Argentina has inked US$7.5 billion in loan agreements with China, at least US$6.8 billion of which will be used for major dam and railway construction projects in the Latin America's third largest economy.

The deals, which were signed by Argentine President Cristina Fernandez and Chinese President Xi Jinping during the latter’s first official visit to Buenos Aires, include a $4.7 billion loan from the China Development Bank for the construction of two hydroelectric dams in Patagonia, as well as a $2.1 billion loan to finance a large-scale railway improvements.

The pair of hydroelectric dams in Patagonia will be built by China Gezhouba Group Corp and Argentina’s Electroingenieria SA, which won contracts for the construction of the project last year. The dams will provide a pivotal boost to Argentina’s energy infrastructure, and will possess a combined generating capacity of 1,740 megawatts.

The $2.1 billion rail loan will see a major overhaul of the freight network run by state rail operator Belgrano Cargas in order to improve its ability to convey the crops produced by Argentina – a leading agricultural exporter, to the country’s sea ports.

The railway project will further enhance China’s access Argentina’s agricultural commodities. Argentina is currently the third biggest exporter of soybeans and corn in the world, with China serving as its chief purchaser of the former.

Fernandez hailed the signing of the loan agreements as being “foundational in the relations between our two countries.”

The loans arrive as a major source of succour for cash-strapped Argentina. Despite its status as Latin America’s third largest economy, the nation is struggling to raise money via international capital markets as a result of its shaky credit status ever since its 2002 default. The country’s currency reserves now stand at $30 billion – their lowest level since November 2006.

China is now Argentina’s largest trading partner outside of Latin America, as well as its second-biggest trading partner in the world after Brazil. In 2013, Argentina’s trade deficit with China leaped by over 20 per cent to reach $5.8 billion.