Bloomberg Businessweek - USA (2019-05-27)

37

who specializes in Sino-Latin American relations.
“Any sort of project that can go ahead is therefore
very important for him, and that’s what China
is providing.”
Macri took office in December 2015, vowing to
reverse many of the economic policies of his pop-
ulist predecessor, Cristina Fernández de Kirchner.
His administration cozied up to President Trump
and made tentative moves to distance itself from
China. During Fernández de Kirchner’s eight-year
tenure, Chinese companies committed to invest-
ing billions of dollars in infrastructure. Exports
of Argentine soybeans to China soared, though
imports from the Asian giant grew even faster.
In 2013 a consortium led by Gezhouba Group,
a state-owned Chinese company, was awarded a
contract for a pair of power plants with a com-
bined generating capacity of 1.3 gigawatts, follow-
ing a competitive tender. One of the dams was to
be named after the then-president’s late husband,
Néstor Kirchner, a former governor of Santa Cruz
province, where the project is located.
When Macri moved into the presidential pal-
ace, he instructed his advisers to review the
contract and dispatched a delegation to Beijing
to scrutinize the terms of the credit line, which
critics of the project claimed were opaque.
Meanwhile, his government set lofty targets for
renewables and solicited bids for wind and solar
farms. He also sought to lure foreign energy com-
panies to develop Vaca Muerta, the world’s sec-
ond-biggest shale-gas deposit.
But Macri’s efforts to rehabilitate Argentina’s
reputation with investors, which had been shred-
ded by the country’s debt default in 2001 and years
of acrimonious wrangling with bondholders, ran
aground last year. Concerns about his adminis-
tration’s inability to tame inflation and shrink
persistent budget deficits triggered a selloff in
Argentine assets that started in April 2018 and con-
tinued for several months. The peso lost half its
value against the dollar, earning the title of 2018’s
worst-performing currency. The International
Monetary Fund stepped in with a record $56 bil-
lion credit line to avert an implosion.
China also helped, expanding an existing
currency-swap agreement that allows Argentina’s
central bank to tap yuan to boost reserves. At the
Group of 20 summit in Buenos Aires in December,
Macri and Chinese President Xi Jinping committed
to strengthening ties between the two countries in
areas such as trade, investment, and infrastructure.
China has been expanding its footprint in Latin
America, partly under the aegis of the “Belt and
Road” initiative, a high-priority project of Xi’s that

seeks to bolster the country’s influence around the

globe. According to Urdinez, China’s funding of

energy projects in Latin America is six times higher

than the World Bank’s. This decade, state-owned

Chinese companies have also built and acquired

hydroelectric dams in Ecuador and Peru. Back

in Argentina, China National Nuclear Corp. is in

negotiations to build an $8 billion nuclear plant.

“Argentina has a real lack of financing options, but

it needsmorepower,soit’sparticularlyvulnerable

toChina,”saysJamesEllis,headofLatinAmerica

researchatBloombergNEF.

Majorhydroelectricprojectssuchastheone

Gezhoubais overseeinginPatagoniaoftenincite

oppositionfromenvironmentalistsandsurround-

ingcommunities.PlansforCondorCliff and

LaBarrancosa,whicharescheduledtobecom-

pletedin2023,hadtobescaledbackbecauseof

concernsabouttheirimpactonglaciersupriver,

including Perito Moreno, a tourist magnet.

Gezhoubaplayeda roleinerectingChina’sThree

GorgesDamontheYangtzeRiver,whichdisplaced

morethan1 millionpeople.

Whilehydropowerremainsthemostprevalent

kindofrenewableenergyaroundtheglobe,it’s

beenlosingfavortoothertypes.Figurescompiled

bytheParis-basedInternationalEnergyAgency

showhydro’srateofgenerationgrowthwasjust

0.5%in2017,comparedwith40%forsolarand

32%foroffshorewind.

FernandoZárate,anofficialinSantaCruzin

chargeofsupervisingconstructionofthedams

iscontentto havehisstateswimagainstthe

tideinordertomeetArgentina’senergyneeds.

“Wecan’tleavethepeopleunsatisfied,”hesays.

—JonathanGilbert

THE BOTTOM LINE Construction of a pair of Chinese-financed

dams in Argentina has accelerated, despite President Macri’s initial

misgivings about the projects.

Europe,CentralAsia

LatinAmerica*

SouthAsia

Africa

AsiaPacific

MiddleEast,N.Africa

$65.5b

62.0

○ Investmentin energy

projects,2005-17

Chinesebanks

 World Bank

39.0

33.0

20.5

4.1

 ECONOMICS Bloomberg Businessweek May 27, 2019