Argentina signed deals on Friday to borrow US$7.5 billion from China at a time when the country cannot tap global capital markets because of disputes over unpaid debt.
Among the deals signed, Argentine President Cristina Fernandez and Chinese President Xi Jinping (習近平) agreed on a loan for US$4.7 billion from the China Development Bank (國家開發銀行) for the construction of two hydroelectric dams in Patagonia.
China Gezhouba Group Corp (中國葛洲壩集團) and Argentina’s Electroingenieria SA signed contracts last year to build the dams, which are set to have a combined generating capacity of 1,740 megawatts.
The Chinese bank also agreed to a US$2.1 billion loan to help finance a long-delayed railway project that would make it more efficient to transport grains from Argentina’s agricultural plains to its ports.
“It’s a day we can define as foundational in the relations between our two countries,” Fernandez said after signing the deals.
China is Argentina’s second-largest trading partner after its neighbor Brazil. Last year, Argentina’s trade deficit with China increased by more than 20 percent to US$5.8 billion.
Argentina is the world’s third-largest exporter of soy and corn. China is the main buyer of its soybeans.
Xi, China’s first president to visit Latin America’s third-largest economy in a decade, arrived in Buenos Aires on Friday after attending a summit of the BRICS group of emerging economies — Brazil, Russia, India, China and South Africa — in Fortaleza, Brazil, earlier in the week.
He also signed a three-year agreement for a US$11 billion swap operation between the central banks of Argentina and China that is set to let the Latin American country pay for Chinese imports with yuan.
“The exchange will mainly serve to facilitate investments in the currency of the country providing the funds and to strengthen the level of international reserves,” the Argentine central bank said in a statement.
The central bank could ask for the total or partial disbursement of the 70 billion yuan in exchange for Argentine pesos to invest it, or could exchange it for US dollars to fuel its reserves, said an Argentine central bank official, who spoke on condition of anonymity.
The Fernandez administration has imposed stringent import and capital controls to safeguard dwindling foreign reserves, which it needs to pay its debts. It has been virtually shut out of global credit markets since staging a 2002 default.
Hopes that the Argentine government might soon be able to access markets again hinge on the country reaching a deal with holdout creditors, who rejected its debt restructuring in 2005 and 2010.