Argentine banknotes ‘made in China’: a rapprochement between Milei and the Asian giant?

The Central Bank of the Argentine Republic (BCRA) put the US$10,000 note (10,000 pesos) into circulation for the first time and this is already historic. Not only is it the largest denomination in the country, but it includes the images of Manuel Belgrano and María Remedios del Valle. It also leaves several readings beyond the monetary one due to their origin: the notes come from China, one of the nations that the president most criticized. Javier Milei when he was a candidate.

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The new 10 thousand dollar note will be progressively distributed starting this Tuesday, the 7th, among banks and ATMs across the country. Until this Tuesday, the highest value paper money in circulation in Argentina was US$2,000, which is worth less than three dollars, at the official exchange rate.

The new notes are part of a first batch that arrived a few days ago from China, after being ordered by the BCRA from the state-owned printing company China Banknote Printing and Minting Corporation (CBPM), in an order for 770 million notes, explains the newspaper “La Nation”.

“The official intention was to accelerate the deadlines for this new note to be in full circulation in June, when the demand for cash increases to pay the semi-annual bonus”, says the media.

The US$10,000 is the first of two notes that the BCRA plans to put into circulation this year. The US$20,000 one is scheduled to appear in the last quarter of the year.

We present the new #Billete10000Pesos which has strict security measures:

✔️Watermark: against the light you can see the portraits of María Remedios del Valle and Manuel Belgrano, and the initials of their names in a light tone.

✔️Ventilated safety wire: red wire that… pic.twitter.com/UM5tSSMjCS

– BCRA (@BancoCentral_AR) May 7, 2024

Argentine political analyst Santiago Rodríguez Rey explains that the acquisition of banknotes from abroad is due to a printing and capacity problem in Argentina because there is a need to print them as quickly as possible.

“Specifically, the release of the notes seeks to try to solve a problem and that is that today the highest value note is 2,000 pesos, which is equivalent to around two dollars. A coffee in the City of Buenos Aires costs 2,500 pesos. In other words, the highest value bill does not buy a coffee,” he tells El Comercio.

“La Nación” highlights that the previous government, led by Alberto Fernández, refused to issue larger denomination banknotes due to the political decision of former vice-president Cristina Fernández de Kirchner, who said it was a way of recognizing inflation. This refusal “not only generated higher printing costs, but also complicated the logistical operations of companies and citizens”.

Along these lines, Rodríguez Rey highlights that, as inflation has fallen in recent months, the arrival of higher denomination notes will help boost the economy a little. “Because the fact that there are no more accounts makes all transactions more complex. This was causing some problems for the banks, for transportation. It was a flood of bills“, To add.

In addition to the consequences for the Argentine economy, the entry into circulation of the new banknotes is proof that market forces and China ended up imposing themselves on political or ideological positions.

Since taking power five months ago, Milei has made his alignment with the United States very clear. The liberal president clearly marked his international positions since the election campaign, when he stated that he “would not do business with China” and guaranteed that cutting ties with the Asian giant “would not be a macroeconomic tragedy”.

However, once in office, Milei chose to moderate his speech about Beijing. In a recent interview with the BBC, he was more cautious when asked about his opinion of his Chinese counterpart, Xi Jinping.

“Well, I have no affinity with communist systems. I strongly believe in freedom. But I don’t know him personally to make a value judgement. “That would be reckless of me,” said the Argentine president.

“What I can say is that I have no problem with the Argentine private sector doing business with Chinese sectors,” he added.

Milei during a lecture at Florida International University last April. (Photo: AFP) (ZAK BENNETT/)

At the end of April, Argentine Foreign Minister Diana Mondino began an international trip with a visit to China and more recently was willing to clarify a phrase allegedly discriminatory to the Chinese population said in an interview.

The change in tone is understandable. According to the Efe agency, China is the country of origin for almost a quarter of Argentina’s imports and the destination for around 6% of its exports.

Furthermore, in June 2023, under the management of Alberto Fernández, the People’s Bank of China and the BCRA renewed and expanded a foreign exchange swap agreement (bilateral contract that allows to cover risk exposure) for 18.57 billion dollars .

Chinese banknotes will continue to arrive in Argentina. Last week, the BCRA awarded a new tender for the purchase of 190 million $10,000 bills and 230 million $20,000 bills.

According to “Clarín”, for a sector of the party in power, the attribution to the Asian giant of printing the new 20 thousand dollar notes which, coincidentally, bear the image of the libertarian hero Juan Bautista Alberdi, is inexplicable, meaning they will be emblematic for the government by Milei.

He adds that currently only five countries trust China to manufacture their banknotes. Four of them are geopolitically linked to Beijing: Taiwan, Nepal, Macau and Hong Kong.

But if China beat countries like France in printing Argentina’s national currency, this is due, according to Argentine media, to technical issues and its lower production costs.

“There were other countries that printed these notes, but the supplier that was able to solve the problem most quickly was China. This is not a political issue, but a pragmatic decision. Getting along with China would not be strategic”, says Rodríguez Rey.

But that doesn’t seem to please some libertarians. “For a sector, this spectrum is at least ‘hostile’ because it depends too much on the power led by Xi Jinping for a ‘strategic and sensitive’ resource such as the manufacture of the national currency. It also draws the attention of more than one libertarian leader that the Government enters into some type of negotiation “with a communist nation”, as Milei himself defines it”, says “Clarín”.

An important fact is that the supply of banknotes from China did not start with Milei. The first agreement of this type that the South American country signed with the Asian giant was created years ago, when the Kirchner government authorized the Mint to acquire an “emergency” shipment of the national currency.

Source: Elcomercio