CONFIDENTIAL
065255
M AN 8433.
PROPOSAL, A RATIO NEED TO BE FIXED, FOR EXAMPLE BETWEEN GDP AND FISCAL RESERVES. IN THE 1980'S ON AVERAGE THIS HAD BEEN 10-11 PER CENT. IN 1997 HE ESTIMATED HONG KONG'S GDP WOULD BE 1,300 BILLION. 10 PER CENT WOULD THEREFORE BE 130 BILLION (THE CURRENCY IS NOT SPECIFIED PRESUMABLY HKD). THE CHINESE WANTED TO SEE RESERVES (INCLUDING THE LAND FUND) AT MORE OR LESS THIS LEVEL IN 1997. ANOTHER WAY OF PUTTING THIS WAS TO BASE IT ON THE PROPORTION OF FISCAL RESERVES TO PUBLIC EXPENDITURE. THE CHINESE WERE ONLY ASKING THAT HKG RESERVES SHOULD STAND AT 50 PER CENT OF GOVERNMENT EXPENDITURE. THIS WAS A FAIR AND REASONABLE PROPOSAL.
5.
THE CHINESE WOULD PAY ATTENTION ONLY TO BROAD PRINCIPLES. THE SITE AND TECHNICAL MATTERS WOULD BE DECIDED BY THE HONG KONG GOVERNMENT. BOTH SIDES SHOULD INCREASE CO-OPERATION DURING THE SECOND HALF OF THE TRANSITION. ON MATTERS WHERE AGREEMENT COULD NOT/NOT BE REACHED AT THE JLG, A SOLUTION SHOULD BE FOUND THROUGH BILATERAL DISCUSSION.
VARIOUS OF TODAY'S (27 MAY) PAPERS (INCLUDING, SURPRISINGLY, TA KUNG PAO) CARRY REPORTS ATTRIBUTED TO HKG OR SOURCES CLOSE THE
BRITISH TEAM. THE SOURCES ARE QUOTED AS SAYING THAT HKG HAD
PROMISED TO SET ASIDE HKD 14 BILLION NOW WHICH WOULD ACCUMULATE TO HKD 25 BILLION FOR THE SARG. THE BRITISH SIDE HAD ALSO PROMISED TO SET UP AN AIRPORT CONSULTATIVE COMMITTEE, AND INVITE SOMEONE WITH A CLOSE CONNECTION WITH CHINA AND A BASE IN HONG KONG, TO SIT ON THE AIRPORT AUTHORITY. HKG WOULD DISCUSS WITH THE CHINESE MATTERS INVOLVING SPENDING AFTER 1997, AND NEW PROPOSALS, IN RELATION TO THE AIRPORT PROJECT. DISCUSSION WOULD BE CONFINED TO THESE AREAS IN ORDER NOT/NOT TO DELAY THE AIRPORT PROJECT. THE BRITISH WOULD CONTINUE TO DISCUSS WITH THE CHINESE WAYS TO RESOLVE THE AIRPORT ISSUE AND HOPED THAT AN AGREEMENT WOULD BE REACHED PROMPTLY. NO DEADLINES HAD BEEN SET. SOME OF THE REPORTS SAID THAT THE LAND COMMISSION WAS ONLY APPROPRIATE FOR DISCUSSION OF LAND LEASES AND WOULD NOT/NOT BE SUITABLE FOR DISCUSSION OF THE AIRPORT PROJECT.
7.
THE ONLY EDITORIAL COMMENT IN TODAY'S COMMUNIST PRESS IS A SHORT PIECE IN WEN WEI PO REPEATING THE LINE THAT MAJOR INFRASTRUCTURAL PROJECTS SHOULD BE LOW IN INVESTMENT, HIGH IN
COST EFFECTIVENESS.
COMMENT
8.
THE COMMENTS BY LU PING ARE A FAIRLY DETAILED ATTEMPT TO
2
PAGE CONFIDENTIAL