CONFIDENTIAL
043456
MDHOAN 6743
ADDITIONAL POINTS
NO
3.
THE PRIME MINISTER HAS AGREED TO VISIT CHINA ''SOON' DATE HAS BEEN SET, AND YOU SHOULD NOT SPECULATE ON THIS POINT. THE MOU WILL ENTER INTO OPERATION WHEN HE AND THE CHINESE PREMIER SIGN IT. MEANWHILE, ON THE BASIS OF THE ANNOUNCEMENT MADE ON 4 JULY, THE HONG KONG GOVERNMENT WILL PROCEED WITH CERTAIN URGENT WORK IN CONNECTION WITH THE AIRPORT PROJECT. (THE CHINESE GOVERNMENT HAVE TOLD US THAT THEY WILL RAISE NO OBJECTION TO THIS.)
4.
THE HKG HAVE ESTIMATED THAT THE AIRPORT CORE PROGRAMME WILL
COST SOME PDS 6 BILLION. HONG KONG OPERATES AN OPEN TENDERING SYSTEM AND A LEVEL PLAYING-FIELD. THE PROJECT OFFERS GOOD OPPORTUNITIES TO OVERSEAS COMPANIES, PROVIDED THAT THEY ARE
COMPETITIVE.
5.
THE UNDERSTANDING DOES NOT AFFECT HKG'S AUTHORITY OR HONG
KONG'S HIGH DEGREE OF AUTONOMY AND FINANCIAL INDEPENDENCE, AS LAID DOWN IN THE JOINT DECLARATION (1984) AND BASIC LAW (1990).
BACKGROUND (MAY BE USED FREELY).
6. FOLLOWING SEVERAL MONTHS OF OFTEN DIFFICULT DISCUSSIONS BETWEEN HONG KONG AND CHINA, AND FOLLOWING MY VISIT TO PEKING IN APRIL, BETWEEN HMG AND CHINA, SIR PERCY CRADOCK, THE PRIME MINISTER'S PERSONAL ADVISER ON FOREIGN AFFAIRS, VISITED PEKING FROM 26-30 JUNE. THE VISIT WAS ARRANGED IN RESPONSE TO SIGNALS THAT THE CHINESE LEADERSHIP WAS ANXIOUS TO SEEK A MUTUALLY ACCEPTABLE SOLUTION OVER THE AIRPORT. THE ALTERNATIVE WOULD HAVE BEEN POSTPONEMENT AND MONTHS OF ACRIMONY AND UNCERTAINTY, WHICH WOULD HAVE AFFECTED BILATERAL RELATIONS AND, MORE IMPORTANTLY, SERIOUSLY DISRUPTED CONFIDENCE IN HONG KONG.
7. AT THE END OF SIR P CRADOCK'S DISCUSSIONS IN PEKING WITH THE CHINESE LEADERSHIP, HE AND MR LU PING (DIRECTOR OF HONG KONG AND MACAO OFFICE, STATE COUNCIL) INITIALLED AN MOU SETTLING IMPORTANT ISSUES RELATING TO THE AIRPORT, INCLUDING ITS FINANCING (MEETING CHINESE CONCERNS ABOUT THE FINANCIAL RESERVES TO BE INHERITED BY THE SPECIAL ADMINISTRATIVE REGION (SAR) GOVERNMENT IN 1997), CONSULTATION ABOUT AIRPORT-RELATED PROJECTS AND GOVERNMENT BORROWING STRADDLING 1997, AND THE INTENSIFICATION OF GENERAL COOPERATION BETWEEN CHINA AND BRITAIN REGARDING HONG KONG. THE CONSULTATIVE ARRANGEMENTS SHOULD NOT
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