Q&A: ‘Chinese companies prosper, while Europe moves forward’

Over the past 10 years, Argentina has been one of Latin America’s biggest recipients of Chinese investment in renewable energy. During the four revolutions of Argentina’s government, and even before joining China’s Belt and Road Initiative (BRI) in 2022, Chinese companies have supported many solar and wind power projects.

Despite such investments, Argentina still faces major challenges in sustaining its energy transition and its still struggling economy. The country continued to focus on the oil industry, and the sector of the Chinese industry also invested heavily in it.

China is Argentina’s second largest customer, but relations between the two countries seem to have worsened recently after the election of Argentina’s independent president, Javier Milei, in 2023. Miley’s China and her staff caused controversy.

Meanwhile, China has played a very important role in the country’s energy transition, said Juliana González Jáuregui, a researcher at the Latin American Faculty of Social Sciences (FLACSO) and the National Council for Scientific and Technical Research (CONICET) in Argentina. . However, this happened without Argentina wanting to transfer technology and see that it is more useful than the domestic industry, he argues.

Juliana Gonzalez Jauregui

Juliana González Jáuregui (Photo: Darío Castillo)

In this interview with Dialogue Earth, González Jáuregui also examines China’s relationship with Argentina’s regional authorities in terms of energy transition, as well as the role of Chinese companies in mergers and acquisitions of other companies. He discusses why US and EU investment in Latin America lags behind China.

Global Discussion: To what extent did Chinese investment contribute to reform and renewable energy in Argentina?

By Juliana Gonzalez: China’s involvement in state-owned and private enterprises has determined Argentina’s energy transition, both directly and indirectly. First, by participating in the contribution under the RenovAr program [a government scheme launched in 2016 to encourage private investment in renewable-energy auctions]beat most of them. Secondly, by doing those projects, especially those from PowerChina and Goldwind, which want to continue expanding in the country. There is clear support from China to join the country’s energy transition.

What role are Argentine companies playing in the installation of the first solar and wind projects in the country?

Argentina is far behind in the solar industry, but has made great progress in wind energy. There is no comparison in terms of price. With the explosive growth of Chinese companies, there is no way to compete on price and technology. One of the things I asked related to the transfer of technology, and how Argentina could facilitate such support for local companies to put into certain projects. There is no long-term vision in Argentina’s energy program, and it is in this context that Chinese companies have arrived. But the fact that Argentina does not have the ability to sit back when it comes to negotiating and thinking about technology transfer has nothing to do with China. It’s about us.

How has China worked with Argentina’s regional government regarding energy transition?

The Jujuy area is the most representative and the oldest, and the one that has led to support in other areas. There is a clear understanding on the part of the Jujuy government that it will be part of the mission to China. It is one of the first provinces to get twins in China [Guizhou, in 2018]. Then the money came, with the solar park of Cauchari as the most representative project, and now, the solar railway line is in operation recently. A similar process began in the provinces of Salta, Catamarca and Tierra del Fuego.

EU and US companies have also invested in Argentina in energy transition, especially in lithium extraction. What about their relationship with the local government?

Europe and the United States have not yet understood the importance of sub-national migration to Argentina, something China has achieved quickly and extensively. In Argentina, the provinces have natural resources, so the sub-national element is important.

Has Argentina’s 2022 participation in the Belt and Road Initiative made a difference to Chinese investment in renewables?

I didn’t see any changes after I signed the endorsement. BRI is a brand. It is China’s interest to change the international system within the framework of its understanding of multilateralism. In Argentina, of course, most of the investment came before the signing. But we have different politics from other countries in the region. For example, Chile has a flexible state position in its relations with China, but we do not.

These conditions come as the BRI transitions, away from infrastructure contracts backed by state loans, to a so-called “small and beautiful” project. What could this mean for Argentina and other countries hoping to get money?

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It is related to the reconstruction following the Covid-19 crisis and China’s growing concern about its debt burden. In Latin America, the best-known cases are Venezuela and Ecuador, which are looking at how to repay Chinese-mandated bank loans. Internally, China is beginning to rethink its financial position on the international stage, and in the face of conflict with the United States. The focus now turns to investment projects linked to innovation and technology, and China’s goal of becoming a technology leader during the centenary of the People’s Republic in 2049.

While funding renewable energy projects, China has also remained active in fossil fuel projects. Have you seen any changes in this?

China is replicating what other industrialized countries are doing, exporting pollution outside its country and fossil fuels. On the one hand, it is the state that can move the power transition in the Global South. But on the other hand, it has not stopped to destroy the dependence on fossil fuels and the dichotomy is arising. China is one of the countries that supports the revolution, but it is also the one that invests the most money in fossil fuels.

Rooftop solar collectors

Solar water heaters in a low-income area in Rosario, Argentina. According to Juliana González, Argentina is far behind in the solar industry and it will be difficult for it to compete with China in price and technology (Photo: Celina Mutti Lovera / Dialogue Earth)

To what extent are Chinese companies active in mergers and acquisitions in Argentina’s green energy sector?

In the field of wind and solar, the strongest development has taken place in Brazil, and in recent years also in Chile. In Argentina, we have some cases like Goldwind, which acquired the Isolux wind farm [of Spain]. This concept can grow further. Now we won’t see massive state investment or massive projects funded by state-owned banks or businesses from China. Instead we will see cash flow, where companies raise money to gain more leverage for mergers and acquisitions.

Inside you researchYou mentioned the need for a long-term strategy between China and Argentina on renewable energy. How should this be done?

The concept of strategy involves bringing to the public and private table in Argentina, including the science and technology sector, to think about the energy transition. It doesn’t mean that you have to compete with China, but to try to have some influence on the value chain, to see what we can contribute to Argentina. China started its own energy transition through investment, and wanted to transfer technology. Why can’t Argentina do that? The medium and long-term plan is to think about communication between departments, which does not exist in Argentina at this time. We have many divisions and there is little communication between ministries, agencies and national and regional governments.

How do you see Argentina’s power change in the next three years during Javier Milei’s administration, amid strong relations with China?

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I find it confusing. The current government has a wrong view of its relationship with China. Mistakes have been made since the new government took office. I understand the desire to have an alliance with the United States, but in the current world situation you have to include China in your foreign policy. On top of that, the government has made a declaration that climate change is not something Argentina should be concerned about. So I find it difficult to have a long-term vision for power change.

Milei has shown interest in improving relations with the EU and the US. What could this mean for Argentina’s energy transition in terms of income and employment?

If we think about the reversal of the position of the Global North in the face of China’s rise, I see a window of opportunity for Europe, instead of the United States, energy exchange investments – but Europe is looking at another way. Germany is focused on foreign policy initiatives vis-à-vis China, including on innovation and energy transition, but not on renewables in Argentina. In the United States, the focus has been on China talking bad rather than doing anything effective in Latin America.

Last year, the EU released an investment quota in Latin America under the Global Gateway program, including projects in energy exchanges and essential minerals. What role do you think he will play in Argentina?

I see it as a conversational response to competition in China. The fact is that Chinese companies are making strong progress in renewables in Latin America and Europe and are falling behind, unless they decide to invest publicly in this area. The idea of ​​Global Gateway is a private investment, which I don’t see the program driving. The problem is that there is no currency advantage that China has, and the EU has not yet decided to issue a similar currency status.


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