China and Malaysia have agreed to jointly develop and build a littoral mission vessel for the latter's naval forces, signifying deeper defense cooperation between the two Asian nations.

The deal, witnessed by Premier Li Keqiang and his Malaysian counterpart, Najib Razak, was signed on Tuesday in Beijing.

According to Najib, the first two of the littoral mission ships Malaysia purchases from China would be built in China, with two then built in Malaysia. Further Malaysian-built ships would be subject to government financing. "This deal will enhance the Malaysian shipbuilding and defense industry," he said in a written article.

The ships are considered fast patrol vessels primarily used for coastal security, which can be equipped with a helicopter flight deck and missiles, Reuters reported.

Vice-Foreign Minister Liu Zhenmin said the agreement would be conducive to the peace and stability of the South China Sea.

"Both China and Malaysia are countries surrounding the South China Sea, and the strengthening of their naval cooperation will enhance mutual trust," he told reporters.

It would mark Malaysia's first significant defense deal with the country, Reuters reported.

Jia Duqiang, associate researcher at the Institute of Asia-Pacific Studies of the Chinese Academy of Social Sciences, said Malaysian purchases of LMVs from China will send a clear signal across the Association of Southeast Asian Nations. "After all, arms trade is always a sensitive issue, and it requires a strong, mutual political trust to execute," he said.

Military relations between Beijing and Kuala Lumpur have grown recently, with the first joint military exercises held last year in the Strait of Malacca.

The naval deal is just one of 28 agreements signed by the two countries on Tuesday, covering areas like infrastructure and finance.

Another major bilateral deal was that China would provide loans to Malaysia for construction of the planned East Coast Rail Line.

Malaysia's transport minister was quoted in earlier reports as saying the loan amount is 55 billion yuan ($8.1 billion), the biggest single deal Malaysia is to sign with China.

Chinese companies also are investing more in Malaysia, said Jia. Telecommunication giant Huawei recently established a new research center in Malaysia.

The week-long stay is Najib's third official visit to China. Premier Li Keqiang recalled the frequent exchanges between the leaders in the recent years. "I recalled the historical contribution your father made to improve bilateral ties," Li said.

The late Tun Abdul Razak — Malaysia's second prime minister and Najib's father — was remembered for his vision in 1974 when he decided that Malaysia would become the first ASEAN country to establish diplomatic ties with China.

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