More than $1.7 billion a year worth of Argentine exports of soya oil to China are at risk in the dispute, which began when Chinese officials objected to high solvent content in the commodity. China is the world's largest consumer of soya oil.

In fact, industry analysts quoted in the media said, China's decision to halt the imports of Argentine soya oil had more to do with high taxation designed to make Chinese goods on the Argentine market uncompetitive.

Argentine anti-dumping regulations are aimed at limiting a range of Chinese exports -- from textiles to steel -- destined for the country.

Argentina was on the itinerary of Chinese President Hu Jintao but he canceled the visit and returned home, after visiting Brazil, when an earthquake hit western China Feb. 26.

Although Argentine President Cristina Fernandez de Kirchner sought out Hu at a Washington meeting in April, officials said the soya oil dispute wasn't discussed at the talks. Instead, Fernandez said she met Hu mainly to apologize for canceling a long-arranged visit to China that would have taken place in early February. Fernandez was worried about handing over power temporarily to her vice president and political rival, Julio Cobos.

That series of events have put Argentina in a position where China increasingly is calling the shots in the soya oil dispute, analysts said. Officials said they had learned Chinese government had instructed soya oil importing authorities to go instead to U.S. and Brazilian exporters.

Argentina can ill afford to lose China as its largest customer, analysts said. High export tariffs mean that about $600 million of Argentina's soya oil export earnings from China are meant for the treasury.

Amid reports that this year's soya harvest could be record high, Argentina needs to retain China as its largest customer and find more customers. A shortfall in exports would also present the government with the financial and political implications of stockpiling unsold soya oil.

China wants Argentina to recognize it as a market economy, a move that will reduce at a stroke the anti-dumping duties. But as the dispute over soya oil deepens, China seems poised to extract more concessions from Argentina.

Argentine officials have already faced demands for easier terms for Chinese exports of footwear, steel and other goods.

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