'We have applied for permission from Beijing for a second line and will receive it,' vice-mayor Chen Jiabao said at a BNP Paribas Peregrine seminar.

'This will need 10.5 billion yuan in capital, of which the government will invest 40 per cent and the rest will come from banks and the public. We welcome investment by Hong Kong's MTR.'

MTR has invested in the metros of Beijing and Shenzhen but may baulk at the less appealing prospects on offer in Nanjing.

'We have sent people to study [the MTR] and receive training. Of course, our network is too small now to make money. On the second line, we will use the Hong Kong model and develop property along the line,' Mr Chen said.

The China market offers to MTR investment prospects unmatched in the world.

At the opening of the Nanjing line, Vice-Minister of Construction Chou Baoxing said that over the next five years, mainland cities would invest 500 billion yuan in 1,500km of railways and light rail systems.

'We have 43 cities with over one million people and 14 cities with over two million. By 2010, 45 per cent of the population will live in urban areas. Railways are vital,' Mr Chou said.

He praised the construction of the line in Nanjing as the cheapest in China so far, at 400 million yuan per kilometre. Total construction cost 8.5 billion yuan.

According to its website, the Nanjing Metro plans to build 10 railway and four light rail lines by 2050, with 433km of track. It first drew up a railway plan in 1984 but did not start construction until December 2000 because it could not obtain permission from Beijing.

The government is nervous about approving rail lines because of the enormous costs and the possible inflationary effects. In October 2002, it banned approvals of new lines, which it relaxed only in June this year. It has since cleared the plans of four cities - Hangzhou, Shenyang, Harbin and Chengdu.