BEIJING—Argentina said it secured an agreement with China for the Asian giant to invest $10 billion in the South American country's railways sector, China's latest move to extend its influence in Latin America through multibillion-dollar energy and infrastructure deals.The signing occurred Tuesday during a visit to Beijing by Argentine President Cristina Fernandez, at a time when the two countries are in dispute over a number of trade issues. Juan Pablo Schiavi, Argentina's transport secretary, said the pact calls for China to invest in ten separate rail projects in Argentina over the next two-to-five years, including construction of railway lines and equipment. Among these is a $2.5 billion rail renovation project in the capital Buenos Aires, he said.
China's state-run Xinhua news agency reported that six bilateral cooperation contracts had been signed Tuesday by the two countries during the visit, including cooperation deals for Argentina's construction of a light-rail system and subway system. It said China will provide export credit to Argentina for purchases of locomotives. The report didn't list an amount or say where the funds for the deal would come from. China's Ministry of Foreign Affairs didn't immediately respond to a request for comment Tuesday afternoon.
China and its companies increasingly are using the country's financial muscle to spread influence and secure access to natural resources throughout Latin America as well as in Africa and other regions. In April, China Development Bank, a state-owned lender, agreed to lend Venezuela $20 billion. President Hugo Chavez said the funds would be used to build new power plants, highways and other projects and would be repaid with Venezuelan crude oil. Last year, China announced a $10 billion oil-for-credit deal with Brazil, in part to help explore massive offshore finds that could turn Brazil into a major global oil player.
Separately on Tuesday, African Minerals Ltd., a Sierra Leone-focused iron ore miner, said it had agreed to a $1.5 billion investment in its Tonkolili project to Shandong Iron & Steel Group Co., a deal that gives the Chinese state-owned company 25% of the mine. Shandong's investment is accompanied by an agreement to take 10 million metric tons of iron ore from Tonkolili each year at discounted prices. The money will enable African Minerals to build a railway to ship iron ore from the mine to the coast, the company said.
China has become an increasingly important global player in the rail sector, thanks to an enormous investment plan in recent years to upgrade and expand its own rail sector. Argentina is looking to restore what is a largely dilapidated rail network that spans some 10,000 kilometers through 13 provinces.
Trade ties between Argentina and China have been strained this year, after China tightened import rules for Argentine soyoil in April, a move widely seen as retaliation for barriers Argentina imposed last year on Chinese products. China was the single largest buyer of Argentine soyoil in 2009, taking 46% of its exports, but that has now fallen to just 1%, according to Argentine research firm Abeceb.com.
China Ministry of Foreign Affairs spokesman Qin Gang, asked about the dispute Tuesday, called it "a policy issue that has come up in the development of trade between the two countries. I believe the two sides can, in a bilateral spirit, through good coordination, find a way to resolve this issue."
Despite the rough spots, economic ties in other sectors have been reinforced in recent months, in particular in the energy sector.
In March, China's Cnooc Ltd. agreed to form an oil-and-gas production joint venture with Argentina's Bridas Energy Holdings Ltd., in a $3.1 billion move to boost its production and reserves.
- Wan Xu in Beijing and Devon Maylie in London contributed to this article
By SIMON HALL for The Wall Street Journal
Write to Simon Hall at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Source: http://online.wsj.com/article/SB10001424052748704518904575364523811330964.html
