China’s largest train manufacturer won a billion-dollar deal to supply Chicago with rolling stock, it announced Friday, as Beijing seeks to create high-tech firms capable of competing for lucrative contracts with foreign giants.

CRRC corporation, the result of a 2014 merger between two state-owned firms and the largest train maker in the world by revenue, signed a $1.3-billion contract to manufacture 846 subway carriages for the Midwestern US city, replacing around half its fleet.

It was the biggest train supply deal any Chinese firm has sealed in a developed economy, CRRC said on its website, calling it a “breakthrough” for the country’s exports of high-end equipment.

“‘Made in China’ trains will be landing in Chicago,” it said.

The city’s mayor, Rahm Emanuel, said the deal would “go down in history”, the Chicago Sun-Times reported.

Beijing has long urged rail and train makers to expand overseas in order to build expertise and market share and boost the competitiveness of its national champions.

Chinese firms have signed deals to build railways in several countries, including Indonesia — where they beat off Japanese competition — Serbia and Hungary, and a project in Thailand is being planned.

But some foreign deals have fallen through, with Mexican authorities cancelling a multi-billion dollar high-speed rail project last year amid allegations of favouritism during the bidding process.

Chicago has the United States’ second-largest public transport system and the trains will be assembled in the city by a CRRC US subsidiary, CSR Sifang America, with the project expected to create 169 jobs.

CRRC last year won a contract to make 284 subway cars for Boston for $566 million.

It submitted the cheapest bid in the Chicago tender, according to reports, beating Canada’s Bombardier by $226 million.

The new carriages will replace an unpopular design that uses aisle-facing seats, the Chicago Tribune said, leaving commuters “getting their feet stepped on while they are seated, or being eye level with the buttocks or crotch of a standing passenger”.