The Asian Development Bank (ADB) is to lend 60 million U.S. dollars to help restore a rail link between the Vietnamese capital, Hanoi, and the Chinese border.

The ADB's China office said on Thursday that the project would promote sustainable growth and trade links between the two countries by improving a vital subregional rail link.

The line stretches 285 kilometers between Yen Vien, on the north of Hanoi, and Lao Cai, which carries substantial domestic and regional traffic between Vietnam's Hai Phong port and China's Yunnan Province.

Most of the line was built before 1910, and inadequate investment in maintenance had led to its deterioration.

The project would ensure that it could operate safely and efficiently, boosting capacity at stations and main terminal points to permit the use of heavier and longer trains and increase the number of trains that could use the line.

"The restored line is expected to help boost bilateral trade between Vietnam and China and also international trade from China via the container port at Hai Phong," said Ray Cahoon, ADB team leader for the project.

"It will also eventually form an integral part of the Singapore-Kunming link, which may be completed by about 2015 with the construction of a final link between Phnom Penh and Ho Chi Minh City," he added.

About 200,000 people living along the line should benefit. Public consultations had indicated strong support for the project, which was expected to generate jobs directly and indirectly, as well lower transport costs and travel times.

It would open up tourist areas in Vietnam, including the World Heritage Site at Halong Bay and the Sa Pa mountain resort.

The ADB loan, from its concessional Asian Development Fund, covered almost 38 percent of the project's estimated cost of 160 million dollars. The loan has a 32-year term, including a grace period of eight years.

Vietnam Railways is the executing agency for the project, which is due for completion around the end of 2012.