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Qingdao port, China's third largest port in terms of handling capacity, has joined hands with Weihai, another Chinese port city close to Japan and the Korean Peninsula,in speeding up coastal port development.

The two ports agreed on Thursday to create a new company, Qingwei Container Port Co. Ltd, which will jointly run the two container berths and try to raise the container handling capacity to 800,000 TEUs within three years.

The initial investment, injected from the Qingdao Port Group and the Weihai Port Group, topped 140 million yuan (16.9 million US dollars).

The Qingdao company holds 51 percent of the shares.

Qingdao port, located in Qingdao city of eastern Shandong Province, ranked third in handling capacity on the Chinese mainland last year. It was estimated to handle 6 million TEUs this year, according to sources with Qingdao Port Group.

Chang Dechuan, executive of the group, said the Qingdao port will make full use of the ideal location of Weihai to shorten the distance with Japan and the Korean Peninsular, and the industrial belt around Bohai Bay and the heavy industries in northeast China.

Weihai is about a two-hour's drive north of Qingdao in ShandongPeninsular.

Shandong has planned to invest 53 billion yuan (6.44 billion USdollars) for port construction in the next five years, aiming at upgrading a line of its coastal ports into a major transportation center in northeastern Asia.