updated 12/11/2006 9:54:41 AM ET 2006-12-11T14:54:41

Walt Disney Co. is exploring other locations beside Shanghai for a theme park in mainland China amid concern that the central government may not support its plans in Shanghai, sources familiar with the issue said on Monday.

The U.S. entertainment giant has been exploring the possibility of opening a park in China's biggest city for over a year, according to city government officials.

But the chances of Beijing approving the project have shrunk since Shanghai's Communist Party boss was implicated in a big corruption investigation in September, leading Disney to also considering other options, the sources said.

Shanghai had hoped to have the park built by 2010, when thousands of people will visit the city for the World Expo, but that schedule may become unrealistic if Beijing does not give its approval early next year, the sources said.

"It's hard for Shanghai to win approval from the central government at the moment," said a government source who has knowledge of the issue.

The source cited the political climate created by this year's corruption scandal, which implicated the city's Communist Party chief at the time, Chen Liangyu, and other senior city officials and businessmen suspected of embezzling local pension funds.

"I won't say Beijing will never give its approval for the Shanghai park. But nobody knows when, and the timing is the biggest problem," the source said.

Disney has in the past confirmed that it was considering Shanghai as a site for a park, but has not revealed details of talks with the city government.

Contacted by e-mail on Monday, a Disney spokeswoman in Hong Kong said: "The Walt Disney Company has not reached an agreement with Shanghai to build a second destination resort in China."

"Our focus is on the successful operation of our first theme park in China — Hong Kong Disneyland," she added.

"China is a priority for the entire company and we have a continuing dialogue about a variety of Disney initiatives, including television, motion pictures and consumer products, of which theme parks are only a part."

In March this year, Shanghai Mayor Han Zheng told reporters that the city was eager to host a Disney park after the company opened a $1.8 billion Disneyland in Hong Kong in 2005.

In early August, the official China Securities Journal reported that Shanghai authorities had started preparing a site for the park, even though Beijing had still not reached agreement with Walt Disney and the city government.

Under Chen's leadership, Shanghai became known for a string of showy real estate projects, including a $350 million Formula One race track, one of the world's most expensive tracks, and a futuristic $150 million tennis stadium.

Some officials in Beijing opposed such projects as wasteful and liable to encourage real estate speculation, and the Shanghai corruption probe may have increased their influence for the time being, analysts believe.

Disney cartoons are already a hit among Chinese children, so even if a Shanghai park does not materialise, the company may look at other possible locations, including non-coastal areas where the local government is eager to attract foreign investment, said another source familiar with the issue.

"It's not going to be in the South or on the coast — (it may be) somewhere where they're desperate to promote some growth," said the source.

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