The deal with China Telecommunications follows a pledge earlier this year by Beijing to step up purchases of US telecoms equipment, a promise sought by the US government as a way of redressing America's massive trade deficit with China.

In the past six months, state-owned China Telecom has signed deals worth more than 100 million dollars with San Jose-based Cisco.

The backbone network, known as the China Telecom Internet Protocol Next-Generation Network, will connect more than 200 cities.

Cisco will also provide equipment for the backbone network serving provinces in central, eastern and southern China where the biggest share of Chinese companies and Internet traffic is concentrated.

The network will enable users in China to connect to overseas networks through virtual private network services.

The next-generation network is part of a plan by China Telecom to become one of the world's largest providers of Internet protocol services within a decade or two.

Beijing-based China Telecom, whose shares are traded in Hong Kong and New York, operates as a virtual telecommunications utility. It handles 99 percent of all fixed-line subscribers.

(CRI November 13, 2004)