Shanghai's futuristic maglev (magnetic levitation) train was inaugurated by the German chancellor, Gerhard Schröder, and the Chinese premier, Zhu Rongji, in a demonstration of new technology which could transform modern ground transport.

It sped past a few villages and above a network of new roads to reach the city airport at Pudong in eight easy minutes. The 19-mile journey takes 45 minutes by road.

The maglev rides above a concrete track - built in record time by Chinese migrant labour - with the help of state-of-the-art magnetic technology.

It transmitted its speed to a computer display on the platform of Longyang station, its departure point on the edge of Shanghai's financial district.

The figures whirred up, too fast for the eye to follow, until reaching a fraction above 430kph, staying there a couple of seconds before falling again.

Mr Zhu called it a "miracle" and Mr Schröder praised the work of the joint team of German designers and Chinese engineers.

The link to Pudong will become fully operational later this year and is forecast to carry 10 million passengers by 2005. Shanghai planners claim it will make their airport one of the most accessible in the region.

Some Chinese onlookers were more sceptical, especially about the cost of riding the maglev: a one-way ticket will be priced at a hefty 50 yuan (£3.80).

"If two people are travelling it will cost more than a taxi," said a young journalist. "And then we still have to change on to the subway to get into town: it's not so convenient."

But the Pudong project is part of a much grander design which Siemens, the German parent company, hopes will one day justify its huge investment.

There is speculation that within the decade a line may be built from Shanghai to Beijing, a distance of 800 miles, at an estimated cost of £15.5bn.

The biggest problem in pushing through such an ambitious project is that the system needs a brand-new dedicated track.

But this difficulty is more easily solved in China than in more developed countries, because the government still has the power to force through hugely expensive construction projects, and there is plenty of cheap labour.

This test project, which cost an estimated £750m, is designed to show that the maglev is the 21st-century answer to travel over medium to long distances.

Once it is in service it will snatch the title of the world's fastest operating train from its rival contenders the Japanese Shinkansen (bullet train) and the French TGV.

The TGV's world record of 320.3mph was set on a test track in 1990, but its average cruising speed in service is a far more modest 155mph.

The Shinkansen's top speed when carrying passengers is slightly higher than the TGV's at 186mph, making it the world's fastest operating train at present.

The maglev, with a top speed of 311mph and a cruising speed of more than 248mph, will easily eclipse the bullet train when it enters service.

A brochure handed out yesterday showed that the cities of Beijing and Guangzhou - at opposite ends of the country - could be reached in three hours by maglev from Shanghai. The current journey times by train are 15 hours to Beijing and nearly a day to Guangzhou.

"This is only the beginning," the president of the Shanghai Maglev company, Wu Xiangming, said.

The maglev's great advantage is that, unlike its rivals, it is not limited in speed by contact with the permanent way.

When in motion, a system of magnets keeps it hovering above a concrete guideway at an average distance of 1cm.

The train's motor generates an electromagnetic travelling field which moves the vehicle, and its speed can be regulated by varying the frequency of the alternating current.

It is only 12 months since the maglev contract was signed by the city of Shanghai and the German consortium of Siemens, ThyssenKrupp and Transrapid International.

Construction began two months later, and the giant concrete pylons carrying the trackway were quickly built by teams of migrant workers.

The high construction cost of maglev trains has deterred potential customers elsewhere in the world, including Germany, where a proposed Berlin-Hamburg link was scuttled two years ago.

Japan Railways has developed a different type of train based on magnetic levitation, which is still undergoing trials.

Other studies of maglev feasibility have been carried out in the Netherlands and the US but no other scheme has yet been approved.

Fast tracks

Japan: Shinkansen (bullet train)

· Maximum operating speed of 186mph

· Conceived in Japan in 1964, it was the world's first high-speed train

· Needs 40 electric engines to power it, giving a total output of 12,000 kW

· Held world record on test track of 275mph until 1989

· Perfect safety record

France: TGV

· Maximum operating speed of 200mph, but normally only reaches 155mph

· Set world record of 320mph in trials in 1989

· TGV now pushes into Belgium, Germany, Switzerland and Italy

· Fashion designer Christian Lacroix helped design the Mediterranean TGV

China: Maglev

· Maximum speed: 311mph; cruising speed: 248mph

· Designed by German engineers, but plans for its use in Europe scrapped because of high cost

· Magnets keep train hovering 1cm above concrete track