Rn't/2 Miss Marose217/2
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Mr Morris 14/2 Москва Mr Store iz
Mr Paul
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2 1 FEB 1991
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FROM:
RY
mezan Tawe?
PS/Lord Caithness
DATE:
11 February 1991
13/2
CC:
Mr McLaren
Mr Burns
Special Advisers
CALL BY LORD DERWENT AND SIMON MURRAY, 11 FEBRUARY
57
h
UNDERTAKERS
1. Lord Derwent and Mr Simon Murray spent 3/4 hour with the Minister this morning. Mr Murray did most of the talking. Indeed at times the meeting almost developed into a stream of consciousness on his part.
2.
Taking his cue from Lord Caithness' brief assessment of the mood in Hong Kong during his visit Mr Murray said that he thought Hong Kong would weather this storm as it had weathered others although relations with China would become more difficult as 1997 approached. He referred to a joint venture which Hutchison were negotiating with cosco to develop terminal 8 at the container port. Two months ago after five years of negotiations Cosco, much to their dismay, had been obliged by Peking to pull out. But they had now been authorised to resume negotiations. Mr Murray thought that there was some justice in the Chinese case over PADS. Lumping the various elements together with a single price tag in October 1989 by the Hong Kong Government had been a mistake. The airport should have been built many years ago (and he implied that Sir John Bembridge's postponement of the construction of a new airport in the early 1980s had not been unrelated to Swire's reluctance to move from Kai Tak). Hutchison, together with Hopewell and three Chinese partners, had put a proposal for a new airport to the Hong Kong Government five years ago. It had been turned down.
3. Mr Murray thought that there would have to be closer consultation with China in the run up to 1997. He thought there was potential for a new major row over proposals for liberalisation of the Hong Kong telephone company, in which the Chinese had a 20 per cent holding. Mr Murray said he was more concerned by the potential disruption in China following Deng Xiaoping' death than by Chinese intervention post 1997. Part of the problem was Hong Kong's bad public relations performance. The Hong Kong Government was overwhelmed and the quality of its staff was mediocre. The US generally took a pessimistic view of Hong Kong post 1997. Sir David Wilson was doing an excellent job (a point Mr Murray reiterated several times) but he and the HKG now lacked the clout to put up an
/effective case in