Our country has vast territory and a large population, so there is tremendous potential for 800-1500km medium and long distance passenger transportation market. In the 21 century, with the sustained and rapid development of its economy and the fast progress of the society, a great demand for high speed passenger transportation has emerged and will continue to exist. At present, the construction of large capacity high speed passenger transportation infrastructure in our country is far lower than the level of the developed countries and there is not yet even one high speed passenger rail line in the real sense. In the coming years, this country will be in urgent need of building and developing a high speed rail transport system suiting the demand for high speed passenger transportation.

Due to its highest economical operation speed, high speed maglev transportation system is not only suitable to mass rapid passenger transportation between transport hubs hundreds to over one thousand kilometers apart, but also suitable for modern mass rapid passenger transportation between a center city and adjacent cities scores to hundreds of kilometers apart. It will be one of the important transportation modes to be taken into consideration in selecting the mass passenger transportation system.

In 1999, in the course of the argumentation of the feasibility of Beijing-Shanghai high speed rail, some experts suggested that, in view of many advantages like contact free, high speed, fast stark, low energy consumption, less environmental impact etc. and considering the high speed Transrapid has run safely over 600,000km and the German Government had declared Transrapid technology as mature one, the state should employ high speed maglev technology in the construction of Beijing-shanghai Line in order to make full use of the delayed effect of the developing countries and realize the leap over development of rail transit.

Meantime, most railway experts raised an objection and they thought high speed wheel-on-rail technology had been proved fully mature after scores of year's practice and significant progress had been made in the development of the high speed wheel-on-rail system technology in our country. Despite so many advantages that the high speed maglev technology possessed and the researches being carried out in many countries, the technology remained at the experiment level, laced practice of commercialized operation, its technology superiority, safety and economic performance remained to be further proved and risks existed both in technology and in economics.

During the argumentation, both sides stuck to their respective views. After a fierce debate, the experts eventually got to a common view and suggested that a segment of commercial demonstration line be built first to verify the maturity, availability, economics and safety of the high speed maglev transportation system. The suggestion won the attention and support from leaders of the State Council. Shanghai was chosen as the site of the construction of the project in June,2000 after the comparison and selection from among Beijing, Shenzhen and Shanghai.