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CONFIDENTIAL # 3

6.

3

The approach to an airport at Chek Lap

Kok from the west would involve flying over

Chinese waters up to within about 3,500 metres

of the runway. So before the HKG can take any

decision to proceed with the project, it will

need to be sure that the Chinese Government

would have no objections.

7.

The Chinese Government's concurrence

in the project would also be essential in the

context of financing the replacement airport.

HKG does not yet have sufficient data to come

to a conclusion on a financing plan for the

project, but a blend of Government capital and

loans raised on the international market will

clearly be necessary.

However, it is unlikely

that loan finance could be raised by the Hong Kong

Government in the absence of some assurance

about the future of Hong Kong after 1997.

8.

It will shortly be necessary to make

China formally aware of the project. As well as

the need to deal with the question in paragraph 6

concerning the over-flying of Chinese waters,

it would be necessary to involve the Chinese in

certain planning matters such as the utilisation

of air space and possible facilities dedicated

to traffic bound for China. At this stage it

might be possible to see whether China was

interested in participating in the financing of the project.

CONFIDENTIAL #

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