could be built later. The Government estimates that some 40
per cent of the cost will be met by the private sector. The project will entail a considerable depletion in Hong Kong's reserves (and possibly the issue of bonds), but by 1997 the
Land Fund, which by then is expected to be some HK$ 70-80,000 million, will be available to the Government of the Hong Kong Special Administrative Region (SAR). Revenue from the
redevelopment of Kai Tak and the surrounding areas will also provide substantial additional funds in due course, and the new airport and toll roads will provide further revenue.
During 1989 and 1990, it became clear that the private sector wanted to see firm support from China for the project, before it would commit substantial funds which would be repaid
over a period extending well beyond 1997. However, the Chinese
expressed concern about the cost of the airport scheme and its
impact on Hong Kong's financial position, notably the level of fiscal reserves in 1997. They also appeared to be seeking to establish that all major matters concerning Hong Kong around 1997 should be agreed with them before implementation. The British Government believed that the Hong Kong Government's proposals for the airport were realistic, and would leave Kong Kong well prepared to meet the challenges of the 21st Century. Britain was also concerned to ensure that the Kong Kong Government retained the ability to govern effectively up to
1997.
Agreement and Prospects
The Hong Kong Government provided the Chinese Government with the detailed consultancies and supporting papers on the project. The Governor spoke with Lu Ping, Director of the Hong
Kong and Macao Affairs Office; discussions were continued when
the British Foreign Secretary visited Hong Kong and China in early April, and officials held further discussions in May. Agreement was finally reached when Sir Percy Cradock, the British Prime Minister's Personal Adviser, visited Peking in
late June 1991. He and Lu Ping initialled a detailed Memorandum of Understanding on 30 June.
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Private notes are available after approval.