Xinhua News Agency and China Mobile signed a framework agreement on Thursday. The sides will set up a new search engine company, to build a world's leading search engine.

Xinhua issued the announcement yesterday, but didn't give any details.

" We will set up a media and search-engine joint venture, aim to build a world's leading search engine. To extend our Services to internet, advertising, print media and other industries, " Xinhua's vice president Zhou Xisheng said in the signing ceremony.

" The future of search engine looks great, but the competition is fierce. But the venture will ' make full use' of Xinhua's position in media content and China Mobile's user base. " Sha Yuejia, vice president of China Mobile said.

A new search engine would compete with market leader Baidu Inc. and second-place Google Inc. in China, which had 420 million Internet users at the end of June, more than the size of the U.S. population.