Argentina Shifts Payment Method for Chinese Imports from US Dollar to RMB

Argentina Shifts Payment Method for Chinese Imports from US Dollar to RMB
Western Hemisphere Department Director Ilan Goldfajn talks with Minister of Economy of Argentina Sergio Massa at the International Monetary Fund on September 14, 2022. IMF Photo/Kim Haughton

The Lede: Argentina plans to use the Chinese renminbi (RMB) instead of U.S. dollars to pay for Chinese imports as part of a shift away from the world’s primary reserve currency.

What we know:

  • Sergio Massa, the Economy Minister said at a press conference in Buenos Aires that the use of the yuan in trade with China would enhance Argentina's reserves and provide more "freedom” for the country, noting the change is coming as early as this month.
  • Argentina will use the Chinese currency to pay for imported goods from China, amounting to about $1.04 billion this month, Massa said at an event that Chinese Ambassador Zou Xiaoli also attended. From May onwards, Argentina plans to pay for Chinese imports worth between $790 million and $1 billion in yuan.
  • The move comes as Argentina has been experiencing pre-election financial turbulence for the last couple of weeks. With the official exchange rate reported on April 24, the peso was equivalent to 227 dollars. But, on the parallel market known as "dólar blue," the peso's value was almost twice as much, nearing 500 per dollar. President Alberto Fernández accused the right-wing opposition of being responsible for the steep devaluation of the peso against the dollar and Massa started an investigation, pledging on utilizing all the resources that the state has at its disposal.

The background: In Argentina, reserves are frequently strained while the dollar is regarded as a safe option by both the public and businesses in light of the country's high inflation. To cover trade expenses and upcoming debt payments the government must work on rebuilding its reserves – something that’s also part of a US$44.5-billion debt programme with the International Monetary Fund (IMF). The agreement imposes restrictions on interventions in foreign exchange markets and establishes objectives for the acquisition of reserves by the Central Bank.

In January, Buenos Aires formalized a currency swap deal with Beijing to tackle the issue, allowing Argentina to boost its dwindling foreign currency reserves. According to Massa, the agreement to pay in yuan would enhance Argentina's net reserves outlook, allowing the country to sustain its level of activity, trade volume, and economic operations with China while grappling with a disappointing year for domestic agriculture and exports due to persistent drought. It would also give the “Central Bank greater operational capacity.”

After Brazil, China is the second major trade partner for Argentina and the second most significant destination for Argentine exports. Buenos Aires Herald reported that the yuan is being used more frequently for foreign trade in Argentina, driving a growing trend of companies seeking out banks such as ICBC or HSBC, which have Chinese capital.

Likely outcomes/Takeaway:

  • The new agreement between Beijing and Buenos Aires requires the suppliers to accept payment in yuan since they are obligated to issue invoices in that currency for the transaction. The expectation is that orders made in yuan via the Import System of the Argentine Republic (SIRA) will receive quicker approval compared to those requested in dollars. The initiative is likely to accelerate imports as approvals typically take 180 days, whereas, with yuan, the process is shortened to 90 days.
  • The agreement with Argentina is part of Beijing’s ongoing efforts to internationalize the yuan. Earlier this year, China and Brazil signed a deal to trade in RMB, meanwhile yuan has also taken over as the most traded currency in Russia where Western sanctions have shaken the dominance of the U.S. dollar. The Chinese yuan in March surpassed the U.S. dollar in usage for cross-border transactions within China for the first time. Beijing’s deal with Argentina contributes to the already growing trend of using the yuan to settle international trade transactions that might reflect its increasing importance in the global financial system.


  • “We have very good expectations with regards to Argentina and the confidence that they can maintain their economic and financial stability.” – Zou Xiaoli, Chinese Ambassador to Argentina.
  • “It [the agreement] gives us greater freedom and gives the Central Bank greater operational capacity. We’ve had to intervene over the past few days due to people speculating and over-speculating with the idea that we as a state don’t have the economic capacity.” – Sergio Massa, Argentina’s Economy Minister. “China continues to support Argentina in the defense of its economic sovereignty.”

Good Reads:

Argentina to start using yuan to pay for imports (Buenos Aires Herald)

Argentina Is In Full Crisis-Mode. Can Economy Minister Sergio Massa And President Alberto Fernández Regain Control? (Forbes)

Argentina: US dollar recoils after Minister Massa's measures (MercoPress)