TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 78

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CONFIDENTIAL #

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into the area. The authority is considering the

possibility of allowing the Federation to run the site with commercial rules and regulations as similar to those

in Hong Kong as possible. Second, Cavendish International Holdings Ltd. of the Whampoa-Hutchison Group will

participate in the construction of a 2,600 MW power

station in Jiangsu Province, which will be the largest

thermal station ever built in China. The project is

estimated to cost Rmb 1.5 billion. Construction was

scheduled to start before the end of 1988 and the station

to commence operation by end 1990.

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(b) China's investment in Hong Kong

38.

campaign

It appears that the "house-cleaning" (27)

which attained a very high profile in the

last quarter of 1988 has so far not achieved much and the

general atmosphere now seems to be one of "business as

usual". It is widely suspected that the large and

well-established PRC-interest companies may benefit from this campaign because business could become more

concentrated in their hands if some of the smaller

companies have to withdraw from Hong Kong.

39.

First, China

PRC-interest companies' investments in infrastructural and property developments in Hong Kong have recently attracted much attention. International Trade and Investment Corporation (CITIC) increased its shareholding in the Eastern Harbour Crossing to 23.75% from 9.5% by buying from the majority

shareholder. Second, China Resources (Holdings) Co. Ltd.

bought a vacant factory building in Yau Tong for HK$70

(27) This is a campaign with a view to restoring economic

order and discipline, and eliminating malpractices in some PRC-interest companies in Hong Kong.

CONFIDENTIAL

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