The Vientiane Times quotes Laotian public works and transport minister Mr Lattanamany Khounnyvong as saying the two countries were finalising details of the loan agreement with the Exim Bank of China to finance the $US 7bn project.

According to the newspaper, feasibility studies have been completed and a Chinese contractor will be selected soon on the mixed-traffic line, which will run from Xishuangbanna in China's Yunnan province to Luang Namtha, Luang Prabang, Vang Vieng, and Vientiane. The project will require the construction of 76 tunnels and 154 bridges.

Initially proposed as a joint project between the two countries, construction is now being taken forward solely by Laos, following approval of the plans by the country's parliament last month.

The railway will give China greater access to Laos' mineral resources, and around 5 million tonnes of freight, mainly potash, is expected to cross the border each year by 2020.

On November 5 the Laotian government signed a contract with Malaysia's Giant Consolidated Group for the construction of a 220km double-track line between Savannakhet on the Thai border and Lao Bao on the Vietnamese border. In July the Thai government agreed to fully the extension of the country's only existing railway, the metre-gauge line between Nong Khai, Thailand, and Tha Na Leng, to Vientiane by 2014.