CONFIDENTIAL
125663 MDHJAN 6041
ENVOYS.
THE TALKS COULD BE CONFIDENTIAL OR OPEN. HE DEPLORED THE WILD SPECULATION WHICH SO OFTEN APPEARED IN THE PRESS. THERE WERE CERTAIN DIFFICULTIES IN THE RELATIONSHIP, BUT IT WAS POSSIBLE FOR THE TWO SIDES TO REACH AN UNDERSTANDING AND THE GAPS COULD BE BRIDGED. HE HOPED THERE WOULD BE GOOD COOPERATION BETWEEN BRITAIN AND CHINA IN TRANSFERRING POLITICAL POWER IN HONG KONG, WHILE AT THE SAME TIME ENSURING THE TERRITORY'S STABILITY AND PROSPERITY. EXPRESSING HIS AGREEMENT TO THIS APPROACH, LORD YOUNG SAID THAT HE KNEW CHINA WAS SHORT OF CAPITAL. HE HAD SEEN IT WHEN HE HAD BEEN SECRETARY OF STATE FOR TRADE. WHEN THE PREMIER HAD TIME TO STUDY THE AIRPORT AND TERMINAL SCHEME, HE WOULD SEE THAT THERE WOULD BE NO LIABILITY ON THE CHINESE GOVERNMENT AFTER 1997. THE REPAYMENT OF 60 PER CENT OF THE COSTS FOR PADS WOULD COME FROM THE INTERNATIONAL INVESTORS AND THE MATTER WOULD BE HANDLED BY THE PEOPLE WHO RAN THE AIRPORT AND THE PRIVATE SECTOR. AS FOR THE REST OF THE COSTS, THERE WERE FUNDS IN RESERVE AND THIS RESERVE WAS BEING BUILT UP EACH YEAR. HE HAD VISITED THE SITE OF THE POSSIBLE CHINESE CONTAINER PORT AT SHENZHEN, BUT HAD THE IMPRESSION THAT TO PUT A NEW AIRPORT AND HARBOUR THERE MIGHT BE TOO FAR FROM HONG KONG. HE DREW THE PREMIER'S ATTENTION TO THE PROPOSED CHANNEL TUNNEL BETWEEN BRITAIN AND FRANCE. THIS WAS BEING CONSTRUCTED BY THE PRIVATE SECTOR AT A COST OF US DOLLARS 11 BILLION. THERE WOULD BE NO LIABILITY ON THE GOVERNMENTS OF FRANCE AND THE UK. WHAT THESE TWO GOVERNMENTS HAD DONE WAS TO GRANT THE RIGHT TO USE THE TUNNEL FOR 40 YEARS DURING WHICH TIME THE INVESTORS WOULD TAKE THE PROFITS AND REPAY DEBTS. IN CONCLUSION, HE HOPED THAT LI PENG WOULD VISIT THE UK AGAIN ONE DAY. LI SAID THAT HE HAD BEEN IMPRESSED BY THE THAMES BARRIER ON HIS LAST TRIP. LI ADDED THAT THE YUEYANG POWER STATION PROJECT WAS GOING SMOOTHLY, AND SAID THAT LORD YOUNG WOULD BE WELCOME TO ATTEND THE OPENING CEREMONY AT THE END OF THIS YEAR. FINALLY, HE SENT HIS PERSONAL REGARDS TO THE BRITISH PRIME MINISTER. HE REITERATED HIS WISH THAT THE TWO GOVERNMENTS SHOULD KEEP CONSULTING EACH OTHER AND EXPRESSED A WARM INVITATION TO THE FOREIGN SECRETARY TO VISIT CHINA WHEN THIS WAS CONVENIENT.
DONALD.
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