RANDY JAMES of Associated Press in Buenos Aires, Argentina

Updated at 11.54am:
China will invest more than US$19 billion (HK$148 billion) in Argentina over the next ten years, deepening trade links between the world's fastest growing economy and South America's second-largest, Argentine officials said.

The announcement of the trade and investment agreements came Tuesday as Chinese President Hu Jintao opened a two-day visit to Argentina, part of a Latin American tour widely seen as an effort by China to expand the country's economic presence in the region.

Argentine officials said the multibillion dollar investments would be made in energy production, infrastructure and Argentina's railway system in what amounts to the largest bilateral trade accord for the South American country since its 2001-2 economic crisis.

"Our aim is to strengthen this relationship despite the distances," between the two countries, Mr Kirchner said.

The largest investment includes a Chinese pledge to invest US$8 billion in the coming years to expand Argentina's railroads, US$6 billion over five years in construction projects, along with US$5 billion in oil exploration.

Other projects include investments in communications and satellite technology, raising the total investment amount to US$19.7 billion, according to Argentine and Chinese officials.

Mr Hu's arrival in Buenos Aires followed a five-day visit to Brazil where Brazilian President Luiz Inacio Lula da Silva recognised China as a market economy, a move that should make it easier for the two countries to do business.

Analysts say China's interest in a region recovering from recent economic turmoil is largely due to a growing Chinese need for commodities and other natural resources readily abundant in Latin America.

"China is increasingly prioritizing Latin America as an economic power," said Dan Erikson, an analyst at the Inter-American Dialogue, a Washington policy group. "China is becoming a tremendous importer of raw materials, much of which Latin America has to offer."

Last year, Argentine exporters sent some US$2.5 billion in goods to China, most of it soybeans. China is the fourth biggest destination for Argentine products.

Rapid heavy industry development in China and rising living standards have contributed to an overall 50 per cent increase in South American imports over the last three years, according to Wenhui Zhu, an expert on Chinese trade at the Brookings Institution in Washington.

"The two sides are complementary," Mr Zhu said. "South America is resource-rich, and it's a growing market."

Mr Zhu said China is hungry for an increase of farm exports from Argentina, which is among the world's largest producers of beef and soybeans.

Urbanisation and industrial growth has reduced China's cultivatable land, hiking demand for soy, wheat and other agricultural products, he said.

Mr Kirchner and Brazilian President Luiz Inacio Lula da Silva made separate trips to China this year, leading trade delegations of hundreds of business leaders anxious to increase trade.

The impact of Chinese demand is especially apparent in Brazil, the Latin America's largest economy, according to Mr Zhu. In 2002, China was Brazil's seventh-largest export destination, but China jumped to third place last year, and by 2005 China will eclipse Argentina as Brazil's second-largest export destination, he said.

Many analysts said they expect trade between China and South American countries to continue expanding, provided the Chinese economy remains strong.

"Hu's first trip to Latin America is very unlikely to be his last," said Dan Erikson, an analyst at the Inter-American Dialogue, a Washington policy group.