in the pendulums direction has spawned new powers that have increasingly
questioned the legitimacy of the United States economic and political world
architecture.

The new geography of trade generated a surge in commercial

interactions between developing countries which engendered further cooperation.

However, not all emergent economies have opted for the same developing
strategies. Whilst some nations have driven their growth from manufacture and low
key production, others have benefited from a boom in the price of commodities (Fanelli
and Albrieu, 2012). This led to different paces of development reflected in an unequal
distribution of power within the South-South grouping. As such, China has emerged
as a natural leader in terms of both its economic and political clout (Efstathopoulos,
2013). The concept of a Beijing Consensus - the Chinese alternative to the neoliberal
economic narrative - then arose in opposition to the historical Washington Consensus
(Fernndez and Hogenboom, 2010b).

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The Washington Consensus represented the climax of the global US-led world
system (Corigliano, 2007; Erazo, 2010). Born in the wake of the 1990s, it was
extensively applied in Latin America. In the region, it was perceived as the latest
occurrence of a centre-periphery pattern by which developing countries are
subordinated to developed ones. This North-South framework included an economic
as well as a socio-political aspect. To that end, the Washington Consensus professed
a decalogue of market orientated reforms, but also involved alignment with the US in
non-economic international regimes (Corigliano, 2007; Hardy, 2013). According to its
critics, its implementation dramatically weakened public institutions and caused a
surge in inequality (Escud, 2011; Hardy, 2013). Following the economic crises of
1998, the original concept of the Washington Consensus was abandoned and regional
leaders adopted a more critical stance vis--vis the US.
It is in this context that the South-South trade gained traction within Latin American.
In the region, the South-South momentum is denoted by two dynamics. On the one
hand, it has witnessed an exponential growth of intra-regional trade; on the other,
China has emerged as a new major regional actor (Hardy, 2013; OECD, 2010).
However, it can be said that Chinas new role has been by far the most potent and
novel force over the past decade. Firstly, it has been increasingly investing in the local
mining, transport, petrol, and financial industries. Secondly, as the most important
emerging commodity importer, it has offered a new market for Latin American
products, and by the mechanism of supply and demand substantially increased the
price of primary products (Fernndez and Hogenboom, 2010; Iturre and Mendes,
2010; Strauss and Armony, 2012). In 2000, China was the seventh-largest export
market for Latin America; it is now third and soon to become second, only after the US

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(ECLAC, 2010). It is also the third largest external investor in the region (Dadush,
2010).
To illustrate this dynamic Argentina offers an insightful case study. Poster child of
the implementation of the Washington Consensus by the Bretton Woods institutions
in the 1990s, it subsequently turned into one of the greatest sovereign defaults in
modern history. The 1999-2002 crisis marked the culmination of a tense experience
in which the animosity of the Argentine people against the global trade regime
eventually erupted into an institutional crisis in 2001 (Escud, 2012). As such, studies
have found Argentina to be the country of Latin America with the most negative public
perception of the US (Oviedo, 2006).
China has been the crucial factor behind the countrys swift recuperation (Escud,
2011; Hardy, 2013; Paz, 2013). It has surpassed the US to become Argentinas
second export market, just after Brazil (ING, 2012). The country is the third largest
producer of soy bean in the world and China the greatest consumer. From 1990 to
2004, Chinas demand for soy bean has increased by 460%, whilst global production
only by 32% (Castro, 2010). Chinas hunger for soy bean is due to its growing middle
class. Soy bean is a crucial input in meat production, whose demand is positively
correlated with the size of a countrys middle class (Castro, 2010). Besides, China
hosts 22% of worlds population with only 7% of its arable land (Giuffre, 2010). This
imbalance makes the country dramatically reliant on foreign imports to feed its
population. According to Eurasia Group, a political risk consultancy, food and
commodity scarcity were among the top 2013 risks that the country faced (Eurasia
Group, 2013). In 2010, the main sources of Chinas soy bean were the US (36%),
Argentina (19%) and Brazil (16%) (Castro, 2010).

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In spite of the economic linkage between both countries, the relationship has been
characterised by its conflictive nature. Argentina is the Latin American country with
the most trade disputes against China (49%), followed by Brazil (28%) and Mexico
(11%) (Hardy, 2013, p.170). Argentine exports for the most part primary products to
China whilst it imports essentially manufactured goods. As of 2006, 84% of Argentine
exports to China were concentrated in basic foodstuff (Oliva, 2010, p.106). This
touches on the debate of Chinas new role in the international system in general and
in Latin America in particular. The uncertainty about Chinas rise concerns its capacity
to provide a comprehensive alternative to the current international system. As such,
some have questioned its revisionist potential and the singularity of its rise compared
to other hegemonic instances (Brutsch and Mihaela, 2012; Efstathopoulos, 2013).
In the case of Argentina, critics of Chinas presence have emphasised the
asymmetry of the relationship and its similarity with past hegemonic instances (Brutsch
and Mihaela, 2012; Oviedo, 2006; Quintana, 2009). It has been argued that China has
embraced the US-led world system and is unwilling to build a fairer international
architecture. In that sense, the South-South discourse is denounced as hypocritical
and instrumental in serving Chinas economic and political objectives. Chinas
presence is perceived through a realist approach based upon a narrow vision of
national interest. They contend that China reproduces the historical process of
primarisation of Argentina. That is to say, an economic process characterised by the
concentration of the countrys exports in primary products. Hence, they claim that
Chinas presence must be controlled, if not limited.
In contrast, some have contested that China does represent a novel opportunity for
Argentina (Escud, 2012; Fernndez and Hogenboom, 2010; Hardy, 2013; Paz,
2013). In that matter, they argue that the Asian superpower represents a lasting
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partner. Here, the adopted approach concentrates on a more liberal view founded on
the premises of free trade. They support further bandwagoning with China and
compare it positively to Britains role in the region during the 19th and early 20th
century.
In spite of disagreements about the virtues of Chinas presence in Latin America,
both sides agree on the crucial dynamic that links the Asian giant to Argentina. This is
what Fernndez and Hogenboom identify by distinguishing between endogenous and
exogenous development models (2010, pp.25-26). On the one hand, China has
followed an atypical endogenous development model based on state intervention and
the constitution of a prominent industrial sector. This has empowered it to shape the
process of globalisation as reflected in its impact on the global demand for
commodities. On the other hand, Argentina has throughout history relied on an
exogenous development model based upon the exportation of primary products. This
has made it much reliant upon global tendencies such as fluctuations in the price of
commodities (Andrs, 2010; Corigliano, 2007; Escud, 2011). As such, Chinas new
role will dramatically continue to impact Argentinas position in the international
economy. Therefore, in regard to the regions historical subordination to hegemonic
powers, how far is Chinas presence any different?
1.1

Purpose

The aim of this study is to explore the extent to which Chinas interaction with
Argentina offers an alternative to the countrys historical relations with great powers.
Such relationships have been characterised by a centre-periphery pattern. To that
end, this paper investigates the dynamics of the Sino-Argentine association in regard
to previous hegemonic instances in the region. Those hegemonic instances

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correspond to the Pax Britannica under the British informal empire (1862-1947) and
the Pax Americana under US supremacy through international regimes (1947-2001).
The chosen period (2004-2014) is identified as framing the new impulse of the
bilateral tie. In 2004, was signed between President Nestor Kirchner and Premier Wen
Wen Jiabao the joint-agreement which led to the instauration of the Strategic
Partnership (Oviedo, 2010, pp.451-461). Consequently, 2014 equates to the
celebration of ten years of the Sino-Argentine Strategic Partnership.
1.2

Theoretical framework

Such an ambitious analysis requires adopting a comprehensive methodology. In

fact, to better reflect on the nature of the Sino-Argentine relationship it is necessary to
outline its main political, economic and social components. To that end, this paper
uses the three central lenses provided by the International Relations discipline, namely
realism, liberal institutionalism and constructivism.
Each theoretic lens provides a systematic way of thinking about how the
international system operates (Bremmer, 2010, p.47). Adler and Barnett distinguish
the theories based upon their degree of materiality (see fig. 1 next page). As they
contend (1998, p.10):
On one end is realism, which assumes that the structure of international politics is
defined by the distribution of power and thus a highly asocial environment, and
observes a series of discrete, exchange relations among atomistic actors. On the other
end is constructivisms recognition that international reality is a social construction
driven by collective understanding, including norms, that emerge from social
interaction.

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This difference is reflected in how each theory perceives the rules of the game in
the realm of international politics. In the first place, realism - and to a lesser extent
liberal institutionalism -, assume that states preferences are fixed (Adler and Barnett,
1998, p.10). Both theories describe interactions between states as driven by political
and economic interests which mirror the unequal distribution of power within the
international system (Guzzini, 1998, pp.62-63). Thus, they mostly perceive the SinoArgentine relationship in terms of material asymmetry and dependency. In the second
place, constructivism postulates that states are cognitive actors with mutable identities
and changing preferences (Wendt, 1992, pp.391-392). As expressed by Adler: ()
cognitive structures like games whose constitutive rules give meaning to the moves
constitute identities, interests and behaviour, but are, in turn, also constituted by
them. (1997, p.266). Hence, the constructivist theory perceives how the SinoArgentine interaction leads to changes in preferences that surpass the constraints
associated with the identified material asymmetry.
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This paper adopts all three theories because it contends that each emphasises on
a different aspect of the relationship. Furthermore, in the logic of the constructivist
approach, it analyses how the normative structure affects the material one. That is to
say, how Chinas South-South rhetoric affects and constrains the way in which it
projects its material power. As this paper will demonstrate, this specific process is
fundamental in understanding the transformation of Chinas attitude with regard to the
developing world.
2.

Argentina, cycles of globalisation and hegemonic powers

Throughout its history, Argentinas destiny has been tied to cycles of globalisations

underlined by the rise and fall of great powers. This specific trait can be extended to
the whole Latin American region and derives from two main structural factors. Firstly,
since its independence from mainland European colonial powers, the region has
specialised in the exportation of basic commodities. In Argentina this has translated in
shifting specialisations from corn, wheat to - more recently - soy bean (Escud, 2012).
The specialisation in a particular product is contingent to the evolution of technology
and global demand. Intimately linked to these transformations is the rise and fall of
great powers. As such, Argentinas recent specialisation in soy bean can be traced
back to the emergence of China and subsequent boom in the global soy bean demand
(Escud, 2012, Ferchen 2011). Secondly, the geographical proximity of the region to
the US explains, to a degree, its limited autonomy in the second part of the 20th
century (Erazo, 2010).
Argentinas particular exogenous development model makes it important to identify
past cycles of globalisation in order to place the Sino-Argentine relationship in
historical perspective. Although the academic literature diverges on the exact number

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of cycles of globalisation that have affected Argentinas position in the world economy,
this paper identifies two main sequences. Furthermore, it also includes the prospects
of China leading a third wave of globalisation in the region.
2.1

Pax Britannica (1862-1947)

The first cycle of globalisation, identified from 1862 to 1947, corresponds to

Argentinas subordination in a world economy led by Britain. In 1862, Argentina
emerged as a unified country under the presidency of Bartolom Mitre. At the time,
the agricultural export sector represented the ruling class of the nascent Republic
(Hardy, 2013, p.189). Following Napoleons defeat and the subsequent 1814 Vienna
Congress, Britain ascended to a global superpower. This new hegemonic instance
ushered in a century of world domination and peace; commonly referred to as the
Pax Britannica (Corigliano, 2007). With its great agricultural potential, Argentina
became a crucial trading partner to Britains blossoming economy and a key actor to
sustain the process of industrial revolution in Europe (Erazo, 2010).
The economic linkage between both countries was in its initial stages a mutually
beneficial interaction. At this time, Britain invested heavily in Argentine infrastructures,
especially in railroads, port infrastructures, and refrigerated items (Andrs, 2010;
Corigliano, 2007). Most of these investments were aimed at enhancing the agricultural
exporting capacity of the country, also referred to as the agro-export model. From 1865
to 1914, Argentina received in average 8.6% a year of Britains investments abroad
(Erazo, 2010, p.30). However, this relationship engendered the formation of a dual
economy. On the one hand, capitalism was applied in the external world; on the other,
pre-capitalism was applied in the domestic economy (Erazo, 2010). That is to say, a
growing contrast emerged between a state-of-the-art agrarian complex and a marginal

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and uncompetitive industrial sector. As a result, the agro-export model consolidated

the power of a landed aristocracy over a mostly deprived population, a region wide
pattern which is at the origins of Latin Americas unequal societies (Corigliano, 2007).
2.2

Pax Americana (1947-2001)

The second cycle of globalisation, identified from 1947 to 2001, corresponds to a

mix of periods of subordination and isolation. It relates to the diminishing presence of
Britain in the region as a result of the Second World War, and the rise of the US as a
global superpower (Andrs 2010; Corigliano, 2007). In 1947, Britain clogged the
convertibility of the sterling, stepping down from its central position in the global
economy. At the same time, the Bretton Woods institutions were established and the
US dollar emerged as the sole uncontested international currency. With the advent of
the Cold War, Latin America became what is known as the US backyard. The US
derived its right to intervene in the regions domestic affairs with the revival of the 1823
Monroe Doctrine (Oviedo, 2006). However, this time-frame corresponds to both
preferential relations with the US and antagonism. In that sense, Argentina shifted
between the protectionist Import Substitution Industrialisation (ISI) model, and more
orthodox free-market policies at various times (Andrs, 2010). Entangled in the context
of the Cold War, this period was characterised by the succession of military
dictatorships in Argentina coupled with high inflation and weak growth.
From 1991 to 2001, Argentina was incorporated into a US-led renewed Bretton
Woods system (Corigliano, 2007). This was the result of both political and economic
factors. By 1991 the local elites had begun to question the merits of the isolationist
model. On the economic front, high inflation and crippling debts delegitimised the
virtues of the ISI system (Corigliano, 2007). On the political front, the defeat in the

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Falklands in 1983 was perceived in a new light which led to an abandonment of the
countrys non-alignment policy during the Cold War (Escud, 2012). In this context,
arose an alternative vision of foreign policy in support for further bandwagoning with
the US (Escud, 2012). The convergence of these elements led to high expectations
over the Washington Consensus. However, by 2001 the country was left disillusioned
as the neoliberal experiment had further deteriorated Argentinas position in the
international economy.
2.3

Pax Sinica?

Within a decade, China has imposed itself as a major actor in the region. This new
role coincides with US lessened influence in Latin America. The failure of the Bretton
Woods experiment coupled with President George W. Bushs War on Terror in the
Middle East dramatically diminished the relevance of Latin America in US foreign
policy (Corigliano, 2007; Escud, 2012). This receding influence was most notable at
the Fourth Summit of the Americas held in the Argentine coastal city of Mar Del Plata
in 2005. The summit represented the last attempt to date of the US to enforce the Free
Trade Area of the Americas (FTAA). It was characterised by a regional opposition to
the US sponsored neoliberal project and fierce popular protests (Fernandez and
Hogenboom, 2010b, p.187). As a result, some have referred to Chinas expansion as
part of a new cycle of globalisation for Latin America. Accordingly, Fernandez and
Hogenboom label Chinas presence as a new desembarco (arrival) in reference to its
similarity with the British, and later American, sway in the region (2010, pp.25-26). This
paper corroborates with this view and associates Chinas new regional presence as
the beginning of a third wave of globalisation.

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On the diplomatic front, two factors have driven Chinas strategy in the region.
Firstly, Chinas historical interest in Latin America has been motivated by the
international recognition of the Peoples Republic of China (PRC) over the Republic of
Taiwan (Oviedo, 2010; Rios, 2010). This was particularly illustrated by Chinas
Popular Diplomacy which involved a series of high-ranking officials tours in the region
(Oviedo, 2010). This dynamic still has resonance today. Most of the countries that
recognise the Republic of Taiwan are situated in the Caribbean (Rios, 2010, pp.222225). Secondly, China also uses its diplomatic connections in the region to bolster
support in international organisations. This was especially the case regarding the
recognition of the Asian giant as a market economy within the World Trade
Organisation (WTO). Indeed, the recognition of China as a market economy was a
fundamental pre-requisite in the establishment of the Sino-Argentine Strategic
Partnership (Oviedo, 2010; Quintana, 2009).
Over the past decade, Chinas involvement in the region has shifted from a
diplomatic to an economic focus. This is the result of its new global strategy driven by
resource security (Iturre and Mendes, 2010). In effect, to sustain such high pace of
growth China has had to increasingly rely on foreign imports of raw material and
natural resources (Fernndez and Hogenboom, 2010). To that end, Africa has been
the first region where State Owned Enterprises (SOE) and state officials have
proposed joint-agreements to foreign governments (Power et al, 2012; Sutter, 2008).
In this framework, China provided low interests loans to governments in exchange for
exploitation licences for its SOE. The broadening of Chinas strategy to include Latin
America is motivated by its increasing reliance upon energy and food imports
(Ferchen, 2011). As such, most of Chinas investments in the region concern public
infrastructures and resource extraction industries. It also proceeds to Mergers and
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Acquisitions (M&A) in order to take control of operating companys stakes (Fernndez

and Hogenboom, 2010, p.8).
This international division of labour dictated by the Chinese economy has impacted
the region in different ways. Chinas initial specialisation in low key manufacture with
low wages has exacerbated competition with Latin Americas developing economies
(Phillips, 2010; Oviedo, 2013). In that respect, the case of Mexico stands out from
other countries of the region. The Mexican economy has adopted a similar
specialisation to the Chinese one in a way that their production chains enter in direct
competition (Di Masi, 2010). In contrast, South American economies have privileged
a commodity export model and although their own industry is at risk, the main drivers
of their growth remain untouched (Hardy, 2013, pp.168-170).
In response to Chinas rising regional presence, states have adopted different
strategies. Countries like Brazil and Argentina have enforced protectionist measures
against Chinese goods, especially in order to protect their car parts industry (Di Masi,
2010). Other countries, such as Chile and Costa Rica, have signed free trade
agreements (FTA) with China, accepting the detrimental impact on their respective
industries (Hardy, 2013, p.156). Broadly speaking, two groups of countries within Latin
America seem to diverge on the role of China in particular and the virtues of free
market in general. On the one hand, the Pacific Alliance composed of Chile, Peru,
Colombia and Mexico stresses economic liberalism. On the other, the Mercosur
alliance composed of Argentina, Brazil, Uruguay, Venezuela and Paraguay promotes
more protectionist measures and a deepening of regional trade (The Economist,
2013).

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This chapter has planted Chinas growing regional presence in the context of
Argentine historical insertion in the international system. Argentine subordination to
great powers has proven to consolidate its marginalisation in the international
economy. Under the British informal empire, it managed to reach its golden age at the
expense of the establishment of an independent industry. In a different framework,
under the Washington Consensus, the domestic politics and economy were co-opted
by transnational interests. The political vacuum left by US contempt for the region has
bolstered Chinas new role. In that sense, within the space of a decade China has
become Latin Americas leading commercial and financial partner (Oviedo, 2013).
3.

The reproduction of a NorthSouth framework

The North-South framework is an applied term derived from the concept of the

North-South divide. The concept of a North-South divide was initially coined to

distinguish a broadly defined socio-economic rift between the more developed
countries of the North and the less developed countries of the South (Kruger, 2009).
Based upon the Wallenstein model of core and periphery systems, Oviedo identified
how such asymmetry has emerged in the Sino-Argentine relationship (2013, p.5).
According to his analysis, the relationship initiated as semiperipheralsemiperipheral
when the Sino-Argentine tie was first normalised in 1972. Subsequently, as China rose
and Argentine stagnated, the relationship progressed to the actual peripherycore
model at the turn of the century. Therefore, the evolution of the balance of power has
exacerbated the asymmetric trait of the Sino-Argentine relationship.
Thus, the material aspect of the bilateral tie is similar to the NorthSouth
framework. The repercussions of such an asymmetric relationship have different
bearings. This complexity is manifested by the diverging viewpoints between the

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realist and liberal institutional theories of the International Relations discipline. Both
emphasise the importance of the balance of power in what is perceived to be an
anarchical international system (Wendt, 1992). They focus on states as main units,
although they also account to varying degrees for non-state actors, such as
multinationals and international organisations. However, whilst the realist doctrine
perceives asymmetric relations as mostly serving the interest of the stronger state
against the weaker one, the liberal institutional school presupposes that cooperation
emerges in the long-run (Keohane, 1988). In the first part, this chapter underlines the
main elements of the pessimistic realist perception of the relationship and draws
similarities with past hegemonic instances. In the second part, it discusses the more
optimistic liberal institutional perspective, and stresses its limits.
3.1

The Realist view: A Zero-Sum Game

The realist doctrine can be traced back to Ancient Greece and the narratives of
Thucydides on the Peloponnesian War. It perceives power defined in terms of military
capabilities as the main locus of politics (Bremmer, 2010, p.47). Contemporary realism
is constructed upon Hobbes account of the state of nature (Gallarotti, 2010). According
to Hobbes, individuals live in an anarchical system where only material capability can
ensure the sustainability of a sovereign.

As Gallarotti notes: Tangible power

resources can be used to repel acts of force, and they can be used to compel actors
into submission. (2010, p.18). In that standpoint, sovereign states seek to collect
power in order to better ensure their security; this is also known as the security
dilemma (Bremmer, 2010, p.47). It is a zero-sum game, in that ones increased power
results in the loss of power from another actor.

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However, this does not only concern military power, but also includes socioeconomic elements in order to sustain such lethal force. To differentiate this objective
from military development alone, Meirsheimer opposes latent power to military power
(Gallarotti, 2010, p.17). This latent power has a bearing on the way economic
relationships are maintained. The relationship between the military and the economy
has historically been sustained through mercantilism. Originally, mercantilist policies
sought to support the military prowess through the accumulation of gold reserves. This
was possible by the means of a tightly associated trade sector with the state apparatus
so as to ensure a positive balance of trade. As Guzzini contends (1998, p.170):
Technological and organizational innovations in warfare bolstered the rise of
mercantilism () Both the production of gunpowder and the rise of professional armies
depended on the merchant trading system (to assure the provision of powder) and
wealth (to pay the armies).

Following the rise of Britain as a global hegemon in the 19th century, mercantilism
was progressively abandoned and Adam Smiths liberal creed embraced (Silver and
Arrighi, 2003). Nevertheless, mercantilism has survived as a marginal practice and
resurged in times of crisis (Silver and Arrighi, 2003). Similar to the realist assumption,
it perceives international trade as a zero-sum game with gains of trade made at the
expense of others. In that matter, the mercantilist view of the international system
corroborates with the modern realist school of the International Relations discipline
(Jones, 1986, p.10-11).
Chinese economic policies have often been described as mercantilist (Leverett,
2010; Rodrick, 2010). The adoption of mercantilism as a driving force in Chinas
international trade is based upon two factors, among others. Firstly, since the gradual
opening up of its economy, China has manipulated the yuan. Doing so, it has
16 | 2 0 0 5 6 6 9 4 3

strengthened its position as a chief exporter by under-valuating its national currency

(Rodrick, 2010). Secondly, China has adopted since the 2000s a strategy of resource
drain, also coined as resource mercantilism (Leverett, 2010). To that end, Chinas
Going Out strategy emerged in order to secure crucial raw material for its internal
development (Strauss and Armony, 2012). It was first put in motion in 2004 with the
Guidance Catalogue on Countries and Industries for overseas investments (Dittmer,
2010, pp.40-41). The official document ensured preferential loans for Chinese
companies investing in resource extraction industries, which for the most part were
concentrated in developing countries.
Furthermore, in 2007 China announced the creation of the China Investment
Corporation which sought to invest in strategic assets abroad using part of Chinas
$ 2.4 trillion dollars reserves (Hardy, 2013, pp.162-163). This was motivated by the
increased needs of the domestic population but also in order to sustain the pace of
development of the productive sector. Such operations have been strengthened given
the particular bond between national companies and the state. Similar to the
mentioned adopted pattern in Africa, China has pursued its resource diplomacy
through the international deployment of its national champions, or SOE, as part of its
energy and food security agenda (Fernndez and Hogenboom, 2010b).
In Argentina, this was illustrated by Chinas acquisition of wide areas of arable land,
also known as land grabs, and concessions of mining sites. In that regard, in January
2011, Beidahuang Group - a conglomerate of state-owned agribusinesses -, leased
320,000 hectares of arable land from the Ro Negro province for a 20-year period. The
agreement handed over thousands of hectares to the agribusiness SOE for the
production of soy beans, wheat and oilseed rape, among other crops (Grain, 2011).
Furthermore, it stipulated stringent closes in order to maximise the firms profits whilst
17 | 2 0 0 5 6 6 9 4 3

leaving it free from liability. This included, among others, the tax exemption of exported
crops as well as the use of a newly constructed port on the Atlantic coast, free of
charge (Grain, 2011). Conversely, Beidahuang Group has agreed to invest $1.45
billion dollars over the period, especially in infrastructures such as irrigation systems
(Hardy, 2013, p.163). Whilst the agreement brought some much needed inflows of
foreign capital, its environmental impact and the overall economic sustainability of the
project have received much criticism from the local population (Grain, 2011). In the
same province, in 2006 SOE Chinas Metallurgical Group Corporation (MCC) acquired
70% of exploitation rights of Minera Sierra Grande's iron-ore mine, with a 30-year
concession (Oviedo, 2010).
China has also adopted an aggressive stance on equity stocks of resource
extraction industries operating in the country. In March 2010, China National Offshore
Oil Corporation (SNOOC) bought $3.1 billion dollars for a 50% stake in Argentine oil
and gas holding company Bridas Energy Holdings (Oviedo, 2010). Likewise, in
December 2010, refiner Sinopec Group purchased Occidental Petroleum Corporation
(OXY) Argentine oil and gas unit for $2.45 billion dollars (Escud, 2011).
Moreover, China has expanded its financial hold on the country (Oviedo, 2010). In
2011, Industrial & Commercial Bank of China (ICBC), agreed to take over 80% of the
Argentine subsidiary of Standard Bank Group in a $600 million dollars deal. This was
the greatest takeover of the world's biggest bank, in market value, within the last three
years (Tong, 2011). As emphasised in the official ICBC statement: This is the first
acquisition of a Latin American financial institution by a Chinese bank, also the first
time a Chinese bank acquires a mainstream commercial bank outside China
(excluding Hong Kong, Macau). (ICBC, 2012).

18 | 2 0 0 5 6 6 9 4 3

Consequently, following the realist logic, Chinas South-South rhetoric serves three
purposes in the countrys gradual rise to power. Firstly, it creates a platform by which
to better sell its Going Out mercantilist strategy. Secondly, it is used as part of Chinas
Popular Diplomacy so as to gain support in multilateral organisations. Thirdly, it
serves as a soft-balancing tactic against US hegemony (Oviedo, 2010, pp.459). This
rhetoric was embedded in the 2008 Latin America White Paper. The document
represented the first-ever Chinese foreign policy paper on the region (Giuffre, 2010).
It expressed Chinas interest in Latin America in terms of its abundant natural
resources and its good base for economic and social growth and tremendous
development potential (Castillo, 2009). The paper was filled with Chinas narrative
about a win-win situation and a mutual benefit relationship (Ferchen, 2011). In
regard to Chinas aim to rise as a global hegemon, this discourse is perceived by
realists as deceitful diplomacy.
In fact, it has been argued that Chinas historical tradition of statecraft is still strong
today (Gurtov, 2010, p.20). This type of diplomacy was first used during Chinas
imperial times in order to better rule upon its Asian neighbourhood. As Gurtov states:
Ancient Chinese statecraft, passed down from the earlier days of Chinas Imperial
history, reflects a tradition of deception and intrigue and a highly developed sense of
political strategy that enabled it to gain advantage over rivals. (2010, p. 20). This still
resonates in modern times. This was notably echoed by Deng Xiaopings rhetoric
about hide brightness, nourish obscurity which is at the backbone of Chinas peaceful
development discourse (Dittmer, 2010, p.225).
Such deception dramatically impacted the Sino-Argentine relationship in the wake
of the Strategic Partnership proclamation. In 2004, Argentina concluded an agreement
with China to concede it with market economy status at the WTO in exchange for
19 | 2 0 0 5 6 6 9 4 3

investments and the purchase of sovereign debt (Oviedo, 2010, pp.456-458). But the
Argentine government was left disillusioned as Chinas purchase of Argentine debt
never materialised (Quintana, 2009, pp.6-7). Although, according to Hilton, Chinas
refusal to pay Argentine national debt was due to pressures from the US which was
wary about its fading influence in the region (Hilton, 2013, p.3). Nevertheless, this
disenchantment has led some observers to characterise the relation as a cuento chino
(tall story) (Olivia, 2010, p.14; Oviedo, 2010, p.458).
Another particularity of Chinas South-South relations is that they are for the most
part based upon bilateral ties. In its relationship with Argentina, China exclusively
relies upon bilateral agreements (Hilton, 2013). This is coherent with the realist tactic
of divide and rule in international politics. In fact, China possesses much more
leverage when dealing with one country at a time, rather than as a bloc. Furthermore,
it also lessens the risk of retaliation (Hardy, 2013, p.181-185). According to
Shambaugh: Advocates of Chinese realism tend to argue () that Western attempts
to enlist greater Chinese involvement in global management and governance is a
dangerous trap aimed at tying China down, burning up its resources, and retarding its
growth. (2011, p.13). In that view, Chinas preference for bilateral ties comes as a
consequence of its fear of multilateralism which empowers weaker states. Thus, China
pursues Strategic Partnerships with developing countries in order to enforce trade
agreements based upon its own terms.
The perception of China as a nation that follows mercantilist policies and a divide
and rule strategy in its pursuit of global hegemony resembles to the regions relation
with great powers. In that sense, Chinas use of its economic and financial clout to
open developing countrys markets for exports and investments in resource extracting
industries has been compared to the resurgence of the Gunboat Diplomacy
20 | 2 0 0 5 6 6 9 4 3

(Shambaugh, 2011, p.12). Gunboat Diplomacy corresponds to the pursuit of a

diplomacy based upon the use or threat of the use of force, often by military means.
Such diplomacy was pursued especially by Britain and the US in order to impose free
trade agreements and access to natural resources in Latin America new born
Republics during the 19th and early 20th century (Graham-Yooll, 2002). Hence,
Chinas presence in Latin America reproduces the pattern of emerging great powers
that sought global hegemony through the expansion of privileged economic relations.
The implications for Argentina are three-fold. Firstly, Chinas mercantilist strategy
revolving around the appropriation of natural resources has deprived the countrys
control over its strategic assets. This is what Oviedo contends as he argues that nonrenewable resources should be employed to develop Argentinas internal economy,
rather than to serve for exports (Oviedo, 2010, pp.483-484). This is most certainly true
concerning the petrol and gas sector, given that Argentina has become dependent on
energy imports since 2007 (Fanelli and Albrieu, 2012). Secondly, Chinas divide and
rule tactic has come at the cost of the regional integration process. In that sense, Oliva
states that Chinas growing interaction with Latin America has halted processes of
regional integration (Olivia, 2010). Finally, Chinas growing presence has engendered
a relationship of dependency. In fact, through the acquisition of companies in the
extracting and financial sector, China has increased its leverage upon the Argentine
government (Oviedo, 2013).
However, there are several limitations to the cynical portrait painted by the realist
doctrine. Firstly, it fails to account for the trade outcome of the Sino-Argentine
relationship. Since the outset of the Strategic Partnership in 2004, Argentina has
benefited from a surplus with China over its commercial balance (ECLAC, 2010). In
other words, Argentina exports more in absolute value to China than it imports from it.
21 | 2 0 0 5 6 6 9 4 3

This observation contradicts the principal axiom held by the mercantilist theory which
assumes that states must engage in trade only when it fosters a positive balance of
trade. Hence, the relationship cant be perceived as a zero-sum game given that
Argentina benefits from the positive outcome of the bilateral trade. Indeed, Chinas
purchase of Argentine goods has generated inflows of foreign capital that have much
assisted in the development of the economy over the past decade (Escud, 2011;
Hardy, 2013).
Secondly, it fails to account for Chinas increased presence in Latin American
multilateral organisations, and its efforts to build a trans-Pacific dialogue. Over the last
ten years, China has gained the status of permanent observer in a wide range of Latin
American international organisations, such as the Organisation of American States
(OAS) and the Inter-American Development Bank (IDB) (Escud, 2012). Furthermore,
it has strived to create a multilateral dialogue through the Mercosur and Pacific
Alliance organisations (Oviedo, 2013). China has even set the agenda for such
process by designating the Community of Latin American and Caribbean States
(CELAC) as the most appropriate organisation to launch the Sino-Latin American
forum (Hardy, 2013, p.214). Therefore, this study will look at the liberal institutional
theory in order to shed light on these elements of the relationship.
3.2

The Liberal Institutional view: A Positive Sum Game

Liberal institutionalism arose as a coherent school of thought in the 1980s. Its aim
was to create a new paradigm that would transcend the traditional realist/liberal
dichotomy in order to account for a more multipolar world order. In fact, at the time of
the doctrines emergence, US hegemony was increasingly challenged by external
shocks reflected by changes in the international structure. This was most notable in

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1971 with the US abandonment of the Gold Standard (Guzzini, 1998, p.62). It assumes
that in the absence of an hegemon, states will pursue agreements within the
international community in order to further their interests (Keohane, 1988).
In that matter, states are not solely driven by relative gains, but also by absolute
gains. This paradigm shift thereby rejects the realist zero-sum game logic in favour of
a positive-sum game, or win-win paradigm (Bremmer, 2010, p.48). That is to say that,
regardless of the material asymmetry of a relationship, states are naturally inclined
towards mutually advantageous endeavours. In other words, liberal institutionalism is
a middle-ground between an unrelenting Hobbesian struggle of all against-all, and
the liberal vision of endless peace and harmony founded upon a laissez-faire global
economy (Jones, 1986, p.116). As expressed by Adler and Barnett: While neo-liberal
institutionalism shares with neo-realism the assumption of anarchy, it is more
interested in how self-interested states construct a thin version of society through the
guise of institutions and regulative norms in order to promote their interests. (1998,
p.11). Hence, liberal institutionalism accounts for instances of confrontation in the
international system but perceives cooperation as the final state of equilibrium
(Keohane, 1988).
The revival of the idealism of liberal thinking through a more pragmatic lens brought
to the fore the principle of comparative advantage. The concept of comparative
advantage is a basic tenet of David Ricardos free-market model (Jones, 1986). It
assumes that in an optimal version of international trade, states would specialise in
the sectors they are the most efficient in. This is a reversal of the mercantilist zerosum game thinking that seeks a relative positive balance of trade. As expressed by
Jones: The power and subtlety of this principle is that it demonstrates that even where
one society is more efficient at producing the entire range of relevant goods and
23 | 2 0 0 5 6 6 9 4 3

services that any other, there may still be a sound basis for mutually advantageous
specialisation of production and subsequent trade between the two societies. (1986,
p.33). When states specialise in specific sectors it creates instances of
complementarity. In that case: () there is mutual benefit and increase in overall
production when specialisation and trade develop. (Jones, 1986, p.33). Such
specialisation is distributed across the global economy according to factor
endowments (Jones, 1986). Those factor endowments correspond to country-specific
features that account for such mutually advantageous trade. Subsequently, under the
principle of comparative advantage, liberal institutionalism promotes the international
distribution of labour and gains from trade (Adler and Barnett, 1998, p.51).
Following Deng Xiaopings Open Doors policy and the countrys gradual
development in the 1980s, China has become the worlds factory (Zhang, 2006). By
2008, it had outpaced the US and became the worlds first trading nation (Zweig, 2010,
pp.37-38). Traditionally, China has benefited from the low wage of its labour force to
sustain its position as the worlds most competitive nation in light-manufacturing.
However, to support the comparative advantage of its development model, the country
has had to concentrate on its urban development. In that matter, through the Hukou
system the government ensures that the countryside population does not overcrowd
the richer coastal cities in the East (Spencer, 2011). But this also means that to occupy
these populations the country has had to maintain a labour-intensive agrarian sector
(Oviedo, 2010, pp.435-436). Moreover, for historical reasons, Chinas agrarian sector
is mostly constituted of small independent farmers that are less efficient than their
South American counterparts who benefit from sophisticated large-scale farming
techniques (Hardy, 2013, p.156-158). Correspondingly, South America has been
described as the Farm of the World (Hardy, 2013, p.158). Hence, there is a
24 | 2 0 0 5 6 6 9 4 3

complementarity between Chinas industrial capacity and South Americas agricultural

potential.
The liberal institutional lens accounts for the conflicting nature of what Hardy calls
the complex partnership between Latin America and China (2013). In the case of
Argentina, Oviedo has distinguished varying elements which are underpinned by the
liberal institutional theory and that account for the dual dynamic of the relationship
(2013). In the first place, the increased density of trade interaction between China and
Argentina has generated further confrontation. Chinas rise has exacerbated
competition in three distinct domains. Firstly, it has amplified competition for
manufacture exports in local and third-markets. For instance, in 2006 Chinese
manufactured exports displaced Argentine exports in the Brazilian market. This was
the case in spite of the preferential arrangements provided in the Mercosur grouping
(Phillips, 2010, p.188). Secondly, it has increased competition for Foreign Direct
Investment (FDI). As such, China has become the second recipient of FDI after the
US (Zweig, 2010, p.47). Thirdly, and most importantly, Chinas exports have
undermined the local industrial sector. According to Hardy, over 90% of Argentine
manufactured exports are under threat due to the competition from Chinese firms
(2013, p.168).
The 2010 Argentine soy crisis epitomised the confrontation between Argentine
protectionist policies and Chinas manufacture export-led development model. In
2010, the Chinese government impeded cargos filled with Argentine soy bean to enter
its ports. The official reason was that Argentine soy bean did not comply with Chinas
new health regulations for the import of such crops (Oviedo, 2010, pp.494-498;
Quintana, 2009). However, it was later revealed that China was pressing Argentina to
withdraw its anti-dumping policies against Chinese manufactured goods (Hilton,
25 | 2 0 0 5 6 6 9 4 3

2013). Only after Argentine President Cristina Fernndez de Kirchner paid a visit to
Beijing was the dispute eventually settled (Quintana, 2009, p.7). This precedent
underscored the importance of further cooperation, but also exposed the asymmetric
aspect of the relation. Nevertheless, Argentina has demonstrated great resilience in
the face of the Chinese embargo as it managed to channel its exports to other
countries, such as Brazil. Consequently, the incident also proved that Argentine
dependency to China was only relative (Oviedo, 2013).
In the second place, increased interaction between Argentina and China has led to
further cooperation. Instances of cooperation were highlighted in the content of the
joint memorandums. In 2004, Argentina signed with China the Memorandum of
Understanding between the Argentine Republic and the PRC. The memorandum
stipulated Argentine recognition of China as a market economy in exchange for
Chinese investments in infrastructures and the purchase of goods. Most of the
investments concerned railway and road transport infrastructures in the form of
interest-free loans. China had notably agreed to increment its level of purchases in the
country to $6 billion dollars within a five-year period (Oviedo, 2010, pp.452-453).
Furthermore, it stipulated the diversification in the basket of products that China would
purchase from Argentina (Oviedo, 2010, pp.453-454). Likewise, in 2007, Argentina
signed with China a Memorandum of Understanding on Military Cooperation. The
memorandum established a common commission of defence and included the
provision of military equipment at a discount price (Malena, 2010).
The perception of economic complementary in the Sino-Argentine linkage
resembles to Argentines relation with Britain from the end of the 19th to the beginning
of the 20th century. In that matter, Chinese investments in infrastructures that support
the agro-export model echoes with Britains investments in South America during the
26 | 2 0 0 5 6 6 9 4 3

Victorian era. This parallel has been drawn by proponents as well as opponents of
Chinas new role in the region. On one end, the proponents have argued that Britain
provided much needed finances to the country, ushering in Argentinas golden era
during the Belle poque (Escud, 2011). On the other end, the opponents have
argued that this relationship has generated a state of dependency and resulted in the
primarisation of the South American economies (Oviedo, 2006).
This critique was first elaborated by the Argentine economist Ral Prebisch, a
pioneer in dependency theory (Escud, 2011). He argued that commodity exporting
countries were trapped in boom and bust cycles as they couldnt climb up the value
chain. According to his thesis, this is because the Terms of Trade (ToT) - the difference
between the price of the average exported product to the price of the average imported
product - tended to decrease for economies relying on commodity exports (Escud,
2011). This eventually led to the middle income trap, where developing countries
constantly failed to match the level of sophistication of their developed counterparts
(Hardy, 2013, p.XXIV). However, since the onset of Chinas emergence and the
subsequent commodity boom of the 2000s, the ToT of commodity exporting
economies such as Argentina have dramatically improved as the price of
manufactured goods has decreased (Phillips, 2010).
In the case of Argentina, the liberal institutional theory poses several implications.
Firstly, the comparative advantage principle engenders sectorial and geographical
concentration of exportable goods. This means that whilst Argentine agribusiness has
boomed in the past decade, the local industry has been much hampered.
Nevertheless, the agribusiness has also developed to create further added value
production chains (Hardy, 2013, p.204-210). For instance, the ratio of produced
Argentine refined soy-oil to soy bean has gradually increased over the past decade
27 | 2 0 0 5 6 6 9 4 3

(Castro, 2010). Furthermore, geographical concentration has generated production

clusters that have enhanced productivity and innovation (Hardy, 2013, p.188). Yet it
has also reproduced what Hardy terms the 19th century Belinda syndrome, by which
a landed aristocracy has reaped most of the gains of international trade (Ferchen,
2011; Hardy, 2013, pp.189-199).
Secondly, Chinas investments in infrastructures have bolstered Argentine
development. In contrast with the International Monetary Fund (IMF) and World Bank
(WB) loans, those investments are for the most part interest-free and come with nostrings attached in terms of ideology and market orientated reforms (Fernndez and
Hogenboom, 2010b). Nevertheless, Chinese loans are often in exchange of
preferential market entry for SOE and privileged access to natural resources (Oviedo,
2013). According to the liberal institutional theory, as the density of Sino-Argentine
interactions increases, so will the incentives for further cooperation (Keohane, 1988).
A careful analysis shows that the liberal institutional perspective sheds an overoptimistic light on the Sino-Argentine relationship. In fact, in accordance with the
comparative advantage principle, through specialisation commodity-exporting
countries should gain in productivity so as to further their industrial capacity (Jones,
1986).Conversely, the international system, and more specifically the Bretton Woods
institutions, is believed to level the playing field for developing countries by outlawing
practices of unfair tweaking of factor endowments. However, China has emerged to
become what Zweig calls a Trading Nation (2010). As he argues, against the
Ricardian idea of comparative advantage, through mercantilist policies the East Asian
model showed that states can create comparative advantage by getting the price
wrong (Zweig, 2010, p.38). Furthermore, instead of shifting to more sophisticated
chains of production, China has developed in the specialisation of labour intensive
28 | 2 0 0 5 6 6 9 4 3

industries (Dittmer, 2010). In other words, as China has developed it has also
improved its competitiveness in light manufacturing, thereby further marginalising
Latin America economies from the global production chain.
Another negative effect of Chinas thirst for commodities relates to the caused
increase in the price of primary products. As mentioned, this has contributed to the
rise in the ToT for commodity exporting countries. However, it has also resulted in the
appreciation of the South American currencies (Fanelli and Albrieu, 2012; Hardy,
2013, p.171). This effect is known as the Dutch Disease in which a rise in international
demand for primary products engenders the appreciation of the national currency.
Consequently,

such

appreciation

gradually

degrades

the

international

competitiveness of the domestic industry. In fact, this effect has historically catalysed
the process of primarisation of the South American economies (Iturre and Mendes,
2010).
This chapter has brought to light the inherent challenges posed by the material
asymmetry of the Sino-Argentine relation. The realist prism has presented Chinas
incursion in Argentina in terms of a zero-sum game, in which Chinas gains were made
at the expense of the countrys development. In contrast, the liberal institutional lens
has highlighted the underlying mutual gains of trade. However, a careful analysis
found that those gains are unequally distributed. That is to say, a relationship
characterised by a positive sum game with unequal gains of trade.
As discussed, China mostly imports raw materials and natural resources from the
region in order to process added-value products. In that regard, Chinas interaction
with Argentina is perceived as no more different than the one of historical hegemons.
Both the mercantilist and the comparative advantage concerns drive Chinas interests.

29 | 2 0 0 5 6 6 9 4 3

As a consequence, the centre-periphery character of the relationship has deepened

in the last decade. This is notably illustrated by the concentration of Chinese demand
and investments in capital intensive sectors. Such observation has ushered in a
double transformation of development thinking. On the one hand, commodity exportled growth theories have made a comeback; and on the other, industrialisation has
been dismissed as an unviable alternative. Thus, Chinas rise has further squeezed
the already constrained development spaces of Latin American economies (Phillips,
2010; Hardy, 2013). Yet a focus on the social aspect of the relationship reveals the
potential emergence of an alternative association.
4.

A nascent South-South imagined community

The concept of a South-South community arose in opposition to the classic North-

South framework that characterised much of the interactions between developed and
developing nations in the past century (Kruger, 2009). In the preceding chapter, this
study demonstrated that the material aspect of the Sino-Argentine relationship, that is
to say its political and economic content, is in many ways similar to the historical NorthSouth framework. This is because Chinas interest in the region is guided by a mix of
mercantilist and comparative advantage concerns.
However, the study has yet discussed the normative aspect of the relationship and
its present and potential impact on the material side of the bilateral tie. This dynamic
constrains how nations project their power. In fact, in contrast with Britain and the US,
China sees itself as a non-Western developing nation. As such, it has defined its
presence in Latin America in terms of non-interference in domestic affairs, respect for
state sovereignty and mutually beneficial trade (Strauss and Armony, 2012). As China
deepens its relationship with the region, it is increasingly pressed to develop a more

30 | 2 0 0 5 6 6 9 4 3

coherent strategy. Hence, using the constructivist prism this chapter will explore the
potential of such dynamic to engender a fairer relationship.
4.1

The constructivist view: Towards a Smart Partnership?

The International Relations strand of constructivism emerged in the late 1980s as

an alternative to both the realist and liberal institutional paradigms. It was developed
in the wake of the end of the Cold War and the subsequent implosion of the Soviet
Union to better reflect on the process of institutions and culture in affecting state
identity and interests (Bremmer, 2010, p.49). The theory takes its roots in the field of
Sociology and emphasises on the normative aspect of international politics. To that
end, it views the environment of international relations, and especially the idea of
anarchy, as socially constructed (Wendt, 1992). It perceives nations in terms of
communities as the main unit of study and discourses as the driving force in
international relations. As described by Wendt, its two mains canons are: (1) that the
structures of human association are determined primarily by shared ideas rather than
material forces, and (2) that the identities and interests of purposive actors are
constructed by these shared ideas rather than given by nature." (1999, p.1).
Such theory has proven particularly relevant in the study of the developmentalist
discourse which is embedded in the South-South rhetoric. In that regard, the rise of a
South-South identity has been compared with Andersons concept of imagined
communities (Efstathopoulos, 2013). According to Anderson, communities such as
sovereign states are not materially bounded, but rather represent social constructs
that are the consequence of the perception of a shared identity, a community of
interests (2006).

31 | 2 0 0 5 6 6 9 4 3

Going beyond Andersons concept of imagined communities, Adler and Barnett

have developed a methodology for the identification of what they call security
communities. Accordingly, security communities are built upon () the development
of shared understandings, transnational values and transaction flows to encourage
community-building. (Adler and Barnett, 1998, p.4). Such communities have emerged
with the broadening of security to encompass issues relating to economic,
environmental and social welfare concerns. It represents the next step in the
interaction between international actors as first exposed in the theory of liberal
institutionalism (Adler and Barnett, 1998). Adler and Barnett argue that as
confrontation in the international system will continue to occur, actors will result to
internal arrangements so as to promote order and security. As they contend: () a
security community gets out of the gate because of either push or pull factors that
cause states to reconsider how they organise their relations. (Adler and Barnett,
1998b, p.52).
Such theory precisely pins down the ongoing process of the development of a
South-South community. As explained: () a shared developmentalist ideology ()
may promote not only transnational exchanges and policy coordination, but, more
fundamentally, a shared project () (Adler and Barnett, 1998, p.4). Instead of
deepening a positive sum game with unequal gains of trade, a nascent imagined
community would give rise to a fairer relationship based upon long-term mutually
beneficial outcomes (Adler and Barnett, 1998b, p.57).
Since the formation of the PRC in 1949, ideologically China has remained an
outsider in the international system. As expressed by Hongying: () in the post-Cold
War era, China has stood as an ideological outlier in the world, challenging the
universal validity of economic liberalism and political democracy. (2010, p.210).
32 | 2 0 0 5 6 6 9 4 3

Today, China represents the main rival to the US narrative on the international arena.
In fact, it perceives itself as essentially non-white, victim of the greed of colonial powers
(Hongying, 2010). Furthermore, China has constantly depicted itself as the worlds
greatest developing country (Mitchell, 2007, p.XI).
This vision was first expressed in Deng Xiaopings 1974 speech at the United
Nations (UN) where he introduced Mao Zedongs Theory of the Three Worlds
(Mitchell, 2007, p.17). The Theory of the Three Worlds constituted the backbone of
Chinas foreign policy during the Cold War following the Sino-Soviet split at the end of
the 1950s. Its novelty lay in its triptych perception of international politics. According
to Maos thought, the world was divided into three segments; the first contained great
powers, such as the US and the Soviet Union; the second contained the industrialised
nations, such as Western Europe and Japan; and the third contained the non-aligned
Third World countries led by China (Oviedo, 2010, p.16). Maos vision was at the origin
of the formation of the Beijing Consensus underpinned by the Four Nos policy and the
New Security Concept that, respectively, promote non-intervention in domestic affairs
and multipolarity in the international system (Fernndez and Hogenboom, 2010b).
Chinas Third World leadership was also reflected in international organisations, where
it has demonstrated to be a fervent supporter to the cause of developing countries
(Dittmer, 2010, p.210).
To identify the formation of a nascent Security Community, the constructivist stance
separates structure and processes as two driving forces in international politics
(Wendt, 1992). The first pole, the structure, corresponds to how the community is
organised and how it is perceived by its members. In the first place, power is the uniting
force for the constitution of a security community. Power in that sense is perceived as
non-coercive; it is a magnet which brings states together as part of a voluntary
33 | 2 0 0 5 6 6 9 4 3

association. As put forward by Adler and Barnett: () those powerful states who
belong to the core of strength do not create security per-se, rather, because of the
positive images of security or material progress that are associated with powerful and
successful states, security communities develop around them. (1998b, p.40). This is
coherent with Chinas self-image as the leader of the Third World. Indeed, its rhetoric
constitutes an alternative to the one upheld by Western powers and has been
acclaimed by many developing world leaders (Fernndez and Hogenboom, 2010b).
In the second place, knowledge creates a shared understanding within the
community. As put by Adler and Barnett: () what constitutes and constraints state
action is the knowledge that represent categories of practical action and legitimate
activities. (1998b, p.40). This corresponds to the restrictions imposed by Chinas selfimage within the South-South grouping. In that matter, Wang has demonstrated how
Chinas self-image constrained its actions in ways contrary to its interests (2003). A
notable example was Chinas unilateral decision not to devaluate its currency in the
midst of the Asian crisis in 1998 (Cox, 2010; Wang, 2003). According to Wang, China
refused to devaluate its currency given the harming effect that it would have had
incurred upon the economies of its neighbours (2003, p.65). In the case of Argentina,
Chinas implicit support at the UN for the Falklands issue represents a unilateral action
that is accompanied with only marginal direct benefits (Wang, 2010; Oviedo, 2010).
As such, the South-South momentum revolving around China represents an
alternative structure that is not solely guided by the logic of direct costs and benefits.
The second pole of a security community is underpinned by the concept of
processes. Processes correspond to the deepening of the relationship within the
community through increased transactions, institution building and social learning
(Adler and Barnett, 1998b, p.43). This is notably reflected in Chinas strategy with the
34 | 2 0 0 5 6 6 9 4 3

developing world to create an alternative financial and commercial entente centred on

the internationalisation of the yuan (Ovideo, 2013; Rios, 2010). To that end, Chinas
Central Bank has emerged as a major partner of its Argentine counterpart. In 2009, it
issued a yuan denominated $10 billion dollars currency swap arrangement for a threeyear period, which was renewed in 2013 (Parks, 2013). Such agreement facilitates
transactions between the two countries and diminishes Argentinas reliance upon the
US dollar. Furthermore, it represented Chinas first ever currency swap agreement in
the region (Redrado, 2010, pp.129-133). China has also assisted Argentine high-tech
sector by investing in INVAP, a cutting edge firm that specialises in the production of
nuclear devices for civil purposes (Escud, 2011; Oviedo, 2010). In exchange,
Argentina has supported Chinas implementation in Space and the Antarctic (Oviedo,
2010; Paz, 2013).
Moreover, China has pressed for the creation of multilateral institutions, such as
the Sino-Latin American forum on agriculture and trade (Oviedo, 2010, p.494).
Interactions within these institutions have generated processes of social learning.
According to Adler and Barnett, social learning represents: () the capacity and
motivation of social actors to manage and even transform reality by changing their
beliefs of the material and social world and their identities. (1998b, p.44).
This momentum has further been propelled by the interaction between the people
of both nations. In that matter, Chinas growing diaspora has increased its exposure
in Argentina (Hang, 2013). An estimate of 80,000 Chinese descendants currently lives
in the country. The Chinese diaspora notably occupies a vital role in the countrys
chains of supermarkets in which it runs over 2,000 stores (Zampori, 2010). Cultural
events also play an important part in social learning. In that regard, Buenos Aires was
chosen as a host city for Chinas 2008 Summer Olympics torch relay. The selection of
35 | 2 0 0 5 6 6 9 4 3

the Argentine capital for the Beijing torch relay was of great symbolic importance; not
only was it the sole country of Latin America to participate in the tour, but it was also
the only representative of the whole Spanish speaking world (Oviedo, 2010, pp.476477).
Such rapprochement between the people of the two respective nations has only
few precedents in Argentine history. In fact, during the 19th and 20th century, the
Argentine elite had bonded with its US and British counterparts. Yet these links were
for the most part limited to a wealthy class composed of land owners and the
intellectual elite (Corigliano, 2007). In terms of international organisations, the creation
of the Organisation of American States (OAS) in 1948, which reassembles American
states in a multilateral organisation that focuses on security issues, corresponds to a
form of security community. However, the development of such a community was not
the result of a voluntary association but rather imposed by US clout (Oviedo, 2006).
As such, the OAS has constantly been criticised by Latin American leaders for
embodying US supremacy in the region (Escude, 2012; Tiezzi, 2014). Hence,
historically Argentina has been incorporated into communities where it yielded to
external pressures. In contrast, China pursues the discourse of a developing nation
which resents Western imperialism (Dittmer, 2010, p.210).
Conforming to the constructivist perspective, the resilience of the Sino-Argentine
relationship is due to the emergence of a nascent imagined community. Whereas the
liberal institutional view assumes a gradual resolution of the dilemma of unequal gains
of trade, Adler and Barnetts theory about security communities exposes how states
build order out of the traditional boundaries of international regimes (Adler and Barnet,
1998b, p.52). Among the implications for Argentina, this includes the diversification of
the elements of the bilateral agenda towards the constitution of a fairer relationship
36 | 2 0 0 5 6 6 9 4 3

(Oliva, 2010, p.99). This was notably highlighted by Chinas commitment to reform
some aspects of the Bretton Woods architecture, and its passive support of the
Argentine Falklands claim. Consequently, Chinas diplomacy has enhanced its image
among the Argentine people. This was underscored by a census which found that in
the past decade the Argentine perception of China as a reliable partner has
dramatically improved (PEW, 2013). Accordingly, in 2013 more than half of the
Argentine population (54%) perceived China favourably against only 41% for the US
(PEW, 2013).
The main limits for the development of a Sino-Argentine imagined community lie in
the lack of understanding and trust between both nations. Language and cultural
differences account to a great extent for such impediments (Velloso, 2010). For
instance, Chinas foreign policy still tends to perceive Latin America as an
homogenous, collective region (Strauss and Armony, 2012). Yet recent developments
seem to demonstrate a gradual disaggregation of Chinas diplomacy (Hardy, 2013,
p.221). Still, the relationship has been plagued by the absence of trust. Such trust is
fundamental as it propels the formation of security communities by forging mutual
expectations (Adler and Barnett, 1998b; Axelrod and Keohane, 1985; Keohane,
1986).The lack of long-term expectations was most notably exposed in the context of
the Argentine 2008 farm protests. During the protests, which opposed the powerful
peasant union against the government, the supply of soy bean was halted for several
months. As a result, China has blamed Argentina to be an unreliable partner
(Quintana, 2009, p.7).
The issue of trust has been further aggravated by the absence of reliable
information. In that sense, in 2007 the Kirchner administration reformed the
methodologies used by the National Institute of Statistics and Census of Argentina
37 | 2 0 0 5 6 6 9 4 3

(INDEC) so as to better suit its political agenda (The Economist, 2012). This has led
to the loss of credibility of published national economic statistics regarding matters
such as inflation and trade. In the same fashion, the reliability of Chinese official
statistics has also been questioned (Oviedo, 2010, pp.478-484). This has sparked
much conflict between the Argentine and Chinese economic ministers upon the extent
and content of the trade between the two countries (Oviedo, 2010, pp.498-502).
Furthermore, SOE have frequently clashed with Beijings foreign policy, causing
discontent among Latin American governments (Strauss and Armony, 2012; Zweig,
2010). A final constraint concerns the geopolitical aspect of the association. In fact, in
its dealing with the region, China has taken much care not to conflict with the US
interests (Hilton, 2013). As such, many have lamented Chinas poor commitment in
strengthening the commercial relationship with an ideological content (Efstathopoulos,
2013; Escud, 2012).
This chapter has demonstrated how the emergence of a South-South community
represents an opportunity in avoiding the reproduction of a centre-periphery pattern.
Such a dynamic is unique to the rise of China and shares little similarity with the
regions past interaction with great powers. It represents a chance for Argentina, and
Latin America as a whole, to shift its association with China from a complex partnership
to a smart partnership. That is to say, an economic and political tie based on common
interest and long-term sustainable growth. However, such a scenario only represents
a potential which is yet to be fulfilled. In that regard, the lack of trust and understanding
between both nations has much hampered the constitutive process of a South-South
community.
5.

Discussion and Conclusion

38 | 2 0 0 5 6 6 9 4 3

Since the establishment of the Sino-Argentine Strategic Partnership ten years ago,
China has shown to be both a competitor and a partner. On the one hand, it has proven
to be a fierce competitor in manufacture production and ravenous in the acquisition of
strategic assets. On the other, it has presented itself as a partner in the realm of
international organisations, financial loans and research and development (R&D) in
the high-tech industry. This duality of Chinas new presence represents both
challenges and opportunities for the region.
The main challenge arises from the reproduction of a centre-periphery pattern. This
North-South framework has characterised the relationship of the region with great
powers throughout the 19th and 20th century. It has been at the root of Latin Americas
problem of rampant inequality and weak public institutions. Furthermore, it has
incapacitated the region to climb-up the value chain, squeezing it into the middle
income trap (Hardy, 2013, p.XXIV). In the past decade, Chinas increased interaction
with Latin America has ushered in a new era of growth and a decreasing rate of
inequality thanks to vast programmes of wealth redistribution (Fernndez and
Hogenboom, 2010). However, the content of this interaction has been increasingly
questioned as a sustainable framework for growth (Brutsch and Mihaela, 2012;
Oviedo, 2006; Quintana, 2009).
As this paper has shown, Chinas interaction with Argentina corresponds to a
positive sum game with unequal gains of trade. Through the use of the realist and the
liberal institutional lenses this study found that Chinas strategy in the region is driven
by both mercantilist and comparative advantage concerns. In the first place, China
fosters the importation of commodities; in the other, it is reticent to import added-value
products. This trait has been amplified by the Going Out strategy which encompassed
the acquisition of foreign assets abroad, but also involved foreign investments and a
39 | 2 0 0 5 6 6 9 4 3

global increase in the price of commodities. This latter point has led to a rise in the
ToT to the advantage of the South American economies. But through various
mechanisms, the same process has hampered the competitiveness of national
industries and concentrated exports in capital intensive sectors. This has led to a
relative primarisation of the region similar to the one witnessed under the British rule.
Furthermore, as discussed, such interaction has also come at the cost of the process
of regional integration.
Nevertheless, there are also opportunities to transform the relationship into a fairer
one. This is what has been argued based on the constructivist lens. Indeed, China has
historically proven to represent the spearhead of a multipolar world and of a more
equal international society. As such, it has framed its relationship with the Latin
American region in terms of a mutually beneficial partnership (Giuffre, 2010). This
rhetoric represents a constraint to the projection of Chinas power and in the formation
of its interests. Such a dynamic is already occurring although its achievements have
yet to be acknowledged. To that end, the Asian superpower has notably assisted in
the development of several China-Latin American negotiation platforms and has
proven to be a vital lender for the region (The Economist, 2014). As argued, the
development of this nascent South-South community has the potential to transform
the current complex partnership into a smart partnership. But the main limits to the
emergence of such a community concern the lack of trust and mutual understanding.
This observed dual dynamic in the Sino-Argentine relationship between the
deepening of the North-South framework and the emergence of a South-South
community is characteristic of Chinas schizophrenic foreign policy with regard to the
developing world (Hongying, 2010; Shambaugh, 2011). The inconsistency of Chinas
discourse with its attitude has engendered a wide gap between its self-image and how
40 | 2 0 0 5 6 6 9 4 3

it actually projects its power. According to some, this is because the country is still in
the process of integration into the international community (Power et al, 2012). As
such, China is increasingly pressed to offer a coherent and more predictable stance
in its interaction with foreign nations. The coming issue is thereby which type of attitude
China will finally embrace; whether it will deepen the current North-South framework
or push for the creation of an alternative South-South community.
In that matter, China has shown some mixed signals. In fact, following the 2008
economic crisis its image has been enhanced in the region as it has increased its
financial commitments. This was especially highlighted by Chinas financial assistance
in the aftermath of the 2010 Haiti disaster (Griuffe, 2010). Furthermore, in January
2014 was announced at the Second Summit of the CELAC meeting in Cubas capital,
Havana, the creation of the China-CELAC Forum. This was of great symbolic
importance given that the CELAC is conceived as the regions alternative to the
Washington-led OAS (Tiezzi, 2014). Conversely, Chinas economic strategy still
presses for the primarisation of South American economies. This was especially
outlined in Chinas 12th Five-Year Guideline for the period 2011-2015. Developed by
the Chinese economic authorities, this last five-year plan notably stressed the
importance to bolster added-value activities in the realm of agribusiness by the means
of targeted protectionist measures (Balze, 2010). In practical terms, the new Chinese
economic policy would hinder the regions food-processing industries and further
squeeze its industrial capacity.
Chinas dramatic ascension in Latin America is likely to continue in the near future
at the expense of the US and other Western powers. In the case of Argentina, it is
forecasted that trade with China will double from 2011 to 2017 in terms of both its
volume in exports and imports (ING, 2012). Such numbers have generated great
41 | 2 0 0 5 6 6 9 4 3

expectations from Latin American leaders in their faith to broker a fairer relationship
which distinguishes itself from the historical centre-periphery pattern. However, much
will depend on Chinas willingness to build an alternative South-South community and
the capacity of the region to foster the adequate environment for such an endeavour.
In that matter, further efforts should be made to enhance mutual understanding and
trust between Latin American nations and the Asian giant. But until words are matched
in practice, such unfulfilled potential is at risk of turning into another missed opportunity
for the region.
6.

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