The Exim Bank of China is to finance the construction of a US$200m submarine cable project in Papua New Guinea.
The state investment minister, William Duma, says the Kumul cable project will be done in preparation for another cable under the Coral Sea from Australia.
The Kumul cable will run between Port Moresby, Alotau, Popondetta, Lae and Madang.
Mr Duma says the Chinese company Huawei will help PNG lay the domestic cable.
The Australian government earlier committed to funding most of the cable from Sydney to Port Moresby.
Canberra is also paying about two thirds of the cost of a cable from Honiara in Solomon Islands to Australia because it didn't want Huawei to do it.