China and Nepal have signed a deal to connect the two countries through a modern optical super-highway link which will allow the landlocked Himalayan nation to access the world with Chinese help.

The fibre optic cable project contract, from Kathmandu to Khasa in China, was signed in the Nepalese capital on Sunday, Xinhua news agency reported. The contract was inked by two state-owned enterprises, China International Telecommunication Construction Corporation and Nepal Telecom.

"This link could be used as a transit point between India and China as well," secretary of Ministry of Information and Communication of Nepal, Shankar Koirala was quoted as saying.

Under the agreement on Economic and Technical Cooperation between China and Nepal signed in December, 2003 and Exchange Letters signed between the two governments in August, 2004, China had agreed to aid "Kathmandu-Khasa Optical Fibre Cable Laying Project" at the request of Nepal, the report said.

With the completion of the 125-km super-highway, the project will help Nepal link with the rest of the world via China. The project is expected to start in November this year and will complete by mid-2008.