Resources Company's aspirations and will not allow for any reconsidera- tion of the matter for the next few years. It is therefore necessary to decide whether to assist or frustrate the China Resources Company's desire for a prestige headquarters and perhaps an exhibition centre.
5
A private treaty grant for commercial purposes would represent a significant departure from previous policy. In the past, it has been possible to link all grants made to Chinese-owned organisations to an identifiable public interest.
6
On the other hand, there are substantial advantages to Hong Kong to be gained from helping the China Resources Company to acquire a site for a large new building. A Chinese investment of this size would represent a strong commitment to the future of Hong Kong and would be publicly seen as such. Indeed, the proposal may well be intended as an indication of such a commitment. It would be particularly helpful in generating confidence if the building was constructed in the early 1980s. Because of the unwillingness of directly owned Chinese enterprises to take part in public auctions, the only way in which Hong Kong could obtain such a major symbolic commitment is by according the China Resources Company exceptional treatment.
7
For this reason, it is recommended on balance that the grant of a large commercial site by private treaty should be approved in principle so that preliminary discussions can start on the grant of a site at a full market premium. In these discussions, it will be important to emphasise that the approval does not imply the Government's willing- ness to depart from normal policies in other cases involving Chinese organisations. The proposed basic terms would be submitted for the approval of this Council in due course.
Sites
8
If Honourable Members consider that a grant of land would be acceptable in principle, there are presently four sites of a suitable size which might be considered. They are:
(a) A commercial/residential site of 5, 800 square metres (about 62,000 square feet) on the Wan Chai Reclamation. This site, the conditions of sale for which contain a require- ment for a multi-storey car park, has been advertised for sale on 4th August 1978. The present value is estimated at about $150 million.
CONFIDENTIAL **