CHINA'S propaganda machine in Hongkong stepped up its campaign against the Hongkong Government's massive investment plan for the next financial year by warning that the huge spending would threaten Hongkong's financial stability after 1997. Beijing was apparently alarmed by the Government's decision to increase total expenditure for the new financial year to $132.5 billion and to table a deficit Budget to the Legislative Council today. Unveiling his second Budget this afternoon, the Financial Secretary, Mr Hamish Macleod, is expected to announce a windfall surplus of more than $20 billion in light of Hongkong's booming economy. However, with huge spending commitments to improve the quality of living already on the cards, Mr Macleod is expected to announce that Hongkong will enter into a period of high deficits in the remaining years of British rule. It is likely that the 1993-94 Budget will see a small deficit, the first since 1985-86. Major spending on capital works projects as well as tax concessions to the lower and middle income groups are the key reasons for huge spending over the next 12 months. In today's speech, Mr Macleod is likely to announce raising personal allowances by about 20 per cent to about $55,000 a year - slightly higher than the inflation rate. He will also announce revised tax bands as a further tax concession. A $2 billion sandwich class housing scheme is also to be unveiled, as promised by Mr Macleod last year. On the eve of the publication of the Budget, the left-wing Wen Wei Po's editorial criticised the Government for deviating from its conventional financial policy to keep public expenditure rises in line with economic growth. Denouncing the high increase in expenditure as an ''unrestricted spending strategy'', the paper warned that the move would bring about an excessive financial burden to the future Hongkong Special Administrative Region (SAR) government. The editorial said British companies were likely to be the largest beneficiaries of the Government's massive increases in administrative expenses, fixed capital investment and public works expenditure before 1997. Both Wen Wei Po and Ta Kung Pao pointed accusing fingers at the $7.5 billion proposed spending for ''additional commitments'' under the Capital Investment Fund, which was set aside for unspecified purposes. ''If this huge amount of money is to be spent on over-budgetary public works expenditure, debt repayment and compensation, will the amount of this item of 'additional commitments' increase year by year?'' Wen Wei Po asked. The two papers went on to criticise the Government's unilateral decision to inject huge funds into airport core projects and to invest $9.1 billion in the Provisional Airport Authority and the Mass Transit Railway before China and Britain reach a final agreement on financing for Chek Lap Kok airport and its associated developments. Legislators have also urged the Government to explain why it has earmarked more than 40 per cent of public works spending for airport projects in the next 12 months. Mr Samuel Wong Ping-wai, Legco's engineering representative, said he had submitted a question to the Finance Branch seeking an answer but had yet to receive a reply. Mr Albert Chan Wai-yip, from the United Democrats of Hongkong (UDHK), said spending on airport projects represented a major departure from the 28 per cent as set in an earlier paper to legislators. He would also ask about the risk of greater-than-expected spending on the airport crowding out other capital works projects. The United Democrat was also unhappy that expenditure on the Capital Works Reserve Fund for major infrastructure projects stood at $31.5 billion - smaller than last year's forecast of $39.3 billion. Noting that the Government had cut back on the Capital Works Reserve Fund but had increased spending on airport projects at the same time, Mr Chan said the UDHK was worried that this could delay public works projects not associated with the airport. Co-operative Resources Centre member Mr Ronald Arculli said: ''The expenditure on capital works has increased substantially over the last few years, and we hope the Government will give us more details.'' In the latest Budget estimates, the Government has earmarked $10.7 billion for the airport and its associated projects - 43 per cent of the $24.8 billion planned spending on public works programmes in 1993-94. But in 1992-93, the Government kept expenditure on the airport to $6.6 billion or 26.7 per cent of the $24.9 billion capital works spending. Government officials were unavailable for comment.