RESTRICTED
073413
MDLIAN 4947
HKA 182/5
TOP COPY Q DIST?
RESTRICTED
FM HONG KONG
TO PRIORITY FCO
TELNO 2422
OF 300746Z SEPTEMBER 92
INFO PRIORITY PEKING, UKREP JLG HONG KONG
NEW AIRPORT: PRESS REPORTS.
1. MING PAO CARRIED AN EXTENSIVE REPORT TODAY CLAIMING THAT THE CHINESE PLAN TO CALL ANOTHER AIRPORT COMMITTEE MEETING BEFORE MY VISIT TO PEKING IN ORDER TO MAKE A FURTHER COUNTER-PROPOSAL.
2. THE CHINESE WOULD ASK THE BRITISH SIDE TO INJECT CAPITAL INTO THE AIRPORT RAILWAY ONLY, AND NOT/NOT INTO BOTH CORPORATIONS. THIS WAS BECAUSE THE CHINESE THOUGHT THE AIRPORT AUTHORITY WOULD HAVE A STRONG REVENUE STREAM AFTER COMPLETION. THE CHINESE WOULD ASK THAT THE ADDITIONAL EQUITY INJECTION TO THE AIRPORT RAILWAY BE INCREASED FROM HK DOLLARS 15 BILLION TO HK DOLLARS 29 BILLION. THIS WOULD MEAN THAT THE TOTAL GOVERNMENT EQUITY INJECTION WOULD AMOUNT TO HK DOLLARS 32.7 BILLION. THE THINKING OF THE CHINESE SIDE WAS THAT THIS SHOULD ALL BE PAID BY THE HONG KONG GOVERNMENT. THE CHINESE ALSO FELT THAT WHILE IT WAS NEGOTIABLE TO TREAT THE 62 HECTARES OF AIRPORT RAILWAY LAND AS ADDITIONAL TO THE ANNUAL LAND DISPOSAL PROGRAMME, THE JD STIPULATED THAT HALF OF THE LAND PREMIA WOULD GO TO THE SAR'S LAND FUND AND THAT THAT MONEY COULD NOT/NOT BE USED. THE REPORT NOTED THAT THE GREATEST DIVERGENCE BETWEEN THE CHINESE AND THE BRITISH WAS WHETHER THE BRITISH SHOULD SHOULDER THE ADDITIONAL INJECTION ALONE, OR WHETHER THE BURDEN WAS FOR BOTH THE CHINESE AND THE BRITISH TO SHARE. THE CHINESE SIDE WAS OF THE VIEW THAT THE MOU ONLY ASKED FOR HK DOLLARS 25 BILLION FOR THE SAR. BUT THE HONG KONG
GOVERNMENT WOULD HAVE SOME HK DOLLARS 70 BILLION RESERVES BY 1997. SO IF THE GOVERNMENT WERE NOT/NOT WILLING TO USE THE BALANCE TO INVEST IN THE AIRPORT PROJECT, IT WOULD MEAN THAT THE GOVERNMENT HAD OTHER PLANS FOR THIS SUM OF MONEY.
3. A SIMILAR STORY WAS CARRIED BY ECONOMIC JOURNAL AND SCMP.
COMMENT
4. THE JD DOES NOT OF COURSE PROHIBIT USE OF THE LAND FUND BEFORE 1997. TOTAL FUNDING BY THE GOVERNMENT OF THE AIRPORT RAILWAY WHICH COSTS HK DOLLARS 33.5 BILLION (MONEY OF THE DAY), BUT NO
1
PAGE
RESTRICTED