In a statement, the ministry Wednesday said the two countries will strengthen cooperation on "designing and constructing passenger railway lines with designed speeds of 200 kilometers per hour and higher.''

Both sides will also improve cooperation on railway equipment design and manufacturing, railway lines and equipment maintenance, information technology and other technologies in the sector.

State media said the agreement signals that Germany's Maglev train builder has made a breakthrough in competition for high-speed rail orders from China against its French and Japanese rivals.

Maglev technology was developed by Transrapid International, a consortium comprising German industrial giants ThyssenKrupp and Siemens, and allows trains to barrel at speeds of up to 430 kilometers per hour.

China currently operates a short Maglev line linking Shanghai's new airport to the city. Beijing planned last year to invest some 130 billion yuan (HK$122.25 billion) to build a high speed link between Shanghai and Beijing - a top priority project for the nation. German, Japanese and French firms have been invited to tender to build the 1,300-kilometer link.

Preliminary reports last year that Japan's technology was being strongly considered met with fierce criticism from anti-Japanese Web sites in China.

Japan's Shinkansen bullet train technology and France's TGV high-speed trains were once thought to be leading candidates for the bid as Maglev technology was considered too expensive.

Vice Premier Huang Ju Tuesday told visiting German Transport Minister Manfred Stolpe that China will strengthen international cooperation to improve construction, equipment and management of the railway sector.

AGENCE FRANCE-PRESSE