Cosco Pacific and Guangzhou Port Group have agreed to form a four billion yuan joint venture to build and operate a container terminal in Nansha, Guangzhou. In a statement, Cosco said it would hold a 56 per cent stake in the venture and contribute US$95 million in cash for its share of the venture's registered capital of 1.4 billion yuan. The new terminal, at Nansha port phase two, will have six berths with a water depth of 14.5 metres, which could be dredged to 17 metres. It will be operational next year. The annual handling capacity of the terminal will be 4.2 million 20-foot equivalent units (teu), or 350,000 teu a month. 'Cosco Pacific considered that the investment ... a critical step to expand the company's terminal network in the [mainland] ... will prioritise its resources to develop Nansha port into a major hub port in the region,' Cosco said. Nansha port's development - backed by the Guangzhou municipal government - is controversial as it competes with Shenzhen and Hong Kong ports, and has silting problems due to its location in the middle of the Pearl River estuary. Nansha is the only deepwater port in Guangzhou city. Phase one of the port, owned by the city and the Guangzhou Port Group, was operating at only 25 per cent capacity in the first four months of operation after opening in late September, sources said. Phase one has four berths, with total monthly handling capacity of 164,000 teu. Cosco executive vice-chairman Liu Guoyuan said last month that the firm had signed letters of intent with officials in Ningbo, Nanjing, Tianjin and Nansha to invest in and operate terminals at their ports and planned to invest US$350 million to expand its portfolio this year. China's burgeoning foreign trade - with a 35 per cent increase in exports and 36 per cent rise in imports last year - has spurred rapid growth in the ports industry.