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Image: Chinese President Brings $7.5 Billion Development Deal to Argentina
Chinese President Xi and Argentine President Fernandez applaud at a welcoming ceremony Friday in Buenos Aires. (Getty Images)

Chinese President Brings $7.5 Billion Development Deal to Argentina

Friday, 18 Jul 2014 05:24 PM

Chinese President Xi Jinping arrived in Argentina Friday to sign trade and investment agreements for at least $7.5 billion to develop energy and transport infrastructure projects.

Xi met with President Cristina Fernandez at the presidential palace in Buenos Aires to sign 19 agreements. Argentina’s Cabinet Chief Jorge Capitanich told reporters earlier that the contracts to be signed include financing from Chinese banks for $4.7 billion for two hydroelectric projects to be built in Santa Cruz province by a consortium led by China Gezhouba Group Ltd.

Securing loans with its third-biggest trading partner gives Argentina some respite at a time its reserves are near an eight-year low and it faces the prospect of second default in 13 years. Argentina has until July 30 to settle with creditors or risk a default on its performing bonds.

“Argentina is in a beggar’s position,” said Kevin Gallagher, a professor of international relations at Boston University. “They need the foreign reserves and they need the FDI and China is the only country outside of the orbit of the U.S. court decision that is willing to put money on the table.”

The two dams to be built over five and half years in the south of the country will have electricity generation capacity of 1,740 megawatts and be financed by loans from the China Development Bank Corp, Industrial and Commercial Bank of China Ltd and Bank of China Ltd.

Argentina and China, the world’s second-largest economy, will also sign an agreement to swap as much as $11 billion in their two currencies during a three-year renewable period. The countries will also sign a loan for improvements in the Belgrano rail line worth $2.1 billion and a nuclear energy cooperation accord.

Xi will attend a dinner with Fernandez tonight and meet with the heads of both chambers of Congress tomorrow before receiving the keys to Buenos Aires from Mayor Mauricio Macri, according to presidential palace officials.

Xi’s arrival follows a visit to Brazil, where China pledged more than $8.6 billion in investments and loans while backing the creation of a $50 billion development bank.

Argentine central bank foreign reserves have fallen 21 percent in the past year to $29.7 billion as Fernandez uses the funds to pay foreign debt obligations. A decade of lawsuits over defaulted debt has pushed up Argentina’s borrowing costs, effectively locking the country out of capital markets.

China is adding food to its strategy of importing oil and metals to feed one of the fastest-growing economies in the world, Gallagher said. Argentina, the third-biggest producer of soybeans in the world, is expecting a record harvest this year of 55.5 million tons of soy. China is the world’s biggest soybean importer.


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Chinese President Xi Jinping arrived in Argentina Friday to sign trade and investment agreements for at least $7.5 billion to develop energy and transport infrastructure projects.
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2014-24-18
Friday, 18 Jul 2014 05:24 PM
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