Argentina in talks with Chinese company over $800m rolling stock deal

6 June 2023

CMEC President Fang Yanshui, right, with transport minister Diego Giuliano (Government of Argentina)

The government of Argentina has been holding talks with a Chinese company to invest in the country’s rail network.

Transport minister Diego Giuliano held talks last week with the China Machinery Engineering Corporation (CMEC) in the hope of obtaining some $816m for rail infrastructure and rolling stock, part of a previous deal between the two sides.

Giuliano said: “Tomorrow we are going to work with CMEC on … a contract that began in 2006 for railway works that must be unlocked so that an investment of $816m can begin.”

The government commented in a press release that the negotiations followed previous talks held by Sergio Massa, the country’s economics minister, and Wang Dongwei, China’s deputy finance minister. These centred on the provision of $3bn in loans for six Argentine rail projects.

CMEC has been involved in the Argentine rail sector for the past 17 years. In particular, it has been involved in the development of the Belgrano Cargas freight network, which covers 15,305km in the north of the country.

A freight train on the Belgrano Cargas freight network (Government of Argentina/CC BY 4.0)

In September 2015, CMEC announced that its investment of $2.4bn in the network would be doubled to $4.8bn and new purchases and infrastructure projects would ensue. So far, CMEC has renovated more than 200km of tracks and built numerous bridges.

However, this latest tranche of investment will be made in yuan, rather than dollars. Giuliano said: “This cooperation agreement places Argentina among one of the strategic partners in trade matters with China, and this is important … The possibility of China being able to invest directly, in yuan, is a strong development.”

This decision follows announcements in April by Brazil and Argentina that they would switch to yuan to pay for Chinese imports.

Giuliano added: “If we manage to unlock the purchase of rolling stock that we lack, and if Massa agrees that Chinese infrastructure companies can invest directly in yuan, we will have found an economic and commercial giant with which Argentina has a historic relationship.”