From Shanghai airport to city centre in a few minutes

The consortium - a partnership between the German government and industrial giants Siemens and ThyssenKrupp AG - has declined to say how much the deal is worth.

But it follows an initial feasibility study agreed last year, which itself cost more than $730,000. Some estimates say the deal could be worth billions.

As a sweetener, Germany is reported to have offered China loans and grants of nearly $500m to help finance the project.

Magnetic levitation

The Transrapid rail link is based on the Maglev system, which uses powerful magnets to hold a train a few millimetres from the track, and propel it with little noise and vibration.

Germany has poured billions of dollars into developing the technology, but last year it scrapped a plan to build a rail link between Berlin and Hamburg after eight years of planning and development.

Berlin is said to be considering other shorter stretches for the high-speed train.

Transrapid said it hopes the Shanghai deal will boost other projects in the United States as well as China, were a 1,300km link between Shanghai and Beijing is said to be under consideration.