BEIJING - CHINA will spend more than US$17 billion (S$25.8 billion) building a second rail line into its Muslim-populated and resource-rich far northwest Xinjiang region, state press reported on Tuesday.

Work on the railway further linking Xinjiang with the rest of China will begin next year with the new line to run alongside the existing 1,892-kilometre one, Xinhua news agency said.

Xinjiang is populated by ethnic Uighur Muslims, many of who have chafed under China's more than 50-year rule of the region and complained of Chinese repression.

When the first line was completed in 1999 extending through to Xinjiang's historic Silk Road oasis town of Kashgar, the number of Han Chinese moving into the region increased markedly.

Detractors of the line have claimed that such transport links have worked greatly to consolidate China's rule over the restive region, which borders Afghanistan, Kyrgyzstan, Tajikistan and Pakistan.

However China insists rail and road links help bring much-needed economic development to poor parts of the country such as Xinjiang.

The new 120-billion-yuan (S$26.7 billion) railway will be dedicated to passenger travel, freeing up the old line to be used only for cargo transport, Xinhua said.

The cargo line will be able to carry resources out of the mineral-rich region, including oil, coal and cotton, it said.

The news of the second line came on the same day other sections of China's state-run press announced the discovery of 23 billion tonnes of coal in Xinjiang.

According to Xinhua, the government will also invest up to 100 billion yuan improving Xinjiang roads from 2009 to 2013.

Late last month, China announced it would invest nearly US$300 billion in its overburdened rail system, partly as a stimulus measure aimed at blunting the impact of the global financial crisis.

The investment is also part of plans to extend the country's railway network from the current roughly 78,000 miles to nearly 100,000 miles by 2010. -- AFP