Argentina’s Economy Minister Sergio Massa is backing China and securing funding ahead of the controversial presidential elections

As the Argentine government looks to bolster its foreign exchange reserves in the face of triple-digit inflation, it secured around $1 billion in financing from Chinese companies. The announcements, which come amid Argentina’s Economy Minister Sergio Massa’s trip to China, amount to both economic and political deals as the beleaguered nation navigates a complicated balancing act with the world’s leading superpowers. As Argentina courts the United States’ support in ongoing negotiations with the International Monetary Fund, with Washington holding the keys, Argentina is entering a complex election season in which the opposition — which has a keen bias against the US — awaits becomes. come back to power.

Most of the funding secured is tied to infrastructure projects, with two hydroelectric power plants along the Santa Cruz River in the Patagonia region accounting for the lion’s share. According to Perfil reporter Ariel Maciel in Shanghai, China Gezhouba Group Co. has agreed to complete the second phase of dam projects by mid-July this year. Negotiations included wastewater treatment plants from state-owned company AySA, financing for the Néstor-Kirchner pipeline, which connects to the Vaca Muerta shale field, and investments in electrical infrastructure for the Buenos Aires metropolitan area. Overall, the financing should add about $1 billion to Argentina’s central bank coffers, which is like a much-needed water in the desert given the Latin American nation’s lack of foreign exchange reserves.

Although the full terms of the deal were not released immediately, Massa’s visit to China is part of an economic and political strategy based on strengthening Argentina’s fiscal position amid major weaknesses. At the start of an election year, the Pan-Peronist coalition Frente de Todos is in deep trouble. Inflation is well above 100 percent year-on-year and the economy appears to be slowing as the tax burden remains high. Exchange controls in place since the previous government have been tightened, reducing import capacity and thus weighing on the country’s industrial sector. While unemployment remains low, purchasing power continues to fall, leading to social unrest.

Massa, an unconfirmed presidential candidate, has been trying to gain momentum since taking office at the helm of the Commerce Department. Expecting to lower inflation and position itself as an attractive candidate, an initial winning streak quickly turned to defeat as inflation began to flare up again amid dwindling expectations and the threat of a sudden and painful devaluation. The need for hard currency to bolster depleted central bank reserves has proved damaging. This has become a key issue for Massa, who wanted to use his tenure at the Economy Ministry to position himself as the leading candidate in the governing coalition. Struggling to maintain the status quo through unorthodox economic policies, it experienced several currency runs, which in turn led to inflation and reduced output as expectations worsened.

The leading opposition coalition Juntos por el Cambio expects a victory in the upcoming elections and promises to put in place a stability plan based on a balanced budget and the lifting of myriad monetary and regulatory regimes that have been stalling the economy. Still, its program is based on austerity and unpopular structural reforms that may prove too harsh and ultimately “kill the patient” before treatment bears fruit, according to the Frente de Todos, which advocates an expansionary approach. The Buenos Aires mayor, the apparent front-runner, has been challenged internally by former security minister Patricia Bullrich, who takes an even tougher macroeconomic and political stance. Farther to the right is Javier Milei, an ultra-libertarian economist who has risen in opinion polls and promises to use a “chainsaw” to cut the deficit, burn down the central bank and dollarize the economy. All of this is happening against the backdrop of a nation locked into an IMF program that is in constant negotiations with IMF chief Kristalina Georgieva and Washington.

Massa’s trip to China also comes as his Pan-Peronist coalition finds itself in the midst of a civil war between moderates and hawks represented by Vice President Cristina Fernández de Kirchner. Her son, Deputy Máximo Kirchner, accompanied the economy minister on this trip and is expected to broker some sort of truce that will give Massa peace of mind ahead of the election. But candidatures are still pending, and opinion polls suggest that in a hypothetical runoff scenario, the Frente de Todos could even lose out. Massa therefore pulls all levers in motion. What matters to the Argentine political establishment today is nothing other than absolute short-termism.

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A former Forbes Latam expert with experience in the markets and richlist teams, I am currently Digital Director at Editorial Perfil, one of the largest media companies in Argentina. With a background in sociology, philosophy and economics, I am a trained skeptic with a critical view of Argentina, Latin America and technology. I’m also the executive director of the Buenos Aires Times, Argentina’s only English-language newspaper.

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