TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 91

OF STATE'S ANNOUNCEMENT, AND THEN THE ADVERTISING AND THE

COMMENCEMENT OF OPERATIONS BY BCAL. THE DIVERSITY AND SIZE OF THE REACTION PRECLUDE ANY POSSIBILITY THAT IT HAS BEEN ENGINEERED

OR ORCHESTRATED BY CATHAY.

LIKELY EFFECTS ON TRADE RELATIONS.

THE PUBLIC REACTION LEADS US TO FEAR THAT UNLESS THE CAA'S DECISION IS REVERSED THERE WILL BE CONSIDERABLE LOCAL PRESSURE BOTH

ON GOVERNMENT AND UPON PRIVATE INDUSTRY TO HARDEN ITS ATTITUDE TOWARDS BUYING CAPITAL GOODS AND OTHER IMPORTS FROM BRITAIN. AS MR CHEUNG, Q C SAID:

''SENTIMENT IS A DELICATE FLOWER. WE ARE A LARGE MARKET FOR BRITISH

GOODS. WE HAVE CONSCIOUSLY FOSTERED THE SENTIMENT OF BUYING BRITISH WE BELIEVED IN THE GOOD FAITH OF BRITAIN. THE DECISION OF THE CAA CASTS SOME DOUBTS ON WHETHER BRITAIN SINCERELY. PRACTICES WHAT IT PREACHES, I CAN ONLY HOPE THAT WISER COUNSEL WILL NOW PREVAIL- LEST SENTIMENT WITHERS’'.

SHOULD SENTIMENT WITHER, THE IMPLICATIONS FOR BRITISH TRADE WITH HONG KONG (APART FROM THE EFFECT UPON TRADE WITH CHINA) COULD BE CONSIDRABLE. LOYALTY TO BRITAIN HAS PAID NO SMALL PART IN STEERING SUBSTANTIAL CONTRACTS HER WAY. PURCHASES OF GENERATING EQUIPMENT BY CHINA LIGHT AND POWER, OF BUSES BY THE KOWLOON AND THE CHINA MOTOR BUS COMPANIES, CONTRACTS FOR EQUIPMENT AND FOR CONSTRUCTION WORK PLACED WITH BRITISH FIRMS BY THE MASS TRANSIT RAILWAY, AND THE DECISION BY CATHAY ITSLEF (REFERRED TO BELOW)

AT THE REQUEST OF MR HESELTINE WHEN A MINISTER IN 1974 TO CHANGE THE DECISION BY THEIR BOARD TO PURCHASE MCDONNELL DOUGLAS DC10 AIRCRAFT AND INSTEAD TO SUPPORT THE FINANCIALLY AILING LOCKHEED AIRCRAFT CORPORATION AND THUS ROLLS ROYCE (TO THE GREAT BENEFIT OF HMG) BY BUYING TRISTARS.

•

THE SECRETARY OF STATE HIMSELF ON HIS RECENT VISIT TO HONG KONG

PUBLICLY SPOKE OF TRADE RECIPROCITY BETWEEN BRITAIN AND HONG KONG. MANY PROJECTS ARE CURRENTLY COMING TO FRUITION: THE CASTLE PEAK POWER STATION, ROLLING STOCK FOR THE MTR, THE PURCHASE OF SEVERAL HUNDRED BUSES BY THE TWO PRIVATE BUS COMPANIES: THE ELECTRIFICATION OF THE KOWLOON-CANTON RAILWAY AND PURCHASE OF ITS ROLLING STOCK, FOR WHICH PDS STG 50 MILLION IS PROVIDED THIS

YEAR ALONE IN THE BUDGET, MANY CONSTRUCTION CONTRACTS, BOTH PUBLIC AND PRIVATE, FINANCIAL AND CONSULTANCY SERVICES BOTH IN CONNECTION WITH HONG KONG AND CHINA. SLIGHTLY FURTHER IN THE FUTURE

THE LIE DECISIONS ON THE CHINESE NUCLEAR POWER STATION RENEGOTIATION OF THE DEFENCE COSTS AGREEMENT, AND OF THE MULTI-

FIBRE AGREEMENT, THE BUILDING OF (AND WHETHER IN VIEW OF THE CAA DECISION AND AIR TRAFFIC RIGHTS BENEFITS GENERALLY, BRITAIN SHOULD ASSIST IN FINANCING) A NEW AIRPORT TO REPLACE KAI TAK, THE CONSTRUCTION OF 3 MAJOR BRIDGES, TO LINK THE ISLAND OF LANTAU TO THE MAINLAND, DECISIONS IN THE PRIVATE SECTOR WILL RANGE FROM

SHIP-BUILDING, TO THE TIMING OF CATHAY'S DECISION TO TAKE FURTHER ROLLS ROYCE ENGINES, TO A VARIETY OF FINANCIAL AND CONSULTANCY ARRANGEMENTS, TO THE PURCHASE OF MACHINES FOR FACTORIES, AND CARS.

IT WILL BE MOST UNFORTUNATE IF ALL OR ANY OF THESE PROJECTS SHOULD BE HAZARDED BY A WAVE OF LOCAL RESENTMENT ARISING FROM THE CAA'S

-5-

DECISION