The agreement was signed at a ceremony in the town of Maciel in Santa Fe province by Argentina's transport secretary Mr Alejandro Ramos and Mr Wang Hong, vice-president of China Machinery and Equipment Corporation (CMEC) and is part of a wider $US 7.5bn trade agreement between the two countries.

The Argentine treasury has also agreed to contribute $US 370m towards the rehabilitation of the network, taking the total investment to nearly $US 2.5bn.

The government says the investment will include 100 new locomotives and around 3500 new wagons, acquisition of components to return existing wagons to service, and track renewals, which are urgently needed on much of the 7350km network.