Seduction in Beijing and Buenos Aires

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• The Dragon’s Dance with the Americas

• Libertad Avanza, Indeed

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The GCaM Team

After a seven-year hiatus in face-to-face engagements, the Fourth Ministerial Meeting of the China-CELAC Forum convened in Beijing on May 13, setting a milestone in economic relations between China and Latin America.

Why It Matters. Amid rising global protectionism and heightened tensions with the United States, the forum offers CELAC countries alternative avenues for investment and trade. In 2024, bilateral trade reached a record high of USD 518.4 billion.

• China announced over USD 9 billion in direct credit lines, foreign direct investment, and expanded cooperation in key sectors. It also called for a restructuring of global supply chains and the revitalization of a crisis-stricken multilateral order.

• President Xi Jinping emphasized the importance of electrical interconnectivity and renewable energy, aligning these priorities with the Belt and Road Initiative (BRI), which seeks to integrate CELAC nations into a global infrastructure and trade network.

Between the Lines. Beijing seeks to position itself as a more stable and predictable partner than Washington. Xi criticized protectionist policies and coercive behavior, which he argued lead to isolationism.

• This narrative resonates with countries eager to diversify international partnerships and reduce dependence on traditional markets.

• China’s ties with the region continue to deepen in areas such as agricultural trade, infrastructure, and technology. Brazil, Argentina, and Uruguay, for instance, stand to benefit from increased agricultural exports.

• Concrete examples of cooperation include more than 200 infrastructure projects, the creation of millions of jobs, and free trade agreements with several Latin American nations.

Behind the Scenes. A more robust relationship with China also brings challenges. Concerns are growing over potential debt burdens and increasing economic reliance on Beijing.

• U.S. pressure to curb cooperation with China adds complexity to regional decision-making. Washington successfully pushed Panama to withdraw from the BRI and has voiced opposition to Colombia’s possible accession.

• Such moves, however, risk being perceived as interventionist—an approach that contrasts with China’s narrative of non-interference.

On the Radar. Guatemala occupies a unique diplomatic position, balancing traditional allegiances and emerging opportunities. It remains one of the few countries in the region that maintains official diplomatic relations with Taiwan.

• While it has not joined the BRI or established formal diplomatic ties with China, Guatemala has expressed interest in the forum’s agenda.

• Still, the Guatemalan Chamber of Industry (CIG) and other regional business associations have voiced concerns that closer ties with China could jeopardize trade relations with the United States—particularly at a time when negotiations are underway to reduce tariffs imposed by Washington.

What’s Next. The strengthening of China-CELAC relations presents a growing challenge to U.S. economic influence in the region. While Beijing is clearly willing to invest in regional development, concerns about debt sustainability and strategic dependence persist.

• The protectionist stance adopted during the Trump administration—imposing tariffs as high as 50% on Chinese goods—remains a looming threat. The United States must adapt to a shifting geopolitical landscape and reconsider its strategy toward the Southern Hemisphere.

• A prolonged and widespread trade war could slash global GDP by up to 7%.

• Above all, the Fourth Ministerial Meeting has underscored a shift in the global economic balance. CELAC countries are signaling a strong interest in reducing dependencies and diversifying their markets.

Milei’s victory in Buenos Aires appears to pave the way for a win in October.

What to Know. On May 18, La Libertad Avanza (LLA) achieved a resounding victory in the legislative elections of the Autonomous City of Buenos Aires (CABA), securing 30.1% of the vote. With presidential spokesperson Manuel Adorni leading the list, LLA outperformed Peronism (27.4%) and the PRO (15.9%), which posted its worst result in nearly two decades.

This result renews half of the 60 seats in the city legislature, with LLA winning the largest share of those up for grabs.

The ruling coalition has now consolidated its dominance in the capital—a historic stronghold of the PRO.

Markets responded immediately: Argentine stocks surged and sovereign bonds climbed, reflecting confidence in Milei’s libertarian project.

Why it Matters. With Argentina’s elections split across the calendar, LLA has emerged as the main force on the country’s political right heading into the October legislative vote. By defeating Mauricio Macri’s PRO on its home turf, Milei not only weakens a sometime ally, but also proves he has absorbed much of its voter base.

• The PRO’s third-place finish, led by Silvia Lospennato, marks the end of its long-standing dominance in CABA and raises questions about its national relevance.

• This outcome strengthens LLA’s bargaining power with other right-wing factions and opens the door for PRO lawmakers to align with Milei.

• A strengthened LLA increasingly looks like the definitive alternative to Peronism, reshaping Argentina’s political landscape.

Between the Lines. Milei’s success in CABA once again underscores his ability to channel popular discontent, despite the economic headwinds Argentina continues to face.

• Since taking office in 2023, he has pursued an ambitious fiscal consolidation agenda, reducing the deficit and bringing monthly inflation down to a notable 2.8% in April 2025.

• The partial float of the peso—along with high interest rates and policies encouraging dollar-to-peso conversion—has stabilized the currency and helped avoid a Peronist-style inflationary spiral.

• These policies, combined with incentives like tax breaks for soybean exporters, have generated confidence both in the markets and among an electorate that sees Milei as a clean break with the past.

Yes, but: Despite this momentum, Milei’s advantage heading into October remains under constant threat. Peronism—which secured a solid 27.4% in CABA—remains a risk, especially if it manages to tap into frustration over the economic downturn and narratives around rising poverty.

• The strengthening peso has hurt exports, making the economy vulnerable to a potential depreciation, particularly after the soybean harvest ends in July.

• The Central Bank’s refusal to repurchase dollars to rebuild net reserves— combined with a $5 billion gap needed to meet IMF commitments—represents a ticking time bomb for Milei’s economic strategy.

• To keep the political momentum from May 18 from slipping away, the president must sustain fiscal discipline. If inflation continues on its current path, Milei can expect a comfortable win in October.

What We’re Watching 🔎 . . .

Trump Accuses China of Breaking Trade Truce [link]

Alan Rappeport y Tony Romm, The New York Times

Donald Trump accused China of violating the temporary trade agreement the two countries signed to reduce reciprocal tariffs. He pointed out that Beijing has failed to meet commitments, such as lifting controls on exports and easing the sale of strategic minerals; this could lead Washington to adopt a more aggressive stance once again.

This dispute unfolds amid uncertainty, following contradictory rulings on the legality of the tariffs imposed by Trump, which reached up to 145% on Chinese products.

Despite this, U.S. officials are seeking to implement the agreements, denouncing a deliberate slowdown in fulfilling the commitments made in Switzerland, and suggesting direct negotiations between Trump and Xi Jinping. Inevitably, this tariff war has already caused a record 20% drop in U.S. imports in April, impacting both economies.