China and Iran will sign a $4 billion contract for development of an underground transport system in Iran, according to Iran's state television, Reuters reported.

"The $4 billion financing contract will be signed with China tonight," said Mohammad Royanian, head of Iran's Transport and Fuel Management Office.

He gave no other details.

As the second biggest importer of Iranian oil after Japan, China has long been involved in infrastructure projects in Iran.

Iran said in February that China had signed a $13 billion contract to build a railway network.

Trade between the two countries is worth around $30 billion per year. President Mahmoud Ahmadinejad has said he hopes to increase the volume of trade to $100 billion.