China deals with Argentina
July 19, 2014
Making the first visit by a Chinese premier to Argentina in ten years, President Xi Jinping and Argentinean President Cristina Fernandez signed multi-billion dollar deals in Buenos Aires on Friday at a time when Argentina is unable to raise funds on capital markets due to disputes over unpaid debt.
"It's a day we can define as foundational in the relations between our two countries," Fernandez said. The two leaders signed a three-year agreement for an $11 billion (8.13 billion-euro) swap operation between the two countries' central banks, allowing Argentina to pay for Chinese imports with the yuan unit of currency. The deal is similar to one signed between China and Argentina in 2009.
Fernandez said the deal between the two central banks could offer "stability in exchange rates at the moment. We are, as a country, suffering speculative attacks by vulture funds." Argentina has been unable to access international capital markets since a default in 2002 and its currency reserves are at their lowest since November 2006, at $30 billion.
Among nineteen agreements being signed during the Chinese premier's two day visit, Argentina is to borrow $4.7 billion from the China Development Bank for the construction of two hydroelectric dams in Patagonia. A $2.1 billion loan will help finance a long-delayed railway project to transport grains from Argentine farms to ports. Argentina is the third-largest exporter of soy and corn in the world. China is the main buyer of its soybeans.
China is Argentina's second-largest trading partner after Brazil. Bilateral trade rose to $17.3 billion last year. Argentina's trade deficit with China widened 9 percent from the previous year to $5.4 billion in 2013.
jm/mz (Reuters, dpa)