A Chinese company is building a $439-million (322-million-euro) housing project outside the capital in Mozambique, meant to create a new a suburb for the middle class, state media reported on Tuesday.

Prime Minister Aires Ali laid the first stone for the construction of 5,000 houses "worthy of Mozambicans" in the city of Matola, near Maputo, according to state newspaper Noticias.

The southern African country, one of the poorest in the world, signed the deal with China's Henan Guoji Industrial and Development company in August.

"The project is another evident proof of cooperation with China," the paper quoted Ali as having said.

The Chinese group will build houses, roads, schools, clinics and a shopping centre over 18 months. It will also set up infrastructure for electricity, water and sanitation.

Authorities plan to build 5,000 more houses in other parts of the country.

Young professionals and civil servants can buy the houses on subsidised loans, the paper said.

Similar government projects have been criticised because few Mozambicans can afford such housing in a nation where 80 percent of the population survives on subsistence farming.

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