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The Dollar-Renminbi Tango: The Impacts of Argentina’s Potential Dollarization on its Relations with China

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  • Otaviano Canuto
  • Xiaofeng Wang

Abstract

The surprising victory of Javier Milei, the unconventional ‘anarcho-capitalist’ candidate, in the August primaries ahead of Argentina’s October 2023 general election, can be largely credited to his commitment to dollarize the Argentine economy, a move perceived as the ultimate solution to bring an end to the nation's economic turmoil. The potential shift from the local currency to the dollar has sparked concerns about Argentina's bilateral currency swap line with China. This swap line plays a crucial role in their bilateral relations and has also served as a means for Argentina to fulfill its debt obligations to the International Monetary Fund. The swap line is seen as a key element in preventing Argentina from defaulting on its IMF obligations, which is vital for both its economic and international financial stability.

Suggested Citation

  • Otaviano Canuto & Xiaofeng Wang, 2023. "The Dollar-Renminbi Tango: The Impacts of Argentina’s Potential Dollarization on its Relations with China," Policy notes & Policy briefs 2023, Policy Center for the New South.
    • Handle: RePEc:ocp:ppaper:pb39-23
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    References listed on IDEAS

    as
    1. Otaviano Canuto, 2022. "Dollarization of Argentina: Revival of a Zombie Idea," Policy notes & Policy briefs 1978, Policy Center for the New South.
    2. Edd Denbee & Carsten Jung & Francesco Patern�, 2016. "Stitching together the global financial safety net," Questioni di Economia e Finanza (Occasional Papers) 322, Bank of Italy, Economic Research and International Relations Area.
    3. Sebastian Horn & Bradley C. Parks & Carmen M. Reinhart & Christoph Trebesch, 2023. "China as an International Lender of Last Resort," NBER Working Papers 31105, National Bureau of Economic Research, Inc.
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