China to loan Argentina $7.5bn

Buenos Aires - Argentina on Friday will sign deals to borrow $7.5bn from China, its Cabinet chief said, at a time when the Latin American country cannot tap global capital markets due to disputes over unpaid debt.

Among the 19 agreements to be signed, Argentine President

Cristina Fernandez and her Chinese counterpart, Xi Jinping, will agree on a loan for $4.7bn from the China Development Bank for the construction of two hydroelectric dams in Patagonia.

The Chinese bank is also expected to grant a $2.1bn 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.

"Regarding the total amount, it is about $7.5bn, covering cooperation agreements to finance infrastructure projects and this bilateral trade deal," Cabinet chief Jorge Capitanich told reporters.

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 No. 3 economy in a decade, will also sign an agreement for an $11bn swap operation between the countries' central banks over three years that will allow Argentina to pay for Chinese imports with the yuan currency.

"This will allow the flow of reserves to stabilize," Capitanich said.

Argentina signed a similar deal with China in 2009.

Stringent import and capital controls imposed by Fernandez's government have deterred foreign investment and forced the central bank to drain its foreign reserves to shore up an ailing currency.

China is Argentina's second-largest trading partner after neighbour Brazil. In 2013 Argentina's trade deficit with the Asian country increased more than 20% to $5.8bn.

China's Gezhouba Group and Argentina's Electroingenieria last year won contracts to build the two dams, which will have a combined generating capacity of 1 740 megawatts.

Xi arrives in the capital city of Buenos Aires on Friday after participating in a summit of emerging Brics economies in Brazil earlier in the week.