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Standard Chartered report stresses need for new airport

Chris Chapel

STANDARD Chartered Bank has weighed into the debate over Hongkong's new airport in its latest Hongkong Economic Indicators report.

Headed ''Hongkong's New Airport Is An Important Investment in the Future of Hongkong and China'', the report reads like a lecture to the Chinese Government on why it should pull out all the stops and let the Chek Lap Kok development go ahead.

''In view of the role which Hongkong has played, and needs to continue to play, in facilitating China to open to the outside world and to develop its market economy, it is essential that Hongkong's infrastructure does not stagnate,'' it says.

''It is the future of Hongkong's airport which has, regrettably for Hongkong and China, come to be caught up in Sino-British negotiations over financing and other matters.

''Yet this above all needs to be resolved urgently if China and Hongkong are not to forfeit some of the mutual benefits which the two are set to reap in the latter part of this decade and on to the next.'' Noting that Kai Tak airport has been an extremely profitable investment for the Hongkong Government, the report says it generated an after-tax return on net assets in 1991 of 29 per cent.

''Construction of Hongkong's new airport should also prove not only to be another profitable investment for the hard-earned monies of Hongkong citizens, but also an important investment in the future of both Hongkong and China,'' the report says.

''It is in the interest of all sides that a compromise be achieved as soon as possible in the ongoing Sino-British negotiations so that works on the new airport can proceed smoothly.'' Citing academic studies and bank research, the report says Hongkong's role as a China intermediary is likely to increase as China's trade system decentralises and its mix of imports diversifies.

''The more economic decision-making power is delegated to individual economic units in China, the more will be the need for trade and business to be co-ordinated in business centres.

''This helps to reduce the costs of information and facilitates the making of deals. Hongkong is likely to continue to be best placed to play this role in the foreseeable future.'' The report recognises that major businesses will develop in China as its economy grows, but it argues that it will take a long time before the territory's role with China can be completely filled by Chinese cities.

A study sponsored by Nanyang Commercial Bank found that it would take at least 20 years for Guangdong to attain a level of university graduates similar to the current level in the four Asian ''dragons''.

This and China's huge supply of unskilled labour meant the Guangdong economy would continue to consist mainly of labour-intensive manufacturing.