TNAG-2016-FCO40-2871-Relations-between-Hong-Kong-and-Japan-1990 — Page 171

CONFIDENTIAL

B

Japanese Investment in Hong Kong

3.

Japan is Hong Kong's third largest trading partner after

China and the US accounting for 17% of total imports and 6%

of total exports (including re-exports) in 1989.

Japan has

also overtaken the US as Hong Kong's largest source of

foreign investment.

4. The Japanese continue to be cooperative over rebuilding

confidence. Nakayama visited Hong Kong in November 1989.

The Secretary of State thanked him for his and Japan's

support when they last met on July 1990.

PADS

5.

The Governor announced PADS in his October 1989 policy

The strategy comprises two distinct areas:

speech.

(i)

an extensive port development, estimated to cost

HK$50 billion (£3.3 billion) which will be almost entirely

privately funded and dependent on demand; and

(ii) a replacement airport and a number of related infrastructure projects, estimated to cost HK$77 billion (£5.1 billion), necessary to link the airport with the rest

of Hong Kong.

It is planned that the first runway of the airport

should be operational by January 1997.

6.

7.

Overt Chinese support for the project is becoming increasingly important as potential international investors

are waiting to see the Chinese reaction before committing

themselves. The comments by Premier Li Peng during

Mr Maude's visit to China in July that Hong Kong needed a

replacement airport were therefore important. However the

Chinese have continued to express concern over the costs and are still studying this aspect. Chinese thinking on PADS

would be influenced if the Japanese were to lend their voice

ALDAEY/5

CONFIDENTIAL