TNAG-2255-FCO40-3239-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-gene-1991 — Page 71

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A

Background

3.

The Chinese proposals are summarised and analysed in Hong Kong telno 580. Perhaps the most striking of all is

the proposal that Hong Kong should set aside HK$ 50 billion

for the future use of the Hong Kong SAR. This would be in

addition to the Land Fund, agreed under the Joint

Declaration, which the Hong Kong Government estimate is

likely to contain up to HK$ 88 billion by 1997 (at 1997

prices).

4. As the Governor points out, the other Chinese proposals

would serve to slow down planning and work on the new

airport. It is therefore difficult to reconcile these

proposals with the demand that the airport should be

"basically" completed by 1997.

5. The Governor concludes, with justification, that if the

Chinese stick rigidly to these ideas, we face the prospect

of having to abandon the airport project. That would be bad

for Hong Kong. But it would also be, I believe, a setback

for China. Most of the evidence suggests that the Chinese want the airport to be built and that their present stance

is not simply a wrecking tactic.

B 6. In Hong Kong telno 581, the Governor sketches out

alternative ideas which could form the basis of an

agreement. These counter proposals would still constitute a

fundamental departure from present practice and could be

presented to the Chinese as significant concessions. I

believe that they constitute a reasonable and realistic

negotiating position.

с

1.

The Governor has suggested that a message from him (text

in Hong Kong telno 582) be sent to Lu Ping, with Ministers'

approval, making it clear that the Chinese proposals are

unacceptable.

VIMACT/2

CONFIDENTIAL