BUENOS AIRES--Argentina and China signed multibillion-dollar infrastructure-financing and currency-swap deals on Friday during a visit by Chinese President Xi Jinping, another sign of the Asian country's growing influence in Latin America.

The two governments approved 20 agreements, including a 70 billion yuan currency swap between central banks, equivalent to about $11 billion.

The deals are a rare source of positive news for President Cristina Kirchner's administration, which is struggling with a recession, high inflation, and a possible debt default at the end of the month. But analysts are skeptical the agreements will provide much relief to Argentina's depleted foreign-currency reserves, which the country uses to pay its creditors and defend the Argentine peso.

The swap doesn't resolve the underlying economic problems that are draining reserves nor can the yuan be converted into other currencies, says Alberto Ramos, senior Latin America economist for Goldman Sachs.

"If your house is on fire it's not like buying more insurance will solve the problem. You need to address the main causes of the fire," Mr. Ramos said.

Reserves now stand at almost $30 billion, their lowest since November 2006.

By most measures, Argentina's reserves are very low compared with other major Latin American countries, said Claudio Loser, an Argentine economist and former Western Hemisphere director at the International Monetary Fund.

China has also agreed to lend Argentina $2.1 billion to buy railroad equipment, and finance the construction of hydroelectric dams in southern Argentina to the tune of $4.7 billion, Argentina's Cabinet Chief Jorge Capitanichsaid.

Bedeviled by foreign-currency shortages at home and unable to raise money by selling bonds abroad, Argentina has struggled to find funding alternatives for capital-intensive projects.

Mr. Xi arrived in Buenos Aires on Friday following a summit in Brazil of Latin American and the Brics nations, whose members are Brazil, Russia, India, China and South Africa. China and Brazil announced a flurry of deals Thursday, ranging from passenger-jet sales to power-grid investments.

In the last decade, China's demand for Argentine farm products such as soyoil and soymeal has cemented its place as Argentina's No. 2 trading partner after neighboring Brazil. Bilateral trade rose to $17.3 billion last year, although heavily in favor of China. Argentina's trade deficit with the Asian country widened 9% from the previous year to $5.4 billion in 2013.

Sino-Argentine ties run deeper than the soy that fattens Chinese hogs. Chinese firms have made significant investments in Argentine banking, mining, oil and agriculture in recent years. Argentina is also home to a thriving Chinese immigrant community, which now accounts for a significant share of supermarket sales in Buenos Aires.

Mr. Xi's visit is shaping up to be far more beneficial for the Kirchner administration than Russian President Vladimir Putin's brief stop in Buenos Aires on July 12. Mr. Putin's visit yielded agreements in the areas of nuclear energy, communications and judicial cooperation, but little in the way of actual money.

Argentina needs all the help it can get in the months ahead. Even a recession hasn't been enough to tame galloping consumer prices. Mrs. Kirchner's reliance on the printing of money to finance spending has spawned one of the highest inflation rates in the world, which some private-sector forecasts put as high as 40%.

Dollar shortages and inflation have taken a toll on the economy. The Kirchner administration is expected to report that gross domestic product shrank 0.7% this year, according to the latest survey of analysts by FocusEconomics.

Mrs. Kirchner also has less than two weeks to resolve a high-stakes dispute over unpaid debts or risk seeing her country default for a second time in 13 years.

A U.S. judge has barred Argentina from paying its current bonds unless it also pays hedge funds that have sued to collect on debt affected by the country's 2001 default. Argentina has until July 30 to get some $539 million in interest payments to investors or will likely be declared in default.

A default would make the recession worse, but nothing like the 2001 crisis, which ranked as "Argentina's worst recession" since the 1930s, Mr. Loser said.

Write to Ken Parks at ken.parks@wsj.com

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(END) Dow Jones Newswires

July 20, 2014 22:45 ET (02:45 GMT)

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