B.

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Talks with Li Hao and Shenzhen officials

6.

After-lunch talks with Li Hao lasted about ninety minutes. Li Guangzhen began with a briefing on the development

of Shenzhen. This was very general, reaffirming China's

commitment to an open policy in general and to SEZ's in

particular, and extolling the benefits for both sides of

co-operation with Hong Kong. He mentioned two interesting

statistics;: 96% of the agreements and contracts signed between Shenzhen and external companies involved Hong Kong

(5,294 out of 5,517); 72% of all external investment in

Shenzhen was from Hong Kong.

7.

The Governor said that if the economic opportunities in Shenzhen were right, natural economic forces would ensure

that Hong Kong's involvement continued. We valued official co-operation, in particular the joint working groups set up in 1982. We also wanted to develop a broader scale of

co-operation, on the lines of Sir David Akers-Jones' delegation in 1987 which had discussed longer term infrastructure

planning. The Governor mentioned the start (on 2 March) of our

consultants' study on Port and Airport Development (PADS), and said that we would like to invite a group from Shenzhen to come

to Hong Kong in November for a briefing. The study would not be finished by then, but we should have some preliminary ideas. Our development in this area would be of great importance to Shenzhen and Guangdong. The Governor asked for the Shenzhen side's thoughts on how traffic flows would develop across the border, especially after Lok Ma Chau was opened, and for a briefing on the airport.

8.

The Shenzhen Director of Port Administration, Liu Jie

said that Man Kam To was congested. The Chinese were investing

RMB 20 million in improvements to the facilities on their side

expanding the check point and the parking area (to 5,000

places), building a new customs house and installing new electricity supply. It would take a year to complete. The Wu

CONFIDENTIAL

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