XN000022-1995-03-31 — Page 7

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So we are very puzzled. We are very puzzled. Why just a day or two before the talks, in fact the day before the talks I think, this whole issue of the scope of the talks was raised. And as you know, it took some discussions to resolve that but it was resolved, and I'm very pleased that it was resolved. And, of course, an agreed basis was reached and was announced and the agreed basis was that we would discuss the transitional Budget and related matters and, of course, the transitional Budget is the 1997-98 Budget. So all seemed clear and we set off for the talks in good heart, thinking that it was absolutely agreed what we were talking about.

So I am very disappointed that even after the talks, again doubt is being thrown by the Chinese side on what the talks should be about. Actually, we've had a consistent line. We've agreed with the Chinese side with what they put forward in June and as I say, I am extremely disappointed that this unnecessary argument has emerged at this late date. So that is the background.

Now, we won't let that affect our attitude. We will continue in expert talks to do what we were asked to do, in good faith. We have a detailed programme which we want to discuss with the Chinese side and take them through so that they can follow the procedures for the 1996-97 Budget and then we can consult them on the transitional Budget.

So that is the history. Any problems which have emerged are completely unexpected and I am extremely puzzled why they have emerged at this late date. Questions?

Question: The Secretary for the Treasury, Donald Tsang, said this morning in Beijing that if both sides focus on the practical issues, that would help in narrowing any differences of the principles for the formulation of the Budget. What exactly are these practical issues and how will they help?

FS: Well, I think he is probably referring to the fact, as I said, that we have a detailed programme set out. We want to discuss the whole budget procedure the resource allocation procedure which goes along with it. We want to do extensive briefings. And "briefings", by the way, was a word which they used back in June 1994. There is nothing controversial about the word "briefings". So I think Donald is saying what I am saying, that having set the record straight, we must put that behind us and get on with the talks in an appropriate spirit. But that is what the talks are about. That has to be clear.

Question: But that wouldn't resolve the differences over principles would it?