"It will be a success and a sightseeing attraction," said Song Xiaojun, vice-president of the maglev development company.

"The project is new and problems are therefore unavoidable but we are making good progress in overcoming them."

The maglev line will cost 8.9 billion yuan (US$1.08 billion). Shanghai Shentong Holdings Co Ltd, whose acting general manager is also Song, will be acquiring 35 per cent of the project's equity.

Shanghai plans to add another 212 kilometres to its existing 65 kilometres of railway lines which will carry about 25 per cent of its 16 million population daily.

The estimated cost of extending the lines is 100 billion yuan (US$12.11 billion).

In the next 20 to 30 years, the city will build a tightly-knit three-dimensional mass transportation network with more than 800 kilometres of rail lines in use. Officials say this will drastically change the city's image and improve living conditions of residents.

As the investment company in charge of government interests, Shentong Holdings is obliged to seek money from outside.

The company has a registered capital of 26 billion yuan (US$3.15 billion) and was founded in 2000 after the Shanghai Municipality decided to reform its financing mechanism of mass transit projects.

The city created four entities in this area: investment; construction; operation and supervision, with the purpose of inviting private investment and reduce the government's financial burden.

"It has taken a long time to realize this and it still has to be improved with experience," said Song.

Focusing on maintaining sustainable development, Shentong Holdings has attracted 85 billion yuan (US$10.29 billion) for the city's 212 kilometres of rail lines.

By optimizing the process from design to construction and all related resources, Shentong Holdings will cut costs by almost 15 billion yuan (US$1.82 billion).

Song explains the benefits of the long-life rail system to investors and assures them of profits once the lines are put into operation and promises the same amount as the bank's interest before the lines become financially self-sufficient.

"Whoever invests shall be well rewarded," Song said.

Shanghai has been co-operating with Germany in the project, drawing advanced maglev technology and expertise.

The maglev line did not receive any financial aid from the government, he added. But some problems have meant foreign capital has not been ploughed into the city's massive rail campaign as it could have been.

(China Daily March 22, 2002)