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115535 MDTTAN 2881
80 FLIGHTS A WEEK TO 18 DESTINATIONS IN CHINA BUT DRAGON AIR ARE
ONLY FLYING 14 FLIGHTS A WEEK TO 4 DESTINATIONS. CITIC HAD A MAJOR INTEREST IN DRAGON AIR AND WE HOPED TO SEE A MORE EQUITABLE ARRANGEMENT WITH CAAC. RONG SAID THAT THIS QUESTION COULD BE STUDIED BETWEEN HONG KONG AIRLINES AND CAAC. HE EXPECTED FURTHER DEVELOPMENT OF AIR LINKS. BUT THIS SHOULD TAKE PLACE STEADILY AND
NOT BE TOO HASTY.
5. THE GOVERNOR ASKED WHETHER CITIC WAS SATISFIED WITH ITS INVESTMENTS IN CATHAY AND DRAGON AIRLINES. RONG SAID THAT HE WAS REASONABLY SATISFIED. AT LEAST IT HAD BEEN POSSIBLE TO IRON OUT THE DIFFICULTIES BETWEEN CATHAY AND DRAGON AIR. SOME COMPETITION WAS NECESSARY, BUT SO WAS COOPERATION. THE GOVERNOR INSTANCED THE ADVANTAGE OF COMPETITION WHEN BRITISH AIRWAYS' MONOPOLY ON THE HONG KONG/LONDON ROUTE HAD BEEN ABANDONED. COST OF TICKETS, SERVICE AND KEEPING TO SCHEDULE HAD IMPROVED DRAMATICALLY. RONG SAID THAT COMPETITION NEEDED TO BE HANDLED CAREFULLY IN THE
UNITED STATES IT HAD LED TO A NUMBER OF BANKRUPTCIES WHICH HAD
NOT BEEN GOOD FOR THE AMERICAN ECONOMY.
6. RONG WAS SIMILARLY CAUTIOUS ON INFRASTRUCTURAL DEVELOPMENT.
THIS SHOULD BE BUILT GRADUALLY TO COINCIDE WITH DEMAND. TOO MUCH SHOULD NOT BE BUILT SIMULTANEOUSLY. OTHERWISE PROFITABILITY WOULD BE AFFECTED. THE GOVERNOR POINTED OUT THAT THE EASTERN HARBOUR TUNNEL, IN WHICH CITIC HAD A STAKE, WOULD ONLY ACHIEVE ITS FULL
EFFECT WHEN TATE'S CAIRN TUNNEL WAS OPENED AND THE KWUN TONG BY-
PASS WAS IN OPERATION. IT WAS IMPORTANT TO GET THE LINKAGES
BETWEEN VARIOUS INFRASTRUCTURE PROJECTS RIGHT.
7. RONG REFERRED TO CITIC'S STAKE IN HONG KONG TELECOM. HE HOPED IT WOULD BRING A GOOD RETURN. FOR THAT TO HAPPEN THE COMPANY ITSELF NEEDED TO DO WELL BUT IT ALSO NEEDED TO HAVE GOVERNMENT SUPPORT. LORD YOUNG, WHEN SECRETARY FOR TRADE AND INDUSTRY HAD EXPRESSED THE HOPE TO HIM THAT THERE WOULD BE GOOD COOPERATION BETWEEN BRITAIN AND CHINESE BUSINESSES. RONG NEEDED TO SATISFY THE CHINESE GOVERNMENT, TO WHOM HE REPORTED, THAT THERE WOULD BE ADEQUATE PROFITS. THE GOVERNOR SAID THAT GOOD CONTACTS WERE
CERTAINLY NEEDED BETWEEN THE GOVERNMENT AND BUSINESS ENTERPRISES
IN HONG KONG. BUT THE DIRECT LINKAGES WERE LESS THAN ON THE MAINLAND. HONG KONG TELECOM ONLY REPORTED TO ITS SHAREHOLDERS.
COMMENT
8. RONG WAS CLEARLY ANGLING FOR GOVERNMENT HELP TO INCREASE THE LEVEL OF TRAFFIC THROUGH THE EASTERN HARBOUR TUNNEL, AND TO
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