Trade, SWAPs, and Investments: Internationalization of the Chinese Renminbi in Argentina and Brazil

• In Event: 41020 - Section on Political Economy of the World-System Roundtables
  In Refereed Roundtable (60 minute): Table 3: Borders and Corruption

Abstract

This study examines the impact of bilateral trade, investments, and currency swap agreements between China and Argentina and Brazil in the context of the internationalization of the Chinese Renminbi (RMB). Following the 2008 financial crisis, China expanded its influence in the Global South through strategic economic tools, including currency swaps. These agreements allow countries to exchange their currencies for RMB, reducing reliance on the U.S. dollar. Argentina and Brazil, two semi-peripheral nations with distinct economic conditions, have engaged with China in different ways. Argentina, facing structural financial challenges such as rising debt and trade deficits, has increasingly relied on China’s capital, with its RMB swap line now representing nearly 70% of its central bank reserves. In contrast, Brazil, with stronger reserves and a trade surplus, opted not to renew its swap agreement and instead diversified its holdings by increasing its reserves in RMB. This comparative analysis sheds light on how these financial tools have shaped the countries’ economic strategies, highlighting the role of currency swaps in enhancing RMB internationalization while considering each country’s unique financial landscape. The study draws on data from government reports, interviews, and academic literature to provide a comprehensive analysis of the trade, investment, and financial ties between China, Argentina, and Brazil.

Author

• Maria Jose Haro Sly, Johns Hopkins University / School of Arts & Sciences