An insider and expert from Tongji University said that the German side preferred to sell China a one-time usage right for the maglev technology and wanted the Chinese companies to then build the line themselves, according to newspaper.

The Chinese side, however, wanted to set up a joint venture with the German companies to build the line and specified that 90 percent of the equipment and components would be made in China.

"This will dramatically boost our local employment and economy, but for now, the usage rights are too expensive" added the expert.

Talks came to a standstill when the German side disputed the need for a joint venture conglomerate, to fully share the maglev technological rights.

The central government approved the feasibility study for the maglev line in March, expecting that the new line would improve transport within the Yangtze River Delta region.

Chai Xianlong, vice chief from the Development Planning Research Institution of Zhejiang Province, said the maglev project was still in the feasibility phase and the construction of the line was not expected to be complete by 2010, which was previously reported. Chai has been involved in the research and development process of the Shanghai-Hangzhou maglev line since 1996.

"China wants to build a new maglev line mainly to boost its scientific and research capabilities, but we don't have to build it," Chai said. "There is no time line for the project."