The bank will provide US$150 million to the Henan Provincial Highway Project, which plans to build a 95-kilometre highway between Zhumadian and Xinyang, one of country's poorest areas.

The project aims to increase Henan's prosperity, giving greater opportunities for inter-province trade, especially towards the south, Henan government officials said.

Chinese government representatives signed the contract with the bank Monday in Beijing.

Henan's local government will provide the remaining US$210 million for the construction of the highway, which forms one section of the 2,600-kilometre Beijing-Zhuhai national trunk highway system.

The current per capita gross national product of the Zhumadian-Xinyang area is US$350, compared with an average of US$540 for the province and US$750 for the country, according to World Bank figures.

Henan is China's most populous province, with 92 million inhabitants, but its residents' income ranks 26th out of 31 provinces and autonomous regions on the Chinese mainland.

The World Bank has supported three highway projects in Henan.

Out of 465 kilometres of highways built in the province since 1989, 242 kilometres have been built with loans from the bank.

So far, the bank has provided more than US$4.5 billion for 25 highway projects in China, helping build 18,500 kilometres of highways.

Most of the highways are national or provincial trunk roads and have made a solid contribution to the development of China's transport sector, bank officials said.

Forty-three percent of the Beijing-Zhuhai Highway has been built with help from the World Bank.

Bank official Richard Scurfield said the projects had been very well implemented and the highways were generally of good quality.

Scurfield said the bank planned to provide one or two loans to China's highway projects every year for the next three years. The size of the loans will be between US$100 million and US$150 million, he said.

Scurfield is the leader of the transport sector unit in the World Bank's Beijing office. He is also a member of the bank's negotiating team, which is discussing project plans with the Chinese government for the next three years.

Scurfield said the bank was also willing to help China work out a scheme for using more diversified financial sources to fund its transport projects.

One of the bank's suggestions was to create a transport investment fund made up of government investment, private investment and loans from international agencies.