TNAG-0937-FCO40-1156-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-th-1980 — Page 110

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only be financed by an approach to the international capital markets Other capital works projects could be financed from recurrent revenue but these large products could only be financed through loans. question was whether in the mid 1980s the international capital markets would be as willing to provide loans as it was in the miä

1970s, when the first two stages of the MTR were being planned and built. Ferhaps even more important was the attitude of private investors. It was very difficult to predict the accaptability of approaches by the Hong Kong Government to the markets in the 1980s. but if, for any reason, they tended to hesitate general confidence would be affected and the growth rate of the economy would slow down.

Mr Gu said that he had listened with great interest to what the FS hd said about maintaining growth and ensuring the prosperity of long Kong in the longer term. As he saw it, the problems could be divide d into two categories, In the first category were technical problems, which could be solved by contact and cooperation between the two sides. In this way the problem of water supply had already been solved and discussions were taking place between the Guandong and Hong Kong authorities about the possibility of building a nuclear power station which would provide electricity that was needed on both sides. The Chinese were very ready to continue such negotiations. leaderstood that another problem was the construction of the new airport on Lantão island. Some businessmen had suggested unofficially that Hong Ko.g eng Guangdong Province should cooperate and build an alport flat land near Shenzhen. There would be complications in sucli a project. In particular the Chinese side would need to find some way round the problem of violation of their territorial air space. But if this problem could be solved itwould be al right. The two sides should talk and explore the possibilities.

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The second category was the problem of confidence which had been repeatedly raised by the FS. The major problem was the status of th New Territories and what should be done as a next step. The two sides should be particularly careful to ensure the continued prosperity of Hong Kong and solve problems through cooperation. The UK side was very concerned about the political problem of the status of Hong Kong. Vice Premier Deng had explained the Chinese Position very clearly to the Governor during is visit in 1979. he understood Vice Fremier Deng's policy it was first that whatever was done to solve the problem the position of investors should be guaranteed : second that special policies should be adopted towardo Hong Kong to allow Hong Kong to continue as a capitalist society. Whilst the socialist system continued on the Chinese side capital i al would continue on the Hong Kong side. So whatever measures the Chinese Government took they would take account of the overall requirement to guarantee continuing prosperity. China would not act contrary to this need and would take measures to improve prosperity father than 'vice-versa. Feole should, therefore, set their hearts at ease. The FS had on many occasions raised the question of confidence. Was he really talking about the status of Hong Kong? Did he mean that, when investors invested in Hong Kong, they won de re d

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