The Asian Development Bank (ADB) Saturday said it has approved a US$2-million loan to finance a-billion-dollar project to build railways in an eastern Chinese province to link remote rural villages to the country's economic hubs.

The US$1.35-billion Anhui Integrated Transport Sector Improvement Project includes building of a new 139-kilometer-long expressway in Anhui province's neglected northern region, upgrading 452 kilometers of existing roads, improving village bus services, and strengthened capacity in the province's transport departments, the ADB said.

As a result of the improved transport corridor, two poor counties in the northeast of the province will gain direct access to markets and development opportunities in the more affluent neighbouring Jiangsu province, it added.

"An underdeveloped transport system is one of the major barriers to development and poverty reduction in Anhui, particularly in the rural areas," said Xiaohong Yang, principal transport economist in ADB's East Asia Department.

"A well-developed transport network will help the central region capitalize on its strategic location and transform it into a major hub linking China east and west, north and south."

ADB's loan, from its ordinary capital resources, covers almost 15 percent of the project cost of the US$1.35 billion. The loan has a 25-year term, including a grace period of five years, with interest determined in accordance with ADB's LIBOR- based lending facility.

Parties to provide the balance include the national and provincial governments, Anhui Communications Investment Group Co Ltd and the Industrial and Commercial Bank of China and Bank of China.