WELLINGTON - One of China's biggest building firms has agreed to enter a joint venture with a major New Zealand construction company in carrying out work on the reconstruction of New Zealand's earthquake-battered second city of Christchurch.

Arrow International announced Wednesday it had signed a memorandum of understanding with China State Construction Engineering Corporation (CSCEC), the world's second largest construction company, after six months of negotiations.

"Arrow's partnership with CSCEC brings significant benefits to Christchurch," Hugh Morrison, group CEO of Arrow International, said in a statement.

The partnership would provide access to a highly cost effective supply chain, as CSCEC owned steel mills and fabrication factories and had direct access to the best aspects of the China supply chain, he said.

"Escalation in construction costs is already exceeding 10 percent per annum in the residential market, as a direct result of resource shortages. This is likely to spill over to the commercial sector. It is critical that access to alternate resources is opened up to deliver genuine cost savings," said Morrison.

"The ability to take some of the pressure off the local supply chain will be of enormous benefit, particularly to Christchurch as the recovery process ramps up. Access to an international supply chain also enhances the ability to complete projects on, if not ahead of, time."

CSCEC was globally recognized for super scale and cutting-edge construction projects such as the Shanghai World Trade Center, Hong Kong International Airport,

The New Zealand government announced last month a total of NZ$4.8 billion ($3.79 billion) would be invested in rebuilding major town center facilities and infrastructure in Christchurch.