-Analysis-

BUENOS AIRES — As China extends its investment reach to just about every corner of the globe, the enormous amounts of capital at play are transforming economic and strategic relations the world over.

Latin America is one of the Asian giant's key investment targets. But of all the region's countries, only Brazil appears to be an active investment partner. In contrast, Argentina has taken a passive approach, one that it should consider reevaluating. The official discourse here is that Argentine-Chinese relations represent a "south-south" partnership between developing countries. But that line of thinking is increasingly difficult to sustain and only serves to justify bad policies.

Beijing's strategy currently rests on two broad axes launched years ago. One has to do with 1995 financial reforms that boosted the country's finances and created large private and state banks to fund Chinese enterprise abroad. The ICBC, which operates in Argentina, is one of those banks. The second pivotal change came in 1999, when China introduced its Going Global policy as a way to encourage Chinese companies to invest abroad.

Investment projects are financed mainly by enormous private and state-sector reserves that have accumulated outside China thanks to a booming economy. Its standout investment initiatives:

• The Asian Infrastructure Investment Bank (AIIB), launched in 2014 in partnership with dozens of countries, with China as its primary contributor of capital and main vote holder. AIIB seeks to compete with Western-dominated institutions such as the International Monetary Fund (IMF) to finance infrastructure projects in various countries.

• New BRICS development bank. The bank of Brazil, India, Russia, China and South Africa, the so-called "emerging" economies, will also finance public works, with an initial capital of $2 billion brought in by each founding partner over seven years. The BRICs are also using this bank as a counterweight to financing bodies in which their voting power is limited. The financial clout of BRICS has recently declined because of macroeconomic problems in Brazil and Russia. But there is no ruling out the long-term potential of their economies.

• CELAC-China alliance. China is creating a $35 billion investment fund directed at the 33-member Community of Latin American and Caribbean States (CELAC).

• Mega projects in Asia, Africa and Europe. These are being complemented by trade liberalization accords and are related mainly to the Silk Road Economic Belt (SREB) project, a 21st century revival of the great trading route that linked the East and West. Eventually, it could create a rail link between cities as distant as Chongqing and Madrid. Most countries involved in the SREB and its sister initiative, the Maritime Silk Road (MSR), are partners in AIIB.

Money ... and armed incursions

China's expansion is not just a matter of cash. Its navy is advancing in maritime zones China considers of strategic interest, either as trade routes with partners or for their oild and gas reserves. One such incursion is in the South China Sea, where China is setting up infrastructure around islands claimed by Vietnam and the Philippines (Spratly and Paracel islands).

The aims of China's investment race include building up a global infrastructure to ease the flow of products to and from China; creating investment opportunities for rapidly growing Chinese companies; and investing currency reserves in more profitable products than public debt.

This redirecting of investments from bonds to the real economy has a strategic impact on U.S.-Chinese ties, as China will cut back on financing the U.S. deficit, and on its exposure to U.S. economic problems.

As China provides more credit, more countries will use the RMB, or yuan, and help make it a truly international currency. China is aiding this trend by piloting free-exchange zones like those in Shanghai.

Infrastructure projects will also contribute to developing China's more backward interior regions, and help reduce migration to cities. Already in developed coastal zones, overpopulation and slower economic growth are fueling social tensions.

The U.S. and its allies are following these developments with real concern, as evidenced by President Barack Obama's trip to Asia, where he promoted the Trans-Pacific Partnership (TPP), a trade liberalization pact that would include U.S. allies in Asia and elsewhere in the Pacific zone but exclude China. The formation of antagonistic trading blocks, nevertheless, seems unlikely given that many U.S. partners are enmeshed in other pacts with China. An example is the Regional Comprehensive Economic Partnership, a free-trade project including China, all Association of Southeast Asian Nations (ASEAN) members, along with Australia and Japan, both solid U.S. allies.

The overlapping of so many pacts and interests shows the increasing complexity and fluidity both of economic opportunities and of strategic challenges and rivalries.