Fischer and Zhu held 90 minutes of talks in the eastern Chinese city of Hangzhou followed by a working lunch which covered a "broad range of issues," said a spokesman for Fischer.

The spokesman said Zhu raised the issue of the high-speed railway to link Shanghai's airport and its business district of Pudong, amid reports the German Transrapid Consortium (TRI) is on the verge of wrapping up a deal.

"Both sides agreed that the project would be beneficial, but no details were mentioned, it was left to the private companies," said a spokesman.

The German weekly magazine Focus reported Monday that TRI would sign an agreement Friday with the Chinese government to build the 35-kilometre (20 mile) train line.

However, the German finance ministry Tuesday played down reports that it was preparing to give China loans of up to US$450 million for the project, saying talks were still ongoing between China and TRI.

Fischer's spokesman said the issue of financing was not discussed during Wednesday's talks.

TRI, made up of the Adtranz, Siemens and Thyssen groups, is confident of wrapping up the 1.4 billion euro (US$1.25 billion) contract for the Shanghai line.

However the real prize for the train companies is a mooted deal worth up to US$20 billion for a 1,300 kilometre (800-mile) high-speed rail link between Beijing and Shanghai which could be built in the future.

The winner of the Shanghai contact could be in the driving seat for the mega deal, Fischer's spokesman admitted.

"But both sides agreed it would be a test for the Beijing-Shanghai bullet train project," he said.

The German minister arrived in Hangzhou late Tuesday after talks in Beijing.

Fischer, whose two-day visit to China was cut short because of developments at the European Union summit in Nice, held four hours of discussions with counterpart Tang Jiaxuan and paid a courtesy call on President Jiang Zemin.

Fischer said that the tone of the meeting was constructive and that Germany had offered to help China to develop the rule of law.

Fischer was due to leave China on Wednesday evening from Shanghai.

(China Daily 12/13/2000)