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On economic matters, I conveyed to Mr Lu the community's concern over Hong Kong's future economic autonomy and, in that context, urged for early Chinese agreement to the six mobile telephone licences. Mr Lu reaffirmed that Hong Kong would have autonomy in handling its own economic and financial affairs, as guaranteed by Joint Declaration and the Basic Law. He also undertook to look into the question of the mobile telephones.

Finally, I took the opportunity to inform Mr Lu that a study conducted by the Airport Authority indicated that there was a strong case to bring forward the commissioning of the second runway at Chek Lap Kok to end 1998. I expressed to Mr Lu HKG's confidence that the Airport Authority would do this cost-effectively. Mr Lu said that the Chinese side had no problem with the project, and suggested that before we put the proposal to the Airport Committee for confirmation, we should brief the Economic Sub-group of the Preparatory Committee. This we will do soon.

All told, the meeting allowed both parties to have a frank exchange of views. It gave me an opportunity to draw Mr Lu's attention to specific Hong Kong concerns and to underline our willingness to co-operate in resolving the remaining transitional issues. Mr Lu and I agreed that we should maintain contact, and that the two sides should step up and intensify co-operation in the final 14 months before the transition. In my view, it is essential for the officials of both sides to increase communication and understanding and develop trust at all levels so that we can achieve a smooth transition on the basis of the Joint Declaration and the Basic Law. I hope to be able to build on the dialogue which I now have with Mr Lu.

Dr Leong Che-hung: Thank you Mr President. Can the Chief Secretary express to this Council whether she considers that any breakthrough has been achieved in Sino-Hong Kong relationship on her visit to Beijing; in particular, has she managed to acquire the assurance of the Chinese Government that civil servants should and must be allowed to maintain political neutrality which is so essential and vital to the running of an efficient civil service?

CS: Mr President, I was not personally expecting any significant breakthrough from this visit but I see this visit as a useful building block in developing a relationship of trust, in seeking a dialogue, and in particular seeing where we can maximise co- operation. I believe this to be what the people of Hong Kong want and what the civil servants wish to see.

Insofar as the position of civil servants is concerned, Mr Liu has, of course, on previous occasions, and again on this occasion, reiterated and reconfirmed the need for civil servants to maintain political neutrality, to be dedicated and loyal to serving the people of Hong Kong before 1997, and to do the same, in terms of serving the SAR Government, after 1997.

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