CONFIDENTIAL
116352
MDADAN 3385
(C)
(D)
WILSON
OF NCNA ON OUR LATEST THINKING, AGAIN IN CONSIDERABLE DETAIL. XU JIANTUN HAD BEEN INVITED, BUT DID NOT COME. THE VICE DIRECTOR COMMENTED THAT CHINA WOULD TRY TO SUPPORT THE STRATEGY. CHINA'S ATTITUDE ONLY CHANGED WHEN JIANG ZEMIN MADE HIS COMMENTS ON PADS (SEE BELOW) ON 12 DECEMBER 1989.
OUR ATTEMPT TO GET CHINESE SUPPORT FOR THE PROJECT WAS A REACTION TO THE PROBLEM CREATED BY THEIR LATER PUBLIC CRITICAL COMMENTS AND THE EFFECT THESE CREATED ON POTENTIAL INVESTMENT ETC. HAVING HAD NO COMMENTS OF
SUBSTANCE IN REACTION TO WHAT WE HAD SAID TO ON
THE MATERIAL PASSED OVER FOR MANY MONTHS WE HAD NO NEED TO SEEK ANY PARTICULAR COMMITMENT OR SUPPORT FROM CHINA, PARTICULARLY IN THE LIGHT OF HONG KONG'S PRESENT, AND PROMISED FUTURE, AUTONOMY IN ECONOMIC MATTERS. THE SITUATION CHANGED WHEN JIANG ZEMIN MADE HIS CRITICAL COMMENTS WITHOUT ANY FOREWARNING. AT THAT POINT AND SINCE, AS CHINESE CRITICISM HAS SNOWBALLED, WE HAVE NEEDED TO REPAIR THE DAMAGE DONE TO INVESTOR CONFIDENCE.
OTHER THAN THE DECISION ON FUNDING OF THE TSING MA BRIDGE, ON WHICH I RECOGNISE THAT THERE REMAINS CONSIDERABLE CHINESE PIQUE, IT IS NOT ACTUALLY THE CASE THAT THERE HAVE BEEN MAJOR MODIFICATIONS TO THE PROJECT, OR TO THE FIGURES. WE HAVE CAREFULLY EXPLAINED TO THE CHINESE AT EACH STAGE WHAT THE PADS PROJECTS INVOLVED AND THEIR OVERALL COST, AND THEN WHAT THE AIRPORT CORE PROGRAMME INVOLVED AND ITS COST. PERHAPS EVEN MORE IMPORTANT, WE HAVE GIVEN THEM A VERY CLEAR OVERALL PICTURE OF THE LONG TERM FINANCIAL OUTLOOK FOR HONG KONG BY EXPLAINING OUR LONG RANGE FORECAST. THE LATEST LRF PROJECTIONS SHOULD HAVE PLEASED THEM, IN THAT THEY SHOW POSSIBILITIES OF LARGER RESERVES IN 1997. OF COURSE A LOT OF COMMENTATORS IN HONG KONG HAVE BEEN PRODUCING ALL SORT OF WILD FIGURES IN THE PRESS, AND DOUBTLESS THOSE WHO HAVE WANTED TO STIR UP TROUBLE LIKE THE SIT BROTHERS OR T. S. LO HAVE MADE FULL USE OF THIS. BUT OUR DIRECT CONTACTS WITH THE CHINESE SHOULD HAVE GIVEN THEM A CONSISTENT, AND INDEED FROM THEIR POINT OF VIEW AN IMPROVING, PICTURE.
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