A Chinese company will conduct a study about the possibility of building a canal that would link the Atlantic and Pacific Oceans through Nicaraguan territory, President Daniel Ortega announced Friday.

According to the president, an agreement signed by the Nicaraguan government with HK-Nicaragua company authorizes it to conduct a feasibility study about building such a canal.

"This is an extraordinary and very important piece of news that may affect the future not only of Nicaragua, but of Central America as a whole," Ortega declared.

The current plan calls for building a canal from Monkey Point on Nicaragua's Caribbean coast to Puerto Corinto on the Pacific Ocean.

The announcement was made after Ortega met late Thursday with Chinese businessman Wan Jin, who is interested in Nicaragua's telecommunications sector.

Nicaragua and China do not have formal diplomatic relations because of Managua's formal ties with Taiwan. But the two countries maintain economic relations.