Negotiations over the magnetic levitation (maglev) Shanghai-Hangzhou train line project between China and Germany are on the verge of failure, reports the 21st Century Business Herald June 7.

German Chancellor Angela Merkel views the worlds only operating high-speed magnetic levitation train called the Maglev in Shanghai. German officials have rejected China's demands for access to sensitive technology in exchange for building the 4.3 billion dollar high-tech rail link between Shanghai and Hangzhou, the Financial Times says. [AFP]

Germany has refused China's requests to trade construction of the US$4.3 billion train line for access to sensitive technology. Cooperation on the maglev line project between the two countries was strengthened after German Chancellor Angela Merkel made her first official visit to China this May since taking office last year. But the current deadlock has raised concern about the fruits of her visit to China.

"China will give up the maglev line construction if the talks stall completely, " China National Meglev Transportation Project Research Center director Wu Xiangming says from Germany.

An unidentified source familiar with the situation told the paper "it will be difficult for the talks to proceed."

"The German government is not willing to reveal sensitive technology to China in return for the construction rights, " says the source.

According to the source, China and Germany have yet to reach a consensus concerning construction of the high-tech railway.

"One way is for China and Germany to establish joint venture enterprises and produce the majority of the equipment and parts in China, and about ten per cent in Germany."

"That's the plan China favors. It would foster employment and accelerate the development of China's GDP," explains the insider, adding that it would also decrease construction costs and create favorable preconditions for the technology transfer.

"But the German government prefers China purchase its technology and construct the meglev line on its own," the source says.

"China has rejected Germany's plan due to the high cost of the tech transfer," says the source, adding that Germany needs to carefully consider the price.

Chinese officials approved the construction of a new 170-kilometre (105-mile) track in March but discussions have been going slowly as Beijing is looking for significant technology transfers and funding for allowing the line to be built.