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Cablegate: Shanghai Maglev - a Long History of Controversy

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

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