China and Mongolia started building a new cross-border railway on Wednesday, which is seen as a major route for energy cooperation between the two countries.

China's section is being built by China Energy Investment Corp (CHN Energy), the country's largest coal-fired power generator by capacity. It is planned to be finished and open by 2027.

This is the second railway line built between China and Mongolia after the first one was completed in 1956, it said.

It is expected that the commissioning of the new railway would create an opportunity for increased coal exports from Mongolia to China and would boost the GDP per capita.

The new railway is projected to carry about 30 million metric tons of cargo each year and will greatly improve connectivity between the two nations. It will help make the movement of minerals and energy resources more efficient, it said.