Major economic reforms in Argentina, new opportunities for China-Argentina trade

According to the Buenos Aires Herald, on the evening of December 10, local time, Argentine President Mille announced a package of economic policies in a televised speech marking his first anniversary in office, including the abolition of 90% of current national taxes and the permanent abolition of currency controls in 2025. This move is expected to bring new development opportunities for China-Argentina trade.
Policy content and reasons
Tax reform: Mille said his team is completing a structural tax reform that plans to reduce national taxes by 90%, while restoring the fiscal autonomy of local governments and allowing them to manage taxes independently. The reform aims to simplify the tax system, reduce bureaucratic inefficiencies, eliminate the existing tax system's obstacles to economic growth, enable enterprises to develop more freely and create more jobs, and thus promote Argentina's economic growth.
Remove dollar controls: The currency controls implemented since 2019 stipulate that Argentines can only legally purchase $200 per month in banks. Starting in 2025, this control will be permanently lifted. In addition to the tax system, the Argentine domestic market will be free to use the local currency peso and other currencies for transactions and settlements. Mile believes that the removal of currency controls can attract foreign investors, inject vitality into the Argentine economy, and promote the development of international trade.
Positive impact on China-Argentina trade
Reduced trade costs: Argentina's reduction of 90% of national taxes will directly reduce the operating costs and trade costs of Chinese companies in Argentina. The prices of Chinese exports to Argentina are more competitive, which is conducive to expanding the share of Chinese products in the Argentine market. At the same time, Argentina's products exported to China will also have more price advantages due to lower costs, stimulating the Chinese market's import demand for Argentine products and further promoting the expansion of bilateral trade. For example, China's manufacturing products such as machinery and equipment, electrical and electronic products, and Argentina's agricultural products such as soybeans and meat are expected to trade more frequently.
Strengthening investment cooperation: Tax reform and the removal of dollar controls will significantly improve Argentina's investment environment. The investment costs of Chinese companies in Argentina will be reduced, and the return on investment is expected to increase, which will attract more Chinese companies to invest and set up factories in Argentina and carry out cooperation in infrastructure construction, energy development, manufacturing and other fields. At the same time, it will also facilitate Argentine companies to seek investment opportunities in China, strengthen cooperation between the two sides in science and technology, innovation and other fields, achieve complementary advantages, and promote industrial upgrading of the two countries.
Improved trade facilitation: After the removal of dollar controls, Chinese and Argentine companies will have more options and greater flexibility in trade settlement, which can reduce exchange rate risks and transaction costs. In addition, the Argentine government also plans to promote a free trade agreement with the United States and reform the Southern Common Market to eliminate internal tariff barriers, which will further optimize the regional trade environment, provide more convenient conditions for China-Argentina trade, and promote the improvement of trade liberalization and facilitation levels.
Market vitality stimulation: These reform measures will stimulate the vitality of Argentina's domestic market, improve the production enthusiasm and innovation capabilities of enterprises, promote economic growth and the expansion of the consumer market. Chinese companies can take advantage of this opportunity to further tap the potential of the Argentine market, expand their business areas, launch more products and services that meet local market needs, meet the growing and diversified needs of Argentine consumers, and further consolidate and deepen China-Argentina trade cooperation.
Enterprise and market response
Chinese companies: China's foreign trade companies and investment companies have expressed great concern and positive expectations for this policy adjustment in Argentina. Some companies have begun to study new investment projects and market expansion plans in Argentina, and are ready to increase resource investment in Argentina, make full use of policy dividends, and enhance their competitiveness and influence in the Argentine market. For example, a large manufacturing company plans to invest in and build a production base in Argentina to better radiate the South American market.
Argentine companies: The Argentine business community is also full of confidence in future economic development. They believe that these reform measures will bring more development opportunities to enterprises and help enhance their international competitiveness. Enterprises in Argentina's advantageous industries such as agriculture and mining hope to further strengthen cooperation with Chinese companies, expand export scale, increase product added value, and achieve industrial upgrading and sustainable development.
Challenges and responses
Economic stability risks: Such large-scale tax cuts and economic reforms may lead to a reduction in the Argentine government's fiscal revenue in the short term, which in turn affects the provision of public services and economic stability. This may bring certain uncertainties to China-Argentina trade cooperation, such as lagging infrastructure construction and poor logistics and transportation. Both sides need to pay close attention to changes in Argentina's economic situation, strengthen risk assessment and early warning mechanisms, and formulate corresponding response measures to reduce the impact of potential risks on trade cooperation.
Intensified market competition: Tax reforms and improvements in the investment environment may attract more international companies to enter the Argentine market, and Chinese and Argentine companies will face more intense market competition. Chinese companies need to continuously enhance their core competitiveness, strengthen technological innovation and product development, and improve product quality and service levels to meet the competitive challenges from companies around the world and consolidate their position in the Argentine market.
Policy coordination and communication: To ensure the smooth progress of China-Argentina trade cooperation, the governments of both sides need to further strengthen policy coordination and communication, and promptly resolve problems and differences arising from trade cooperation. At the same time, actively promote the upgrading and improvement of bilateral trade agreements to provide a more stable, transparent and predictable policy environment for China-Argentina trade.
Overall, the series of economic reform measures announced by the Argentine President have brought new opportunities and broad development space for China-Argentina trade. Both sides should seize opportunities, strengthen cooperation, jointly respond to challenges, and promote China-Argentina trade relations to a higher level and achieve mutually beneficial and win-win development goals.