Uruguay's capital Montevideo and China's Qingdao city became sister cities after representatives from the two cities signed an agreement Thursday.

The establishment of sister city ties will help boost mutual understanding and friendship between peoples of the two countries, said the agreement.

Under the principle of mutual benefit, the two sides will carryout cooperation in the fields of economy, trade, science and technology, culture, education, sports and personnel exchanges.

Montevideo, a city with a history of some 300 years, is Uruguay's center of politics, economy, trade, finance and culture while Qingdao is an important port city in Shandong Province, East China.