UNCLASSIFIED
025620 MDLIAN 5604
UNCLASSIFIED
FM HONG KONG
TO PRIORITY F C O
TELNO 3753
OF 180945Z DECEMBER 90
INFO ROUTINE HKGO LONDON, PEKING, UKREP JLG HONG KONG
INFO ROUTINE HKGO WASHINGTON, HKGO NEW YORK, HKGO SAN FRANCISCO INFO ROUTINE HKGO GENEVA, UKMIS GENEVA
FINAL PART OF TWO PARTS
HONG KONG AGREEMENT:
GENERAL REMARKS
PRESS COVERAGE: WEEKLY ROUNDUP
11. BOTH THE CHINESE VICE-FOREIGN MINISTER, TIAN ZENGPEI, AND THE DIRECTOR OF THE FOREIGN MINISTRY'S OFFICE OF THE HK AND MACAU AFFAIRS, CHEN ZIYING, QUOTED AS SAYING THAT SINO-BRITISH RELATIONS WERE IMPROVING. A SPOKESMAN FOR THE CHINESE STATE COUNCIL, YUAN MU, SAID THAT THE PROSPECT OF CO-OPERATION BETWEEN CHINA AND BRITAIN ON THE QUESTION OF HK WAS GOOD AND THAT THE CHINESE AND BRITISH GOVERNMENTS HAD ALL ALONG ADOPTED A FRIENDLY AND CO-OPERATIVE ATTITUDE TOWARDS EACH OTHER.
AIRPORT
12. A CONTROVERSY OVER THE USE OF THE EXCHANGE FUND OR THE FISCAL RESERVES TO BUILD THE NEW AIRPORT PROJECT WS PROMINENTLY AND EXTENSIVELY REPORTED BY THE MEDIA (12-18.12). LU PING WAS QUOTED AS SAYING THAT IF THE FINANCIAL RESERVES WERE USED UP FOR BUILDING THE AIRPORT, THE EXCHANGE FUND WOULD BE REDUCED AND THAT THE HK DOLLAR WOULD BE WEAKENED. HE SAID THAT CHINA'S PRINCIPLE WAS THAT THE SAR GOVERNMENT COULD NOT BE ASKED TO SHOULDER THE FINANCIAL BURDEN OF THE AIRPORT AND THAT THE HK GOVERNMENT HAD TO LEAVE SUFFICIENT RESERVES TO ALLOW THE SAR GOVERNMENT TO MEET EXPENSES IN ITS SET- UP. HE SAID THAT THE RESERVES WERE PART OF THE EXCHANGE FUND AND THAT THE GOVERNMENT HAD TO LET HK PEOPLE KNOW HOW IT PLANNED TO DO WITH IT. HE SAID THAT WHAT THE GOVERNMENT HAD TOLD HK PEOPLE WAS DIFFERENT FROM WHAT IT HAD TOLD THE CHINESE. HE SAID HE UNDERSTOOD THAT THE HK GOVERNMENT WOULD USE UP THE RESERVES BY 1997 AND WOULD ONLY LEAVE THE ODD TO THE SAR GOVERNMENT. HE SAID THAT HE HAD NOT BEEN TOLD THAT THE PROPORTION OF PRIVATE-SECTOR PARTICIPATION IN THE AIRPORT PROJECT WOULD BE AS HIGH AS 40 TO 60 PER CENT. HE WAS ALSO WORRIED THAT THE FUTURE AIRPORT AUTHORITY WOULD BECOME A POWERFUL ''INDEPENDENT KINGDOM'' BEYOND THE CONTROL OF THE SAR
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