A new highway linking China and Mongolia is expected to be jointly built by the two countries with a total investment of 2.51 billion yuan (around 375 million U.S. dollars), local authorities said Tuesday.

The new highway is planned to be 245 kilometers in length and will run from Mongolia's southwest Omnogovi Aymag Province to Ganqimaodu, a border town in China's Inner Mongolia Autonomous Region, said a regional government official.

Two firms from China and Mongolia plan to set up a joint venture, which will be the main builder of the highway. The Mongolia firm will own 51 percent of the joint venture while the China firm the remaining 49 percent.

Construction of the highway is scheduled to be completed in two years.

The project plan had been submitted to the authorities of the two countries respectively, the official said.

The new highway was expected to improve coal transportation between the two countries, as well as promote economic development in China and Mongolia, the official said.

Trade between China's Inner Mongolia Autonomous Region and Mongolia reached 5.33 billion U.S. dollars and jumped 33.5 percent year on year over the first eight months of this year. As of Sept. 22, around 5.24 million tonnes of coal had been transported to China via Ganqimaodu.