CONFIDENTIAL
DSR 11C
unhalli
Hong Kong/China air services
135 The special status of Hong Kong, and China's claim to the territory as a part of China, has for many years proved a stumbling block to the operation of normal scheduled air passenger services between Hong Kong and China, and to the operation of scheduled international flights under an air services agreement between Britain and China. The Chinese refusal to recognise the Government of Hong Kong and its civil aviation authorities effectively closed regional air traffic between Hong Kong and points in China after 1949.
136
Through adherence to these views, the 'Chinese civil aviation authorities (CAAC) have barred international air
traffic using Hong Kong on its routes to and from destinations in China. However, following improvements in. relations between Britain and China in the early 1970's and a growing moderation in China's attitude towards Hong Kong, a draft air services agreement between Britain and China was signed on 13 June 1973. This gave the then British Overseas Airways Corporation (BOC) rights to fly a trunk route between London and Peking, although the Hong Kong Peking sector of the route was "blinded". That is to say, BOAC were refused rights to pick up passengers in Hong Kong to take to Peking and vice versa. Although it is quite normal on such a long route for certain sectors to be blinded, the commercial viability of such an arrangement was clearly undermined. Moreover, the Hong Kong Peking air route remained inaccessible to regional operators such as the Hong Kong- based Cathay Pacific Airlines (CPA).
C
CPA
137 Hong Kong's commercial interests were also threatened by the Chinese attitude towards the operation of air services between Hong Kong and Taiwan. Since Britain does not recognise Taiwan, these two points are served under a non-governmental· commercial agreement between the two airlines involved and China Air Lines (CAL) of Taiwan, but the Chinese Government argued that the use of Hong Kong's Kai Tak airport by CAL amounted to Britain's recognition of "two Chinas". In September 1974 the Chinese made a five point proposal as a condition of the completion of the Air Services Agreement:
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