By Juan Carlos Navarro. Image generated by AI.
While few Latin American nations maintain diplomatic relations with Taiwan, officially known as the Republic of China (ROC), major economies such as Brazil and Argentina only recognize the People's Republic of China (PRC) as the legitimate government of China. Instead of an embassy, they have established commercial and cultural representation offices for Taiwan.
Controversy has been characterizing the current and future relations of the new Argentinian government with China as an alleged meeting between new Chancellor Mondino and the Taiwanese Commercial and Cultural Office representative for Argentina, Florencia Miao-hung Hsie, took place at San Martín’s Palace. This meeting has been categorically denied by both parties.
If this piece of news is true, though, it would not be the first indication of a shift in Argentina's policy towards China. The initial sign was given by Argentinian congressman and presidential advisor Agustín Romo when he met with a Taiwanese official and referred to Taiwan as a separate entity from China. During the December 22nd, 2023 meeting, he stated, "Taiwan has ranked number one on the index of economic freedom. An example for the free world!" Florencia Miao-hung Hsie was also present at the meeting.
China has expressed its displeasure over the growing proximity between Argentina and Taiwan. It reacted through its embassy in Argentina by sharing a Chinese State Media article that emphasized that "Taiwan is an inalienable part of China's territory."
Recently, the Chinese Ambassador was received by Argentinian Chancellor Mondino. This meeting could potentially reduce tensions between both countries, as they have strong economic and commercial ties with each other.
According to Sidera's LATAM liaison for the Asia-Pacific region, Luis David Díaz Ibarra, Argentina's gestures towards Taiwan should not be seen as a possible break in relations with China at first glance.
As per Mr Díaz’s vision, the Milei Administration wants to show it is in alignment with the traditional stance of the United States, which aims to maintain the current cross-strait status quo, primarily through the Taiwan Relations Act (TRA). This decision was taken after China suspended the US$ 6.5 billion credit line granted to Argentina. Mr Díaz considers this move boldly but warns of its consequences; he believes that Argentina's active pursuit of trading partners to replace China would be staggering. Besides, Argentina belongs to the so-called lithium triangle, and Taiwan is one of the leading manufacturers of superconductors. Strengthening the commercial relationship between both parties would be an interesting perspective.
Regardless of the positive aspects of a closer relationship with Taiwan, Luis concludes that, at this point, a cut of relations with China would be a total mistake.
This puts on the table some comments about Argentina’s new foreign policy that Guillermo Rodríguez Conte, Sidera’s expert on political risk, has stated for the public. Its central fact, following his opinion, is that this new policy is guided by ideological issues, such as:
Renunciation to join BRICS.
Cancellation of purchasing Chinese military aircraft and replacing them with United States’ aircraft.
Invitation to Bolsonaro before Brazil’s current President Lula.
Arrival of V. Zelenski.
Aspiration to move the embassy to Jerusalem.
Now, it would also be interesting to hear from another perspective: Yan-Rong, our Taiwanese expert at Sidera.
Taiwan’s economy and diplomacy heavily depend on China, the US, and the European Union. On the other hand, Argentina does not have strong economic or political ties with Taiwan. In 2022, Argentina ranks Taiwan’s 55th largest exporter and 44th importer.
From Yan Rong’s observation, most Taiwanese do not consider official diplomatic ties with other countries a priority strategy. It is clear to all the countries that establishing diplomatic ties with Taiwan will ruin their relations with China, leading to the loss of the Chinese market. With that being said, from the point of view of our expert, what is the wise diplomatic strategy for Taiwan? Well, the Taiwanese government has been implementing a fundamental diplomatic strategy: pragmatic diplomacy.
Developing pragmatic diplomacy means that, despite no official diplomatic ties, the Taiwanese government intends to strengthen non-political relations, such as trade, e-visa, educational exchange, etc.
However, our expert closely follows the potential change in Taiwan-Argentina trading relations. It seems that the new Argentina president intends to shift its trading reliance on China while seeking to strengthen its economic ties with Taiwan. This may positively affect Taiwan’s economic collaboration with LATAM in the future.
Following The Prospect Foundation’s analysis, even though Milei has claimed he will freeze relations with China, this will not be easy. As they explain, “in 1995, Argentina had a small deficit of $300 million in exports to China and $550 million in imports from China.” However, the trade deficit with China has now expanded to billions of dollars. Additionally, they explain that “currently, 92% of Argentina’s total soybean exports go to China, and China is a major investor in Argentina’s energy minerals (lithium, hydrogen). In addition, China is currently Argentina’s main source of financing, reaching 42% of Argentina's international reserves in 2020.” With this information, The Prospect Foundation concludes that “with the lack of US dollar reserves and Argentina’s heavy dependence on the Chinese economy, the likelihood that Argentina will continue to turn to China for help is quite high.” Even if Milei’s government will not immediately cut ties with China, they expect it to try to distance itself from the Asian Giant.
It is possible to conclude, then, that Argentina’s position shift will probably be aligned with the United States’ traditional position on this issue. A cut of relations with China could imply great economic difficulties for Argentina at a moment when the economic situation is still very delicate. Argentina will then have to face a choice between an ideologically led movement and an economically led movement that, for now, at least, seems to be orientated to more economic thinking than an ideological one.