TNAG-0943-FCO40-1162-Future-of-Hong-Kong-1980 — Page 289

CONFIDENTIAL

draft agreement. During his visit to London in October 1978

the Chinese Foreign Minister, Huang Hua, formally re-opened the question of a Sino-British Air Services Agreement.

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(42 Preparatory consultations began soon afterwards. From these it emerged that negotiation of an air services agreement would include

both trunk-route services between London and Peking and also regional

services between Hong Kong and points in China. It was also apparent

that the Chinese side would still insist on a public statement by the

British Government..on the status of CAL and would seek a number of

other private assurances on the airline's continued use of Kai Tak, but the Chinese position was more moderate than in September 1974 (eg. by dropping the requirement that the Hong Kong authorities should give priority to CAAC over CAL aircraft at Kai Tak, and instead seeking

assurances that the two airlines would not "coincide"). The success

and benefit to China of the regular non- scheduled flights from

China to Hong Kong had clearly contributed to this change of attitude.

143. Negotiations between CAAC and Department of Trade officials began

in Feking on 18 May, and are continuing. The Chinese delegates have

demonstrated not only a sensitivity to the political implications of :

air services on the regional routes between Hong Kong and points in

China, but also a keen awareness of the commercial advantages to be derived from an air services agreement. CAAC is guarding a monopolistic

position on flights between Hong Kong and Peking but has conceded

the principle of regional flights by British carriers from Hong Kong

to other Chinese cities.

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:)

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