Chinese Foreign Direct Investment and Argentina: Unraveling the Path

Abstract

This article explores the political economy of Chinese outward foreign direct investment (FDI) in Argentina during the reign of Nestor Kirchner and Cristina Fernandez. Among other things, it contemplates possible links between Chinese outward FDI (OFDI) volumes and Argentina’s domestic and foreign policies. It also analyses a mixture of successful and unsuccessful Chinese investment cases in the agricultural, chemical, and banking sectors in order to engage the debate about the drivers of Chinese OFDI (COFDI), with some stressing business and economic factors and others emphasizing the primacy of political factors. In regards to the former, my study shows that Argentine policymakers did not offer special accommodations to Chinese investors despite the pro-China proclivities of Argentine leaders and their country’s economic and political need for China. Moreover, at the local level, Argentine politics actually proved to be an obstacle to successful Chinese deals. As for the latter issue, Chinese companies were not inclined to invest in Argentina because of the China stance of the Argentine government, but rather because they saw opportunities to exploit fertile agricultural soil, special tax regimes for investors, and opportunities to integrate into global value chain. My findings have a number of important theoretical and policy implications.