TNAG-2783-FCO40-4002-UK-business-interests-in-Hong-Kong-Chinese-discrimination-ag-1993 — Page 86

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5.

As regards the ACP, there is no prospect of further private sector lending or investment without Chinese support. This will affect the Western Harbour Crossing, borrowing by the PAA and the MTRC, and vital franchises at the new airport including fuel supply, aircraft maintenance, catering and baggage handling. These franchise issues will become time-critical in the middle of this year.

Their inability to proceed will bring to the fore yet again the old question of whether the Government should step in with investment.

6.

Outside the scope of the ACP, there are major franchises which have yet to be raised with the Chinese and are covered briefly in SCA's list. Among these, the pay-television franchise, second fixed telecommunications. network licence and environmental projects are particularly significant. The landfill projects will have become time-critical by the middle of this year. In the case of the WENT landfill we may have to take emergency measures with a temporary agreement with the contractor if the Chinese are uncooperative. If the question of a BOT for Route 3 has a high profile this year, the Chinese may be tempted to interfere with that, as well.

Land grants

7.

It is possible to speculate that the Chinese might severely restrict our land disposal programme for future years. The most damaging scenario would be if they insisted that our total programme, including special purpose grants for CT9 and Black Point, were taken within the 50 ha. limit. Given the financial stake that the SARLF has in the issue, it is unlikely that the Chinese would take such extreme stance but this cannot be ruled out altogether.

8.

The Chinese might instead restrict us to a programme of new land grants not greater than 50 ha. It is difficult to assess the financial result of such action. Our present estimate is that we shall receive about $10 billion from new grants (i.e. excluding modifications, regrants and special purpose PTGS) in 1993-94. But if the programme is restricted, we could seek to make it up with higher-value sites. The Chinese would have to face up to strong adverse reaction from their friends in the commercial community. Contingency plans for this have already been worked out between BLD, FB and PELB but this will only mitigate, not replace, a substantial loss.

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