CONFIDENTIAL
when it was made clear to the Hong Kong authorities that it
was not possible for the UK Government to offer any special
assistance to Hong Kong. At present the Hong Kong authorities
are considering their position in relation to their most
immediate problem, that of their relationship with the
commercial banks. As all OSA countries, including Hong Kong,
will very shortly be informed, the Chancellor has concluded
in the light of first round discussions that there is a
general consensus in favour of deferring further consideration
of this question until next year, nearer the time when
decisions are necessary.
MASS TRANSIT SCHEME
Hong Kong has taken the decision in principle to build
an underground railway at a probable total cost of £500 million
at mid-1972 prices. Opening financial, constructing and
operating proposals had to be submitted by mid October.
Construction should start in 1974. Ministers have agreed the
extent of the initial financial support which HMG can provide
for the British Consortium (led by GEC on equipment, Costains
on construction and Lazards on finance). Mr Royle talked
with the Hong Kong Financial Secretary about the project in
September. The UK bid should be competitive but we expect to
have to improve our financial terms later. The Japanese will
be our main competitors.
CONFIDENTIAL