CONFIDENTIAL

Consultation with the Chinese

7. Contacts since the beginning of the Airport MOU have

been trouble-free so far. There is a cloud on the horizon,

however, with HKG's discovery that the latest estimate for

the airport railway cost is much higher than expected (para

A 5 of Hong Kong telno 129). Once EXCO have decided whether

it wants to proceed with the railway, we shall have to

consider how to handle the Chinese. We shall in any case need to consult them on a number of Airport issues in the

next few months, and will need quick answers if the timing

is not to slip. It is too early yet to know which aspects

the Secretary of State should pursue with Qian in March: but

there are likely to be some.

PIGADF/3

CONFIDENTIAL

Длян

PF Ricketts

188-273

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