been blocked or discouraged in recent years (such as CNOOC-Unocal and Haier-Maytag in 2005, Huawei-3Com in 2008, Chinalco-Rio Tinto in 2009) have been so large that if they had gone ahead they would have increased China’s total annual OFDI outflow by a large percentage.”xiv Allaying these suspicions in a systematic and effective way can therefore play a key role in realizing China’s potential in maintaining outward FDI expansion, while failure to tackle the problem may hold it back. Other notable problems with Chinese outward FDI in the LAC region include the lack of job provisions to locals despite the increasing amount of factories and power plants that result from investment. Many Chinese companies opt to bring along Chinese management and technical expertise and in some cases, even immigrant workers. The LAC countries that have relied mostly on Chinese employees are by and large the small Caribbean countries, where goods and labor markets are smaller and have a weaker bargaining position, while larger countries such as Brazil, Chile, and Argentina have not experienced this problem. However, there is a growing tendency to hire more local workforces due to several factors, such as the fewer Chinese who want to work on these types of projects abroad and prefer to stay in China, where wages and conditions have increased considerably. Moreover, Chinese firms have been fairly responsive to concerns voiced by LAC trade unions. Overall, LAC countries’ bargaining position with respect to the terms of Chinese FDI is relatively strong compared to China’s partners in Africa.xv Last but not least, local corruption is another issue that often sparks concerns in Chinese investment and loan agreements and it is closely related to the aforementioned lack of transparency on both ends. On the Chinese side, the country’s policy of non-interference facilitates unmonitored corrupt practices when dealing with Chinese financial inflows. On the LAC side, the countries’ general economic weakness coupled with a strong tradition of political corruption raises reasonable concerns. This is illustrated perfectly by the case of Argentina and the Kirchnerist search for short-term solutions to domestic economic problems.
Political Motives for Currency Swaps Argentina’s economic prosperity in the early to mid-twentieth century was followed by a prolonged period of hyperinflation from 1975 to 1990 with an average annual inflation rate of
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