The U.S. Is Trying to Drive a Wedge Between Argentina and China
The South American country is relying on the U.S. and Wall Street banks for a bailout
By Brian Schwartz Oct. 21, 2025 The Wall Street Journal
The conversations come as Argentina is increasingly turning to the U.S. for help. The administration of the libertarian Milei is grappling with significant obstacles to his ambitious economic overhaul agenda and fighting against runaway inflation. After cutting government spending and taking unpopular measures to narrow a budget gap, the Milei administration is now facing mounting debt payments next year and empty government coffers. Foreign currency reserves are also diminishing as Argentines rush to the safety of the dollar to hedge against economic turbulence risks ahead of Sunday’s midterm elections.
Milei has built close ties with President Trump, who has sought to boost the political standing of Milei’s party. Argentina launched talks with the U.S. after Milei’s party suffered a setback in a provincial election in September, causing the peso to plummet and signaling weakened public support for Milei’s pro-market overhauls.
Weeks after the election, Caputo flew to Washington to meet with Bessent to discuss options for financial assistance. The two sides have since agreed to a $20 billion currency swap with the Treasury Department and a separate $20 billion bank-led debt facility that has yet to be structured with assets or guarantees to ensure banks will get their money back.
A focal point of the discussions between Caputo and Bessent has been encouraging Argentina to push back on China’s growing presence in Milei’s country, the people said.
If China were boxed out of Argentina, it would give the U.S. an advantage amid mounting trade tensions between Beijing and Washington. China recently imposed restrictions on the export of rare-earth minerals, which are vital to consumer electronics and the tech industry. Trump then threatened additional 100% tariffs on China starting Nov. 1. Trump and China’s President Xi Jinping are scheduled to meet later this month in South Korea.
The Trump administration has made curbing China’s influence in Latin America a national-security priority and pressured other countries across the region to break ties with Beijing. China is “assailing U.S. interests from all directions” in Latin America, U.S. Southern Command head Adm. Alvin Holsey told Congress in February.
Since Bessent announced a deal with Argentina earlier this month, Trump and his team have made clear to Milei that they expect him to limit relations with China.
“You can do some trade, but you certainly shouldn’t be doing beyond that. You certainly shouldn’t be doing anything having to do with the military with China. And if that’s what’s happening, I’d be very upset about that,” Trump told Milei during a meeting at the White House last week. Turning to Bessent, he asked, “You understand that, Scott, right? You do understand that?”
Treasury officials have told senior officials in Argentina that they want to see U.S. companies be a primary source for Argentina’s telecom and internet industry instead of companies tied to China, the people said.
China has a major presence in Argentina’s telecommunications and internet markets. Local telecom giant Telecom Argentina recently agreed to receive a $74 million loan from the Bank of China. Huawei, a Chinese technology company restricted from conducting much business in the U.S., also runs a 5G mobile network business in Argentina.
China is financing the construction of a nuclear power plant that will operate with Chinese technology. China, which has significant investments in mining projects across the South American country, is looking to expand its uranium sources amid growing electricity demand.
Under Argentina’s constitution, provinces own mineral deposits as well as oil and gas. That limits any commitment from Milei’s government to the Trump administration unless it is also supported by provincial governors who act as regional political barons, analysts say.
During a recent interview with Fox News, Bessent said Milei is “committed to getting China out of Argentina.” Bessent later wrote on social media, “We do not want another failed or China-led state in Latin America.”
China’s embassy in Argentina criticized the comments from Bessent. China called Bessent’s remarks a throwback to a Cold War mentality that undercuts Latin American independence.
Argentina, though, doesn’t seem eager to push out China. In a recent television interview, Milei denied that his government would cut ties with China. He said the Trump administration didn’t ask him to do so.
“No, no, that’s not true,” Milei said in response to a question about Argentina abandoning relations with China. Milei noted that Caputo and Central Bank chief Santiago Bausili had met with Chinese officials at the annual meetings of the International Monetary Fund and World Bank.
Write to Brian Schwartz at brian.schwartz@wsj.com
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Appeared in the October 22, 2025, print edition as 'U.S. Urges Argentina To Curb China Ties'