Belt and Road Initiative could spur economic development
An Argentine chartered flight carrying medical supplies from Shanghai arrives at Ministro Pistarini International Airport in Buenos Aires on April 20. (PHOTO / XINHUA)
Editor's note: The world faces huge challenges during the COVID-19 outbreak, and maybe even greater ones when it is over. Here, in the 15th part of a series titled "One World, One Fight", we look at how countries can work together to fight the virus and meet the challenges when the pandemic ends.
With Latin America becoming the new COVID-19 pandemic epicenter, the outbreak has hit Argentina particularly hard.
As of Tuesday, 32,772 confirmed cases of the disease had been reported in the country, with 854 deaths from the coronavirus, according to the World Health Organization.
The third-largest economy in the region was already experiencing financial volatility, but the arrival of the pandemic has compounded the situation.
Last week, Argentine President Alberto Fernandez said lockdown measures should be reimposed in the country in view of the high number of infections reported each day.
He said the problem had not yet been overcome and Argentina must move very cautiously, as there was a risk of people failing to realize that situations "may be generated" in which the disease could be transmitted.
He also acknowledged anxiety in many sectors about resuming economic activity, describing a return to work as "legitimate", but adding that it also increased risks.
Lockdown measures were imposed in Argentina on March 20, when there were just 100 confirmed cases of COVID-19 in the country. The lockdown slowed the rate of transmission and gave the healthcare system time to prepare for a surge in the number of patients.
Omar Sued, president of Argentina's Association of Infectious Diseases, told media outlets that although Latin America is seeing a rapid rise in the COVID-19 curve, the containment measures taken by Argentina deserve praise, as they have helped contain the virus.
"We are very happy to be one of the countries with a lower number of deaths," said Sued, who sits on a panel that advises the president on the virus.
He added that officials knew that the health system would be quickly overwhelmed.
Initially, there were "frightening predictions" of how the situation could develop in Argentina without isolation measures being taken, Sued said. "The first estimate said that we could have 250,000 deaths if we did nothing," he added.
But strict measures come with a risk of possible economic stagnation, Sued said.
Argentina failed to reach an agreement by a May 22 deadline, missing payments on about US$500 million in already delayed bond coupons－its ninth sovereign debt default.
Before the virus struck, the country looked to be heading for a 2 percent drop in GDP this year. Now, the International Monetary Fund is projecting a fall of around 6 percent.
A worker prepares an order in a restaurant working with only takeaway or delivery during the lockdown imposed due to the pandemic of the new coronavirus COVID-19, in Buenos Aires, on April 15, 2020. (JUAN MABROMATA / AFP)
Debt-risk exposure
According to analysts, bringing the pandemic under control is essential for the government to prevent Argentina's volatile economy experiencing another downturn.
Xie Wenze, a researcher at the Institute of Latin American Studies at the Chinese Academy of Social Sciences, said that as the pandemic continues to rage worldwide, some emerging-market economies are increasingly exposed to debt risk.
"In this case (Argentina), Chinese capital and financial services appear to be more stable and safe. China's investment and construction under the Belt and Road Initiative may inject new impetus into Argentina's economic development," Xie said.
Ernesto Fernandez Taboada, executive director of the Argentine-Chinese Chamber of Production, Industry and Trade, said the initiative may bring new growth opportunities for Argentina after the outbreak.
"First of all, it will benefit many Argentine companies that have not yet done business with China in seeking new capital and partners, and will also help those that have done business with China to increase and deepen sustained and stable customer and supplier relationships," he said.
"Second, it will help Argentine businesses to get easier access to many financing projects and services as part of the initiative."
According to a report released by the Argentine Chamber of Exporters, China became the country's largest trading partner in April, displacing neighboring Brazil. Argentina's exports to China that month totaled US$509 million, compared with US$338 million in April the previous year, the report said.
The majority of the trade in April comprised soybeans, beef, shrimps, prawns, animal fats, vegetables and oils. The report also said that since the start of this year, two-way trade between Argentina and China had risen.
According to the Argentine Beef Promotion Institute, China is by far the world's largest importer of Argentine beef, which comprises 74 percent of the Latin American country's exports.
From October 2018 to September last year, China imported 592,000 metric tons of beef from Argentina, the institute said. During the same period, Argentina exported 800,000 tons of the meat, valued at about US$3 billion.
A total of 34 Argentine suppliers now send fresh and frozen beef to China, according to the institute, which has forecast a steady rise in the quality and quantity of such exports in the next few years.
At the International Import Expo in Shanghai in 2018 and last year, Argentina was an active participant, showcasing its interest and confidence in the Chinese market.
At the two events, the leading South American agricultural exporter attempted to look beyond grain and other bulk goods by showcasing its beef, wine, bottled water, dairy items and olive oil.
A worker wearing a face mask as a preventive measure against the novel coronavirus, COVID-19, rides a bicycle while pulling a trolley along a street in Villa 31 shantytown in downtown Buenos Aires, on May 5, 2020. (RONALDO SCHEMIDT / AFP)
Shanghai platform
In addition to attending the Shanghai expos, Argentina has taken other steps to boost its exports, such as setting up a logistics platform in the city to import and store products, enabling them to be distributed to buyers more quickly.
Wang Huizhi, an assistant researcher in the Latin American and Caribbean Department at the China Institute of International Studies, said, "For Argentina, whose main economic development still depends on exporting farm produce, finding a reliable market is crucial for its agricultural producers and the country's economy."
Argentina is facing economic stagnation as it grapples with a 40 percent poverty rate, inflation of more than 50 percent and hundreds of billions of dollars of debt.
Last year, South America witnessed unrest and political uncertainty, leading to substantial lost productivity and revenue amid an already bleak economic landscape.
A report by the United Nations Economic Commission for Latin America and the Caribbean said economic growth in the region last year was estimated to have expanded by an average of 0.1 percent, with GDP growing by an estimated 1.3 percent.
In a separate report released in November, the commission said, "This would mean the region has spent seven years on a low-growth plateau, which in turn has translated into deteriorating levels of average per capita income.
"The region's per capita GDP between 2014 and last year shrank by 4 percent, implying an average annual decline of minus 0.8 percent."
Wang, from the China Institute of International Studies, said many countries in the region have missed the opportunity for industrial upgrading in their economic development.
"The main reason Latin American countries have not realized industrialization and entered a more advanced stage is that they did not adjust their economic development models in time," Wang said.
Cooperation benefits
With the region facing a lackluster economic outlook, analysts said that brisk bilateral trade and booming cooperation with China could offer a glimmer of hope. In the first half of last year, trade between China and Latin America reached US$147.1 billion, up by 1.3 percent year-on-year, according to China's General Administration of Customs.
Bilateral practical cooperation has brought concrete benefits to Latin America in areas such as infrastructure, transportation and renewable energy.
Since 2016, as a leading investor, China has helped build the Belgrano Line, one of three strategic state-run rail lines in Argentina, connecting the country's northern agricultural heartland with leading distribution and export hubs.
The project involves renovating 1,700 kilometers of the Belgrano Cargas freight railway. China has contributed at least 70 percent of the total cost of more than US$2 billion, including new locomotives.
Once the line is fully revamped, Argentina's freight costs will fall and regional economies will have a greater competitive edge in global markets.
Electric buses produced in China are also helping promote sustainable mobility in some of Latin America's largest cities, while Chinese ride-hailing companies, including Didi Chuxing, are making their services more competitive to benefit users.
