RESTRICTED
CALL ON THE SECRETARY OF STATE BY MR FREDERICK FUNG, 18 MAY
Background
THE AIRPORT
1.
When Mr Fung met Chen Zuoer of the Hong Kong and Macao
Affairs Office in Peking recently, Chen apparently told him that the Chinese were prepared:
- to be flexible over the $5 billion borrowing ceiling, and
- to allow the HKG share of the Land Fund to be used
together with HKG Reserves subject to the $25 billion limit
in the MOU.
Mr Fung also has a pet idea about the HKG borrowing from the SAR
Land Fund. He claims Chen said that in principle the Chinese
would not reject the idea.
2. There are in practice no new concessions in these suggestions and we have dealt with them in the points-to-make.
3.
Now for me
The HKG have drawn up a third financing package which has
been passed in confidence to the Chinese side and is not yet
public knowledge. The main features of the package which will appeal to the Chinese are:
- a small increase in HKG equity injection and consequently a reduction in borrowing.
- no 'callable equity'.
- no suggestion that the Chinese share of land premium for
airport railway sites be used as equity before 1997.
sos.call.PR
SLM
RESTRICTED