VZCZCXRO3235
RR RUEHCN RUEHGH
DE RUEHGH #0018/01 0160837
ZNR UUUUU ZZH
R 160837Z JAN 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6603
INFO RUEHBJ/AMEMBASSY BEIJING 1642
RUEHIN/AIT TAIPEI 0867
RUEHHK/AMCONSUL HONG KONG 1184
RUEHSH/AMCONSUL SHENYANG 1057
RUEHGZ/AMCONSUL GUANGZHOU 1027
RUEHCN/AMCONSUL CHENGDU 1056
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7134

UNCLAS SECTION 01 OF 03 SHANGHAI 000018 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM, EEB/TPP/IPE 
DOC FOR ITA/MAC - DAS KASOFF, MELCHER, MCQUEEN, COUCH, LEHRMAN 
TREASURY FOR OASIA- DOHNER/HAARSAGER/CUSHMAN 
 
E.O. 12958: N/A 
TAGS: EINV ETRD ELTN KIPR ELAB PHUM CH
SUBJECT: SHANGHAI MAGLEV - A LONG HISTORY OF CONTROVERSY 
 
(U) Sensitive but unclassified.  Not for dissemination outside 
USG channels; not for Internet distribution. 
 
¶1.  (SBU) Summary:  Shanghai's magnetic levitation train 
(Maglev), has not only been costly in financial terms but is now 
costing the city the support of many of its residents.  On 
January 13, Shanghai residents staged a large-scale 
demonstration against the proposed extension of the Maglev train 
line that would cut through the heart of the city.  Septel will 
provide a report on the protests.  The protests are part of a 
long controversy surrounding the Maglev train since the first 
link between Pudong International Airport and Longyang Station 
was completed in 2004.  The city is now gearing up to connect 
the city's two airports via Maglev with a stop at the 2010 World 
Expo site.  Plans to extend the line to as far away as Hangzhou 
in Zhejiang Province are also back on the books.  End Summary. 
 
Controversy Not New 
 
------------------- 
 
¶2.  (SBU) Controversy has surrounded the Maglev since its 
initial planning began in March 2001 and public debut in January 
¶2004.  Since the opening, there has been significant local 
criticism that the project was wasteful, delivering no practical 
benefit to residents.  The current line only runs between Pudong 
International Airport and Longyang Station, located in a 
suburban area of the Pudong District in Shanghai.  The station 
is far from the city's downtown area, so a taxi or subway ride 
is still inevitable.  As a result, the Maglev has simply turned 
into a sightseeing ride for most people; very few travelers 
consistently use it get to or from Pudong International Airport. 
 Although the price is relatively low, commuters are still put 
off by the inconvenient location of Longyang Station.  A one-way 
ticket on the Maglev costs RMB 50 (USD 7), while the average 
cost of taxi ride of the same distance is around RMB 90 (USD 
12.50). 
 
¶3.  (SBU) In financial terms, the Maglev has also not lived up 
to city officials' hopes.  The annual ticket income is 
approximately RMB 100 million (USD 13.8 million), leaving the 
remaining bill for the city to foot.  On top of the initial 
price tag of 10 billion RMB (USD 1.4 billion) to complete the 
19-mile track, 5,000 people and two factories had to be 
relocated for the construction.  Part of the cost went to pay 
over RMB 800 million (USD 104 million) for residents to 
relocate.  According to media reports, the financial losses from 
the Maglev during the last three years was over RMB 1 billion 
(USD 139 million). 
 
The Cost of Giving Shanghai Face 
 
-------------------------------- 
 
¶4.  (SBU) In January 2006, the Shanghai Urban Planning 
Administration Bureau caused more shock waves when it announced 
an extension to Hongqiao Airport via Shanghai South Railway 
Station and the 2010 World Expo site at an estimated cost of at 
over USD 1.5 billion.    The line would allow transfers between 
the airports, which are located 55 km apart (about 34 miles), in 
about 15 minutes.  In addition, a Maglev link would be added 
from the Hongqiao Airport stretching to Zhejiang Province's 
capital city, Hangzhou - another 175 kilometers away.  The 
Shanghai Government argued the extension would boost the overall 
function and usage of the Maglev.  However, the plan immediately 
met with heavy opposition from local citizens.  In addition, the 
project quickly became bogged down in a cost disagreement and 
technology ownership dispute.  The Shanghai Government and 
Transrapid International, the German maglev company owned by 
Siemens and ThyssenKrupp, began squabbling extensively over the 
price for using the technology to extend the line.  Shanghai 
tried to drive a hard bargain with Transrapid, arguing that as 
the only implementer of the technology, it actually has the 
know-how and expertise that Transrapid needs.  Transrapid 
International argued the technology still remained their 
property. 
 
¶5.  (SBU) However, after the September 2006 sacking of Shanghai 
Party Secretary Chen Liangyu, who was criticized inter alia for 
overambitious infrastructure projects (misuse of social security 
 
SHANGHAI 00000018  002 OF 003 
 
 
funds was the proximate and most important cause of Chen's 
removal), city officials suspended the extension of the Maglev. 
Chen had originally proposed two major infrastructure projects 
in Shanghai before the 2010 World Expo: the Shanghai Star, the 
world's biggest ferries wheel and the Shanghai-Hangzhou Maglev 
line.  Many people believed these projects had no impact on 
their quality of life but were simply "face projects" to improve 
the image of Shanghai.  When Chen's successor, Xi Jinping, took 
office, he immediately moved to scrap the two projects.  He 
announced three new policies on Shanghai's potential 
infrastructure master plan: all qualified projects must be 
completed before the 2010 World Expo; all projects must utilize 
current resources; and any project that may cause societal 
instability should be suspended. 
 
The Resurrection of Maglev Extension 
 
------------------------------------ 
 
¶6.  (SBU) After the October 2007 appointment of Xi Jinping to 
the Politburo Standing Committee in Beijing, Shanghai quietly 
put the extension to Hongqiao Airport back on track in December. 
 This time the project, with slight revisions from the original 
plan, will stretch 31.8 kilometers.  It now includes "detours" 
away from residential areas as much as possible.  The decision 
put the city once again at odds with local residents who fear 
the perceived exposure to radiation and noise.  Residents also 
fret that the Maglev will depress the value of their homes.  As 
a result, many have taken to the street, protesting the 
government's renewal of the project (septel). 
 
Health Effects and Land Prices - The Hidden Costs 
 
--------------------------------------------- ---- 
 
¶7.  (SBU) Maglev technology is based on electromagnetic force, 
which emits low levels of radiation when in operation.   In 
addition, the high speed train produces a thundering sound and 
vibration as it passes by.  To reduce these effects on local 
residents, the Shanghai Government has planned a 25 meter (82 
feet) "isolation area" between residential areas and the Maglev. 
 Anyone within these areas will be compensated to relocate. 
However, many of the residents who are just outside this area 
are protesting that they should receive compensation as well. 
There has been discussion of extending the area to 100 meters 
(330 feet).  However, with Shanghai real-estate prices 
skyrocketing, the government is now equivocating on whether the 
additional space is actually needed. 
 
Hangzhou Also Back on Track 
 
---------------------------- 
 
¶8.  (SBU) In a January 7 meeting with CODEL Clyburn, Deputy 
Director for Shanghai Maglev Transportation Development 
Corporation (the Shanghai Government enterprise which 
administers the Maglev) Wang Tianxiang said that the Shanghai 
and Zhejiang Provincial Government are once again working on 
extending the line to Hangzhou.  Wang acknowledged that the cost 
of extending the line at USD 5.6 million per kilometer is still 
an issue.  However, he believed with the areas vast population, 
and the affordable price, ridership would not be an issue - 
especially since the travel time between Shanghai and Hangzhou 
would be reduced to 28 minutes (currently 1 hour and 40 minutes 
by the newly built bullet train).  Wang also estimated the cost 
of a one-way ticket to Hangzhou would be RMB 100 (USD 14), which 
he believe would attract riders since the cost of road current 
road tolls alone is RMB 90 (USD 12.50).  However, he also noted 
the same problems of noise and radiation within 25 meters of the 
train in the densely populated corridor.  The Shanghai and 
Zhejiang Governments are planning on relocating and compensating 
citizens affected along this lengthy route as well. 
 
¶9.  (SBU) Regional integration is also on the minds of local 
governments as they push forward the Maglev extension to 
Hangzhou.  As the travel time decreases, planners believe 
business people, vacationers, and daily commuters will avail 
themselves of the service as well as strengthen the economic 
ties between the two cities.  However, opposition voices said 
these cities are already well connected economically without the 
 
SHANGHAI 00000018  003 OF 003 
 
 
Maglev train.  There are also concerns that Shanghai's 
over-the-top housing prices will spill over to Hangzhou as the 
city turns into Shanghai's "backyard garden."  Real estate 
experts predict as an increasing number of Shanghai residents 
purchase property in Hangzhou, it will further pump up real 
estate price there that have already climbed over 10 percent in 
the past year. 
 
Maglev Trivia 
 
------------- 
 
¶10. (U) Magnetic levitation transport suspends and propels 
trains via electromagnetic force.  Trains using this technology 
can reach velocities comparable to turboprop and jet aircraft 
(500km/h).  Instead of using fossil fuels, the magnetic field 
created by the electrified coils in the guide way wall and the 
tracks combine to propel the train.  Shanghai's Maglev train was 
made in Germany with German technology by Transrapid 
International.  The line is operated by Shanghai Maglev 
Transportation Development Corporation, and the train can reach 
352 kilometers (220 mph) in 2 minutes, with a maximum speed in 
normal operation of 431 km/hr (269 mph).  It is currently the 
fastest magnetic levitation train in the world.  The ride from 
Pudong Airport to Longyang Station takes 7 minutes and 20 
seconds compared to the drive time of roughly 45 minutes.  Since 
its start, the Maglev has clocked over 4.6 million kilometers, 
and transported almost 1.4 million passengers.  It also has been 
accident free; however, there was a small fire on August 11, 
2006, which officials later attributed to a faulty battery 
casing.  There were no casualties reported. 
JARRETT