China and the United States are heading towards a significant clash over an $18 billion currency swap deal between China and Argentina, which has provided much-needed support to Argentina’s foreign reserves amid ongoing financial struggles and negotiations with the International Monetary Fund (IMF).
In a speech at Miami Dade College last week, U.S. Special Envoy for Latin America, Mauricio Claver-Carone, harshly criticized the long-standing currency swap, labeling it as “extortion” by China and expressing Washington’s desire to see it end.
Responding on Tuesday, Chinese Foreign Ministry spokesman Lin Jian rejected the accusations during a regular press briefing. He accused the United States of attempting to “drive a wedge” between China and its Latin American partners, emphasizing that “fair-minded people” could easily identify the true perpetrators of coercion and destabilization.
“Argentina’s currency swap with China has long been instrumental in stabilizing its economy and finances, a move that has been welcomed and well-received in Argentina,” Lin remarked in defense of the deal.
The currency swap, which has been in place for years, is crucial for Argentina, a country that has faced recurring economic crises, a falling currency, and dwindling foreign reserves. Despite its ongoing financial instability, Argentina remains a key trading partner for China, particularly in soy, beef, and lithium exports.
Under the administration of President Donald Trump, the currency swap line came under scrutiny, especially as Trump maintained close ties with Argentina’s libertarian President, Javier Milei. Milei’s government faces a delicate balancing act between the U.S. and China, both critical to Argentina’s economic interests. Last year, Argentina and China renewed the swap agreement through July 2026, alleviating concerns over a potential payment crisis. However, Argentina’s central bank has indicated that it plans to gradually reduce the currency swap to zero by mid-2026.
Claver-Carone, when questioned about Argentina’s discussions with the IMF regarding a new $20 billion loan program, expressed hope for a successful outcome. However, he voiced concerns about China’s growing influence in Argentina, particularly through the currency swap.
“We would like to see the eventual end of the credit line Argentina has with China,” Claver-Carone stated. “That line of credit is extortionate, and as long as it remains in place, China will continue to exert leverage.”
While Claver-Carone did not elaborate on the specific nature of the alleged extortion, the United States has long raised alarms over China’s so-called “debt diplomacy” in Latin America. In contrast, China maintains that its engagement with the region is based on mutually beneficial trade and investment initiatives.
As tensions rise, the future of the Argentina-China currency swap, as well as its broader geopolitical implications, remains uncertain.
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