Redacted under FOI exemption section 27 (1)
CONFIDENTIAL
HKB 182 12
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MDHIAN 5839
CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE FCO
TELNO 631
OF 280953Z FEBRUARY 91
INFO IMMEDIATE PEKING, UKREP JLG HONG KONG
141
TOP COPY Q DIST ?/
YRTELNO 397 AND PEKING TELNO 49: PADS: THE WAY AHEAD
1. THANK YOU FOR THESE COMMENTS.
YOUR TUR.
2. ON POINT 4(1) OF THE HONG KONG AGENDA, I HAVE NOW DECIDED THAT OUR OPENING OFFER SHOULD BE TO MAINTAIN A RESERVE BALANCE OF NOT LESS THAN HKD68.5 BILLION, I.E. THE SAME IN 1991 PRICES AS WHEN THE JOINT DECLARATION WAS RATIFIED IN 1985. IF THE CHINESE ACCEPT THE CONCEPT UNDERLYING THIS PROPOSAL, THIS GIVES US MORE ROOM FOR NEGOTIATION ON THE ACTUAL FIGURE.
4. IN RELATION TO THE DEFENSIVE POINTS ON CHINA'S AGENDA, YOU ASKED WHETHER THE HKG ENVISAGED GUARANTEEING ANY OF THE BORROWING BY THE AIRPORT AUTHORITY. WE DO, FOR TWO REASONS. FIRST, THE AIRPORT AUTHORITY, WHEN FIRST ESTABLISHED, WILL HAVE NO TRACK RECORD. AS WITH THE MTRC, WE WILL ALMOST CERTAINLY NEED TO GUARANTEE ITS INITIAL BORROWING. SECONDLY, THE DOUBT THROWN ON THE AIRPORT PROJECTS BY CHINA OVER SUCH A LONG PERIOD OF TIME WILL MAKE LENDERS EVEN MORE CAUTIOUS THAN WITH EARLIER LOANS. THIS TOO WILL ALMOST CERTAINLY MAKE HKG GUARANTEES NECESSARY IN ORDER TO GET LOANS AT RESPECTABLE RATES OR EVEN ANY SUBSTANTIAL LOANS.
PEKING TUR
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CONFIDENTIAL
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