Argentina China High-Speed Rail Metro Rail

China Agrees to Major Investments in Argentina’s Rail and Metro Lines

» $10 billion spending spree will improve transit in Cordoba and improve branch railway lines. China expects to improve trade relations and open access to natural resources.

Expanding its effort to use infrastructure investments to spread its influence, the Chinese government has agreed to a $10 billion commitment to upgrade a series of intercity rail lines in Argentina and improve urban transit systems in Buenos Aires and Cordoba. Funds come from the China Development Bank and will require a 15% match from the Argentinian government.

This money will not contribute to to the construction of the Buenos Aires-Rosario high-speed line, a separate and currently delayed project.

The effort suggests not only that China is willing and able to contribute its national funds to foreign projects, but also that it intends to structure its investments as an alternative to the World Bank, a grant-making institution that since World War II has sponsored infrastructure in underdeveloped countries with the general aim of spreading Western economic interests. China announced in March that it was planning to invest in a series of transcontinental high-speed rail lines throughout Asia and Europe; in addition, the Eastern superpower has been upping its spending in Africa far above the engagement of any other country. China clearly hopes that new infrastructure abroad will help speed goods to its rapidly expanding domestic market and encourage the expansion of its own international business.

Thanks to talks between Presidents Cristina Fernández de Kirchner and Hu Jintao, Argentina will receive $4.35 billion to renovate three freight railroad lines, including $1.85 billion to improve conditions on the Belgrano Line, which links the country to Bolivia and is an important link for the nation’s agricultural producers. China undoubtedly wants to expand its access to Argentina’s productive farmland, and rail transport is significantly cheaper than road movements.

But China has also agreed to more than four billion dollars for the improvement of the Buenos Aires Subway and the creation of a four-corridor Metro in Cordoba — projects that provide no clear economic benefit to the latter country. This suggests that Argentina has agreed to giving China preferential trade treatment above and beyond the improved access to the country’s agricultural resources.

China, of course, does not have infinite resources so it won’t be able to promise similar spending in every country around the world. That said, its own extensive investment in its high-speed rail and urban rapid transit suggests that similar American projects could potentially find funding in Chinese hands. If U.S. companies aren’t able to provide adequate private sector support for construction programs, and if neither the federal government nor states themselves are able to develop infrastructure banks to advance such funding, foreign aid could be a realistic possibility.

This could be seen as a significant let-down for Americans used to thinking that we should be able to fund our infrastructure using our own funds. But the opportunity for expanded global trade could be an excellent opportunity for improvements in the U.S.; there’s no reason to be worried about direct investment from abroad if it makes possible the construction of resources that we couldn’t otherwise build.

Image above: Cordoba, Argentina, from Flickr user Javier de Cordoba