China is holding back on soybean oil imports from Argentina, complaining of chemical contamination, in a move seen by observers as retaliation for Argentine curbs on Chinese imports.

Before Fernandez landed in Beijing, Buenos Aires repeatedly denied it had engaged in any underhanded curbs on imports from China. Published reports, however, cited Fernandez government's unhappiness over "dumping" of cheap Chinese goods into Argentina's market.

The Chinese officials likewise show no acknowledgment a trade war is afoot behind the scenes or that their decision to suspend soybean oil imports from Argentina is anything but scientists' reaction to contamination in the soybean oil.

However, China began diverting its imports to other countries, including the United States, as news spread of Argentine restrictions on a whole range of Chinese imports.

Analysts cited similarities between the Argentina-China trade tussle and Argentina-European row earlier in June which led to European Union taking its grievance to the World Trade Organization. In that instance, too, Argentina denied restricting European goods' entry but EU officials said they had evidence of "unofficial" blocking of EU merchandise at Argentine ports.

The difference between the two scenarios is that Argentina's $2 billion earnings from soybean oil sales to China are at risk while Chinese imports of the commodity remain suspended.

Fernandez cited "strategic" partnership between Argentina and China but it wasn't clear if the talks had led to a resolution of the key issue of a resumption in the soybean oil trade.

Fernandez is under mounting pressure from Argentina's business community to secure a resumption of the trade, as the consequences of a continued Chinese ban are seen likely to be disastrous for Argentina's soya industry.

Argentina is the world's leading producer of soybean oil and in 2009 China purchased 4.6 million tons equivalent to 70 percent of Argentina's exports of the commodity.

CEPAL, the U.N. Economic Office for Latin America said that between the end of 2008 and January 2010, two-thirds of the 33 "disloyal trade" claims from Argentina before the WTO were targeted at China.

Fernandez also upset the Chinese when she canceled a scheduled official trip to China earlier in the year as her government fought the opposition on the use of Central Bank's foreign currency reserves to meet debt payments.

Fernandez apologized to Chinese President Hu Jintao over the cancellation but the issue of soybean oil trade suspension remains unresolved.

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