Argentina has reached a nearly $2.5 billion deal with China to modernize the South American country's leading freight-rail network, officials said.

Argentine President Cristina Fernandez and the director of China Machinery and Equipment Corporation, Zhang Chun, signed the agreement during a meeting this week at the presidential palace.

Cabinet chief Jorge Capitanich said the deal included purchases of locomotives, railway cars and other railway equipment from CMEC that will modernize the Belgrano Cargas network, which covers a dozen provinces and links northern and western Argentina with Buenos Aires.

The bulk of the financing for the purchases is in the form of a loan from the state-controlled China Development Bank.

The Argentine government re-nationalized that freight-rail network earlier this year. EFE