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November 12, 2009

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China gets rail deal in Malaysia

MALAYSIA agreed yesterday to award a multibillion-dollar rail project to a Chinese contractor as part of efforts to bolster business ties with its biggest trading partner amid a visit by Chinese President Hu Jintao.

Both countries also signed agreements to cooperate in the banking, education and infrastructure development sectors during a meeting between Malaysian Prime Minister Najib Razak and Hu, the first Chinese president to visit Malaysia in 15 years.

"China and Malaysia's relationship is embracing a new era of all-around development. We will work with Malaysia to usher in an even brighter future," Hu told a news conference in Kuala Lumpur yesterday.

Malaysia has agreed in principle to grant the construction of a double-track rail line in southern Malaysia to an unspecified Chinese company, Najib said.

He did not provide details, but government officials earlier this year estimated that the track would cover 197 kilometers and cost 7.5 billion ringgit (US$2.2 billion) to build.

Malaysia will also consider letting Chinese companies participate in a northern dam expansion as well as an aluminum smelter and pulp and paper projects on Borneo island, Najib said.

Hu in turn indicated that China plans to increase its demand for Malaysian timber and palm oil, Najib said.

China overtook the United States as Malaysia's biggest trading partner this year, with bilateral trade reaching 89 billion ringgit between January and September.

Both sides signed a memorandum of understanding to deepen cooperation between their banking regulatory authorities in what some analysts believe could be the prelude to allowing a Chinese bank to establish operations in Malaysia.

Hu wrapped up his two-day visit to Malaysia later in the day before heading to neighboring Singapore for the Asia-Pacific Economic Cooperation summit.


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