China is stepping up pressure on Germany's Transrapid International by demanding a 50% reduction in cost for any future projects it may award the consortium and by pushing ahead with the development of its own magnetic levitation railway.

People familiar with the matter in Beijing told Handelsblatt that the Chinese government has demanded that the consortium lower the cost per track kilometer to 15-20 euro, from the current 40 euro, if it is to stand a chance of winning future orders for what are seen to be the jewels in the country's infrastructure crown.

The Transrapid consortium, led by Siemens AG and ThyssenKrupp AG, is currently working under immense time pressure to complete its first project for the Chinese government – a 30km long track running from Shanghai's Pudong International Airport to the nearest city subway station at Longyang Road.

In seven months, on December 31, China's premier Zhu Rongji is scheduled to travel the route at a speed of 430km/h on the train's first "VIP trial run".

And the consortium is faced with the additional pressure of China pushing ahead with the development of its own magnetic levitation train. The train has already run 2,000 kilometers on a test track at barracks in Changsha, capital of the Hunan province.

The project's financiers, Beijing Enterprise Holding and Beijing Badaling Tourism Corp., plan to soon use the train to carry passengers to the Great Wall. The 7km long track is to cost $2.3 billion, according to Chinese media reports, and by the end of 2004 is to be extended by 40km to the city center of Beijing, Transrapid International's website still describes this route as a possible follow-up order to its current Shanghai project.

Conflicting information is emerging from the consortium about the future of the German technology in China. The allocation of three to five of the planned high-speed train links – including the Beijing-Tianjin, Hong Kong-Guangzhou and Beijing-Shanghai routes – could be decided "by September", ThyssenKrupp said in Beijing. But other consortium sources in Shanghai said that "nothing will happen until the Shanghai project has proven successful".