China and Venezuela signed a US$7.5 billion agreement yesterday that will include constructing a 468-km railway in the South American country. A Venezuelan official said the project, to be completed by 2012, will be the largest non-oil investment project in the history of the country. Reports of the deal cite Chinese newspaper Global Times as breaking the story, but I haven’t been able to track it at either the paper’s English or Chinese language site. New portal Sina has a Chinese language version here. Here are some details of the deal from a translation done at China News Wrap:

According to Russian news agency reports on 31 July, Venezuelan government officials stated in interviews with RN Television that the Tinaco-Anaco railroad would be 468 kilometres in length, and link together agricultural and oil-producing areas in two different states. The project is expected to be completed within 40 months. The railroad is designed for speeds of 220 kilometres per hour, and will carry 6 million passengers each year, and 10 million tonnes of goods.

Venezulan government officials said of Chinese investment in the railroad project that this is the largest investment project in the history of Venezuela outside of the petroleum industry. Venezuela and China will jointly create Latin America’s first railroad factory and railcar manufacturer. This will create 7500 jobs for Venezulans, and 100 Venezuelan engineers will be travelling to China for study.

I’m not sure if investing in a railway that connects oil-producing areas is entirely “outside the petroleum industry,” but this is still a significant development.

Other sources quote Venezuelan Public Works Minister Diosdado Cabello as saying the project will use “Venezuelan iron and Chinese technology,” to build train wagons, sleeper cars, switches and rail-welding equipment. Both countries will set up a series of joint ventures for the project, with Venezuela holding a 60% stake and state-owned China Railway Engineering Corporation holding the remaining.

As I mentioned last week, for all the press China-Latin American trade figures have gotten in recent months, China still lags far behind the US when it comes to investment dollars in Latin America – only US$22 billion by China firms in 2007, compared to US$350 billion by US firms. If this railway deal is a sign of things to come, it may not be long before China begins closing this gap as well.