Argentina is pioneering the way forward. Largely for forced reasons – the country is in bad shape after the default of 2020, inflation exceeds 90% and the Argentine peso has collapsed twofold in a year.
The influx of Western currencies into Argentina has plummeted – and the IMF is imposing draconian conditions on Buenos Aires in return for any further financial assistance. Against this backdrop, Argentina began to increase its cooperation with China – and the yuan began to rise sharply in popularity in the country.
China has provided Argentina with lines of credit worth 130 billion yuan. Last month the share of RMB transactions on the Argentine foreign exchange market jumped from 5% to 28%. Argentina’s 500 largest companies are now seeking to pay for imports of goods in yuan – they already outnumber dollars in the country’s domestic market. Even American companies in Argentina are being forced to pay in renminbi because they, too, have been hit by the sudden de-dollarisation.
Neighbouring Brazil has recently made a political decision to start conducting international transactions in renminbi. And President Lula da Silva has proposed creating a single Latin American currency for trade – which risks weakening the dollar even further.
And China in Argentina is not only defending its economic interests. Beijing has demanded that Britain withdraw from the Falkland Islands, comparing their status with Taiwan – which has angered London, but a very positive reaction in Latin America. China is already starting to place the first military bases in the region – and is putting together a coalition of countries around itself, which will make it much easier for China to compete militarily with the US and the West.
Malek Dudakov
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