BUENOS AIRES—Officials in Buenos Aires and Beijing moved to play down a dispute that has crimped trade in soybean oil, a product that is key to Argentina's economy and in demand in China.

Importers and industry participants said Monday that Chinese imports of Argentine soybean oil appear to have slowed after Beijing began enforcing stricter quality controls and put import licensing in the hands of central authorities.

China imposed the new measures on April 1, asserting that Argentine oil contains higher-than-acceptable traces of solvents. Argentine officials defended the quality of their oil.

Argentina maintains that China is retaliating for trade restrictions imposed by Buenos Aires on manufactured imports last year, amid the global financial crisis.
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"The Chinese are sending a very clear signal," about perceived Argentine protectionism, says Dante Sica, director of the ABECEB economic consultancy in Buenos Aires.

The impact of the measures seemed to be uneven, with some Argentine commodities traders saying Monday that they were doing business as usual with the Chinese. Chinese officials said any interruption in trade was from importers filing applications through outdated channels.

There have already been low-profile talks to thrash out a resolution, said Ernesto Fernández Taboada, executive director of the Argentine-Chinese Chamber of Commerce in Buenos Aires. Agriculture officials returned Monday to Argentina after talks in Beijing last week.

Analysts said they didn't think the dispute would last long because the countries share a mutual dependence where soybean oil is concerned. Argentina counts on China to absorb nearly half of its soybean oil exports, and is expecting a big production boost this year. China last year got 77% of its soybean oil imports from Argentina.

"Each country needs the other, and doesn't want this to get out of hand," says Gustavo Lopez, head of the Agritrend consultancy in Buenos Aires.

China can't easily find a replacement for Argentina's production and doesn't want to risk stoking inflation, which might result from cutting off Argentine supplies, says Liao Kegong, director of the domestic raw material purchase department of COFCO Ltd., China's biggest grain and oil trader.

The economic relationship between the two nations has expanded during the past decade amid China's economic boom and Argentina's rise in agrarian production. Exports to China helped propel Argentina's recovery from a severe economic depression in 2002.

But in recent years, Argentine industry has been hard-pressed to compete with a surge in manufactured Chinese imports. Argentina's trade balance with China swung into a deficit in 2008. That deficit widened in 2009.

Last year, seeking to preserve domestic industry and foreign exchange, Argentine President Cristina Kirchner imposed antidumping measures, a mechanism allowing governments to levy tariffs when they believe imports are being sold at prices that are unfair or below normal market levels. Chinese officials protested that the move was protectionist. The soybean-oil trade flap is the newest twist in the relationship. Under the new Chinese policy, all soy oil imports from Argentina require prior approval from the Commerce Ministry's Quota and License Administrative Bureau, rather than by the ministry's provincial branches.

Ricardo Baccarin, vice president of the Buenos Aires commodities trading house Panagricola, said that if China shifts its soybean oil buying to the U.S. and Brazil, it still won't be enough to meet demand. "The U.S. and Brazil combined can only provide 70% of what Argentina can export," he said.

By MATT MOFFETT And SHANE ROMIG
Write to Matt Moffett at matthew.moffett@wsj.com and Shane Romig at shane.romig@dowjones.com