BEIJING, Dec 7 (Reuter) - The Xian-Baoji highway, the longest in China's vast northwest, has officially opened to traffic, the China Daily said on Thursday.

The 155-km (96-mile) highway is the main section of a state road that, once completed, will link the booming east coast with China's arid and underdeveloped western provinces of Shaanxi, Gansu, Qinghai and Xinjiang, which are starved for investment.

With the opening on Wednesday, it now takes only two hours to drive from Shaanxi's capital Xian to its industrial hub, Baoji, a significant reduction, the report said.

Construction of the highway began in 1992 with 1.42 billion yuan ($171 million) in investment, of which $30 million was lent by the Kuwaiti government, the newspaper said.

Shaanxi authorities will construct another 300 km (186.3 miles) of highway by 2000 and plan to finance the expansion by auctioning management rights to the highway linking Xian to the popular Terracotta Warrior tourist site, it said.