Why Are Argentina’s Highest-Denomination Currency Bills Being Printed By a State-Owned Company in China?

 Javier Milei on the campaign trail, eight months ago: “Not only am I not going to do business with China, I am not going to do business with any communist.”

During his relatively short but surprisingly meteoric political career, Argentina’s faux libertarian President Javier Milei has not exactly been shy about his feelings toward the People’s Republic of China. On the campaign trail, he told Tucker Carlson that he would never trade with China, which was then Argentina’s second largest trading partner, due to its government’s left-wing, authoritarian proclivities:

Not only am I not going to do business with China, I am not going to do business with any communist… I am a defender of freedom, peace and democracy. The Chinese don’t fit in.”

In an interview with Bloomberg, he referred to the Asian nation as an “assassin,” saying:

People are not free in China, they can’t do what they want and when they do it, they get killed. Would you trade with an assassin?

The Chinese government was typically tight lipped in its response. When Milei won the election, Beijing congratulated him.

“We congratulate Argentina on its presidential election and congratulate Mr. Milei on his election,” Chinese Foreign Ministry spokeswoman Mao Ning said at a regular press briefing in Beijing on Monday. “China values its relations with Argentina and we are ready to work with Argentina to continue nurturing our friendship and contribute to each other’s development.”

All of these statements of Milei’s were made on the campaign train. When Milei the candidate became Milei the president, he quickly softened his position, as he has with many of his other more radical positions, such as his pledge to shutter Argentina’s central bank and to dollarise Argentina’s economy. In relation to China, he now said he wouldn’t stand in the way of private business deals between Argentinian and Chinese companies. “We are liberals,” he said. “And if people want to do business with China, they can.”

But his government would not be engaging directly in business with the Chinese government or, for that matter, Chinese state-owned enterprises. Or so his voters were led to believe. But that, it turns out, was also not true.

A Very Sensitive Business

The Milei government is doing some very important — indeed, highly sensitive — business with the People’s Republic of China. That business is printing money.

With official annual inflation still raging at an eye-watering 289% in March — though the monthly rate is gradually coming down as the country’s economy is starved of internal demand by the government’s crushing austerity measures — new high-denomination notes are desperately needed. The highest denomination note currently in circulation is the 2,000 peso bill, which right now (11:26 pm, GMT+1, May 13) is worth just $2.26, according to Argentina’s official exchange rate.

The Central of the Republic of Argentina is about to begin the process of putting into circulation a larger denomination bill: the 10,000 peso note (with a current value of $11.31). The new bill will be distributed progressively to bank branches and ATMs throughout the country over the coming months.

What isn’t getting much attention — for obvious reasons — is the fact that the first batch of the new currency, consisting of 770 million bills, was manufactured not by Argentina’s national mint but by the China Banknote Printing and Minting Corporation (CBPMC), a state-owned corporation that carries out the minting of all renminbi coins and printing of renminbi banknotes for the People’s Republic of China, and which has a rapidly-growing list of government clients from around the world (more on that later).

This, understandably, has raised a few eyebrows among members of Milei’s La Libertad Avanca (Freedom Advances) coalition party. As an article in Clarín notes, some are questioning the wisdom of entrusting the manufacturing of a resource as “sensitive and strategic” as the country’s national currency to a company that is essentially owned by China’s communist government.

The new banknotes were not manufactured in-house by the Argentine Mint for an apparently simple reason: it has unpaid debts with many foreign suppliers of the technologies and resources needed to print new bills. That’s according to government sources cited by the Argentine newspaper El Cronista. A recent article by Clarín suggests that the Milei government’s wholesale slashing of public spending means there may not be enough money in the future either to pay for local manufacturing of most of the country’s banknotes.

In other words, Argentina is likely to become even more dependent on international suppliers for its own physical money supply. And as with so many manufacturing industries today, few can compete on price with the Chinese.

In the Milei government’s defence, the first agreement Argentina entered into with China for the printing of banknotes was signed a number of years ago by the Kirchner government when it authorised the Mint to acquire an “emergency” shipment of the national currency. The more recent deal for the consignment of 10,000 peso bills was signed by the previous Alberto Fernández government. And you can hardly blame Argentina’s current government for taking delivery of currency bills ordered by previous administrations.

But while the order for 770 million Chinese-made 10,000 peso notes may have been made due to reasons extraneous to the Milei government, the same cannot be said of the upcoming 20,000 peso notes. In late April, Argentina’s treasury department and central bank awarded the tender to print the first batch of 20,000 peso notes, bearing an image of the Argentine liberal hero Juan Bautista Alberdi, to the China Banknote Printing and Minting Corporation. As El Cronista notes, the decision ultimately boiled down to a question of basic economics:

The Chinese company won the tender, after presenting a cheaper offer than its competitors from Malta, Germany and France.

It is paradoxical, however, that a Government that has freedom as its mantra has chosen the Asian superpower, governed with an iron fist by the Chinese Communist Party, as the main supplier of the new banknotes. Although Milei pledged during the campaign that he “would not do business with communists”, the forces of the market or, rather, of the Chinese State, prevailed.

A Gathering Trend

Argentina is not the only country to have outsourced its production of national currency to the China Banknote Printing and Minting Corporation, as a 2018 article by the New Zealand Herald documents:

[I]n 2013, Beijing launched the belt and road plan, a global development blueprint involving about 60 countries from Asia, Europe to Africa to stimulate economic growth with large-scale capital investment and infrastructure construction projects.

Two years later, China started printing 100-rupee notes for Nepal… Since then the company had “seized the opportunities brought by the initiative” and “successfully won contracts for currency production projects in a number of countries including Thailand, Bangladesh, Sri Lanka, Malaysia, India, Brazil and Poland,” he said.

But that could be just the tip of the iceberg. The actual number of countries that have or plan to outsource currency printing to China could be much bigger, according to one source in the corporation.

Some governments have asked Beijing not to publicise the deal because they are worried such information could compromise national security or trigger “unnecessary debates at home”, the person said.

Hu Xingdou, a professor of economics at the Beijing Institute of Technology, said a country must have considerable trust in the Chinese government to allow it to print its banknotes.

That is clearly not the case of the Milei government, which has aligned Argentina as firmly as possible with the collective West. It has rejected buying Chinese warplanes in favour of American-designed F-16s from Denmark. It has even applied to become a “global partner” of NATO, months after cancelling Argentina’s membership of the BRICS-plus alliance. The potential fallout of that decision for Argentina’s battered economy as well as the BRICS was nicely summed up by Josef Gregory Mahoney, a politics and international relations professor at East China Normal University in Shanghai.

“I wouldn’t really describe Argentina’s decision as a setback for BRICS or China — it’s a setback for Argentina,” Mahoney told the South China Morning Post (SCMP) on January 7. “Given the poor state of the Argentine economy and the damage that’s being done to it by Milei’s economic policies, his withdrawal is a blessing in disguise for the other BRICS members — they’ve dodged a bullet.”

As I noted in December, the election of Milei could also have major repercussions for China’s “comprehensive strategic partner[ship]” (as described by China’s Ministry of Foreign Affairs spokesman Wang Wenbin) with Argentina. That could be the final straw for Argentina’s dilapidated economy.

For a start, China is Argentina’s second largest trade partner, after Brazil. Trade between the two countries has already declined sharply since Milei’s election, as Beijing looks to alternative markets for agricultural, including neighbouring Brazil. China is also massively invested in many of Argentina’s strategic sectors, including lithium and gas — sectors that the US government and corporations also have their eyes on. China is also heavily invested in the construction (stalled since 2022) of Argentina’s nuclear plant, Atucha 3.

A Chinese firm called Gezhouba is leading the construction of the Néstor Kirchner-Jorge Cepernic hydroelectric plant. The project, involving the construction of two dams on the Santa Cruz river, is the largest bilateral infrastructure project ever attempted between the two countries. The plant was meant to provide for the daily electricity consumption of 1.5 million Argentine households and cut almost $1.1 billion off Argentina’s oil and gas import expenses each year. It was supposed to have been completed five years ago, but construction was stalled by the Macri government and then dogged by geological issues. Now, it has been frozen again, and the Chinese appear to have run out of patience.

Tired of waiting for the Milei government to sign the necessary contracts to continue with the work, Gezhouba left the country in March, leaving 1,800 destroyed jobs behind and serious questions about what will happen with the left over debt. According to La Politica Online, Xi Jinping has a wild card up his sleeve: the contract for the project contains a clause for breach of contract that brings Argentina’s currency swap with China into play as well as the Belgrano Cargas modernisation project, which also includes financing from the Asian giant.

When Economic Reality Trumps Ideology

Beijing is a major trade partner, investor and creditor of Argentina. The first currency swap was signed in 2009 with then-Argentine President Cristina Fernández de Kirchener. Special currency swap arrangements negotiated between the Alberto Fernández government and Beijing last summer enabled Buenos Aires to continue servicing its $44 billion IMF loan package despite suffering an acute foreign currency shortage — the result of a severe drought in Argentina’s agricultural heartlands. Now there is over $6 billion of Chinese debt outstanding, much of which is about to fall due — unless, of course, the credit line can be rolled over.

Between June and July, 35 billion yuan ($4.84 billion) is scheduled to come due — money that neither the government nor the central bank have at their disposal. All of a sudden, Argentina’s immediate economic needs are beginning to taking precedence over Milei’s fanatical anti-socialist ideology and unquestioning devotion to Washington. In late April, the government dispatched its gaffe-prone foreign minister, Diana Mondino, to Beijing to try to mend relations. She was accompanied on the mission by Argentina’s finance minister and central bank governor. From Mercopress:

Argentine Foreign Minister Diana Mondino is on a crusade in China to discuss bilateral issues with an economic giant with whom President Javier Milei had pledged during his campaign that he wanted no ties…

Mondino is to meet with her Chinese colleague Wang Yi and with businessmen from both countries to review the complementarity “evidenced in the high levels of commercial exchange.”

The Minister insisted on Argentina’s “great opportunities to increase its export offer to the Chinese market” and told Argentine businessmen that they would “find great opportunities” in the Asian country.

The Chancellor met with Bagó Group Director and President of Argentina’s Chamber of Commerce for Asia and the Pacific, Rallys Pliauzer; with Argentine businessmen and also with the president of Power Construction Corporation of China, Lindi Jiang, a construction and development group with more than 30 projects in the South American country.

Mondino’s mission seeks to lower the political tension between the two countries while at the same time negotiating an extension to the currency swap worth some US$ 6 billion agreed upon under former President Alberto Fernández. The Minister’s first trip to China since she took office coincides with the tenth anniversary of the comprehensive strategic partnership between the two countries. Argentina needs the swap extended to strengthen BCRA’s reserves and also to pay some maturities with the International Monetary Fund, it was reported.

Mondino came back empty handed after Beijing refused to make any commitments regarding the credit line. She then proceeded to make matters worse by giving the following answer to a question about a recent inspection of a Chinese space station in Patagonia that the US claims is being used for military and intelligence purposes (emphasis my own):

“[N]o one detected that there were military personnel there. Those who were investigating did not identify that there were military personnel. They are Chinese, they are all the same.

Not what you’d call diplomatic language. The remarks, which Mondino insists were taken out of context, have caused a bit of a stir in Argentina. But it’s impossible to know how they are viewed by the Chinese leadership in Beijing. Diego Guelar, a former Argentine ambassador to China during the Macri government (2015-19), says that verbal missteps can have a significant impact on bilateral relations as well as the perception of Argentina in the international arena. But he also believes that China will continue to exercise “strategic patience” and as such will take a pragmatic stance regarding the currency swap.

China has so far been characteristically diplomatic in its statements. During his meeting with Mondino, China’s Foreign Minister Wang Yi said Beijing is willing to work with Argentina to “jointly steer the direction of the future development of relations between the two countries,” adding that the two sides should advance cooperation in space, space flight, maritime and Antarctic fields, and promote sustained, healthy and balanced development of bilateral trade.

But for the moment there are no guarantees, especially when it comes to the currency swap. According to Bloomberg Linea, Bloomberg’s Latin American outlet, “the lack of any concrete announcements regarding efforts to postpone the debt maturities has left more doubts than certainties.” Some are even speculating that  Milei may even have to visit Beijing, “as a political gesture to unblock negotiations.” And that would surely represent a diplomatic coup for Beijing as well as a bruising return to reality for the rapidly pro-Western Milei and his supporters.


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  1. Hickory

    I am repeatedly impressed by the patience of the Chinese.

    I’m also impressed by the foolishness of western leaders. I’m sure some people in the US intel/state offices worked hard to get a fanatical pro-US person to lead Argentina, but they wound up with a fool. What blindly pro-US leaders anywhere are showing competence? Scholz, Macron, Sunak are all short-sighted, reality-avoidant fools.

    Even these little american victories – like getting a pro-american to lead Argentina – just aren’t helping that much. They’re trashing the place instead of building something, and that only makes it harder to avoid the lowest-cost producer and lender, which is often China.

  2. The Rev Kev

    Seems that President Javier Milei is getting more and more erratic. Pretty soon he will be as big a flip-flopper as France’s President Macron. But here, he is getting China to print high denomination bank notes for his economy. But didn’t he promise when running for President to dump the peso and to adopt the US dollar for his country instead? So why make a deeper commitment to Argentina’s currency instead? Unless he is having second thoughts about the stability of the US – or maybe the US has already been making demands on Milei when he converts over to the US dollar like they do with Iraq.

    There might be another factor coming into play with the Chinese. He may want western firms to come in and invest in his country’s infrastructure but maybe those firms are not turning up. Maybe somebody reminded him with the flat side of a telephone book that the Chinese do make deals in building infrastructure and will carry it through – so long as they are paid. So maybe President Javier Milei is getting an education on economic truths that he never thought about before but cannot ignore as President.

  3. vao

    The paragraph beginning with “A Chinese firm called Gezhouba is leading the construction…” appears twice in succession.

    The sentence “For a start, Argentina’s second largest trade partner, after Brazil.” should probably be “For a start, China is Argentina’s second largest trade partner, after Brazil.”

    Regarding economics: I have not been following the issue closely, but it seems to me that Milei has made himself somewhat unpopular after he torpedoed a free-trade agreement between Mercosur and the EU. I am not aware of what has happened with the proposals to have a free-trade agreement Mercosur-China, and what position Milei adopted with respect to them. I wonder how long Milei will continue to play his bull-in-china-shop role.

    1. Nick Corbishley Post author

      Fixed. Thanks, as always, for the heads up, Vao.

      As far as I’m aware, the EU-Mercosur deal was more or less dead in the water long before Milei came along. The Center for Strategic and International Studies recently published a fairly thorough report on the topic highlighting the growing divisions not only between the two blocs but within them.


  4. Emma

    I still can’t get over the mentally calculations that led PTB to pick him and a good chunk of the Argentinian electorate to cast their vote for him. If someone looking like him showed up at a party, I would be making my way towards the door. At least Guaido didn’t look so much like a central casting psycho killer.

  5. Wukchumni

    I keep a $100 Trillion Zimbabwe banknote in my wallet strictly for shock value, when presented as payment for parking at an event costing $20, and Zimbabwe was the last country to really hyperinflate other than the ongoing saga of Venezuela, and those banknotes were printed in Germany.

    …didn’t Argentina get the memo about the ongoing War On Cash™?

  6. Rip Van Winkle

    Milly Vanilly – lip syncing someone’s tune.

    I get that the wild hair look is popular, like Sam Bankman-Fraud, Einstein and Larry Fine.

  7. Pablo

    Argentina is currently collapsing, in the worse state in 30 years. GDP is down 20%, universities aren’t working, trains are crashing and stopping, private employment is down even more than government employment despite Milei shutting everything down, ironically RAISING taxes, destroying industry and having no direct foreign investment at all.
    The libertarian regime is destroying everything so he can claim he’s ‘fixing it’ later, typical shock therapy.
    I’ll pray for the argentininan people

  8. The Rev Kev

    ‘It has rejected buying Chinese warplanes in favour of American-designed F-16s from Denmark.’

    That seems like a poor decision. Those Chinese warplanes would probably be new whereas the F-16s from Denmark are so old and used up that the Danes are giving them to the Ukraine.

  9. Louis Fyne

    >>>Argentina is not the only country to have outsourced its production of national currency to the China Banknote Printing and Minting Corporation,

    Printing secure banknotes is not cheap, nor easy. Lots of smaller and developing countries have outsourced that function.

    And in this case, PRC has a big non-monetary incentive to give Argentina a very good deal.

  10. aj

    Interesting timing as I was just reading an article about Argentina this morning. The IMF and the rentiers are really digging Milei. Meanwhile, the people are bearing the brunt of the hardship so that international business can reap the rewards.

    Argentina will get next installment of bailout as IMF praises Milei’s austerity policies

    As usual, the press buries the lead all the way at the bottom:

    “The international lender remains deeply unpopular in Argentina, where the public blames it for an economic implosion and debt default in late 2001. The IMF later acknowledged it made mistakes contributing to the collapse.

    It’s rare for a country to have the IMF as its biggest creditor. Argentina is in the strange position of relying on money lent by the fund to repay the fund itself.”

    Seems like the IMF has found a nice self-perpetuating grift.


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