President Mamnoon Hussain and his Chinese counterpart witnessed the signing ceremony.
As per details, the project will cost $1.6 billion and it will complete within 27 months.
The train route will be 27.1 kilometer long, spread from Ali Town to Thokar Niaz Baig, from Multan Road to Scheme Mor, Chowburji, MAO College, Mall Road, Laxmi Chowk and Railway Station, from Garhi Shahu Bridge to GT Road and UET and from Pakistan Mint to Dera Gojran.