6.
A particular
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reason
for Chinese
concern is that
developments in Hong Kong in or after 1987 may preempt their formulation of a Basic Law which will provide for
Hong Kong's future political structure after 1997.
The Chinese have formed a Basic Law Drafting Committee
(BLDC) of which Sir Y K is one of the Vice Chairmen; 23 of
the BLDC's 59 members are also from Hong Kong. The BLDC
has in turn established a Basic Law Consultative Committee
to consult Hong Kong opinion during the drafting process.
•
7. The second BLDC meeting took place in Peking in April.
A draft structure for the Basic Law was approved, following
a genuine debate in which Chinese showed responsiveness to
Hong Kong views. Detailed drafting proceeds, with the aim of producing a full draft by 1988.
Hong Kong Air Services/Dragonair
8.
Dragonair (DAL) was incorporated in Hong Kong in
September 1984: it did not then meet the requirement in our
Air Service Agreements (ASA) that it should be owned and
controlled by HMG, the Hong Kong Government or British
Nationals.
The company was radically restructured in
october 1985, and DAL now claim that 65% of its shares are
now owned by British Nationals, with Sir Y K and companies
under his control holding 35%. A final view has yet to be
taken on whether DAL now meets our ASA criteria.
9.
Sir Y K wrote to the Prime Minister last October
seeking HMG's support for "this new Hong Kong venture". The
Prime Minister's reply was non-committal. DAL now has a
licence to operate scheduled services to eight Chinese
cities, but it will be for HMG to negotiate traffic rights with the PRC. Its request to operate charter services to London has been refused in Hong Kong in accordance with publicly stated Hong Kong policy.
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