He Guoqiang of the Communist Part of China with Iran's President Mahmoud Ahmadinejad

Iran to sign $4bn metro contract with China

Iran has announced it will sign a £4bn contract with China to develop an underground transport system in Iran.

"The $4 billion financing contract will be signed with China tonight," said Mohammad Royanian, head of Iran's Transport and Fuel Management Office, but gave no further details.

China, the second biggest importer of Iranian oil after Japan, has long been involved in infrastructure projects in Iran where economic sanctions have hampered investment by Western companies.

Iran said that China had signed a $13 billion contract to build a railway network in the Islamic state.

Trade between the two countries is worth around $30 billion per year, and Iran president Mahmoud Ahmadinejad has said he hopes to increase the volume of trade to $100 billion.

As a permanent member of the U.N. Security Council, China voted in favour of a fourth round of U.N. sanctions against Iran last year, aimed at pressuring Tehran to curb its nuclear programme.

The United States and its allies say Iran is trying to build bombs under cover of its nuclear programme, however Iran denies the allegations and says its nuclear activities are peaceful.

China has backed Iran's right to peaceful nuclear power and has expressed displeasure at proposed sanctions that would hit Iran's energy sector, saying that it does not view such measures as the "fundamental solution" to the dispute.

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