CONFIDENTIAL
B
Japanese Investment in Hong Kong
3.
Japan is Hong Kong's third largest trading partner after
China and the US accounting for 17% of total imports and 6%
of total exports (including re-exports) in 1989.
Japan has
also overtaken the US as Hong Kong's largest source of
foreign investment.
4. The Japanese continue to be cooperative over rebuilding
confidence. Nakayama visited Hong Kong in November 1989.
The Secretary of State thanked him for his and Japan's
support when they last met on July 1990.
PADS
5.
The Governor announced PADS in his October 1989 policy
The strategy comprises two distinct areas:
speech.
(i)
an extensive port development, estimated to cost
HK$50 billion (£3.3 billion) which will be almost entirely
privately funded and dependent on demand; and
(ii) a replacement airport and a number of related infrastructure projects, estimated to cost HK$77 billion (£5.1 billion), necessary to link the airport with the rest
of Hong Kong.
It is planned that the first runway of the airport
should be operational by January 1997.
6.
7.
Overt Chinese support for the project is becoming increasingly important as potential international investors
are waiting to see the Chinese reaction before committing
themselves. The comments by Premier Li Peng during
Mr Maude's visit to China in July that Hong Kong needed a
replacement airport were therefore important. However the
Chinese have continued to express concern over the costs and are still studying this aspect. Chinese thinking on PADS
would be influenced if the Japanese were to lend their voice
ALDAEY/5
CONFIDENTIAL