CHINA is set to adopt an ''unco-operative'' attitude over Hongkong's transitional matters if Britain tables its political proposals to the Legislative Council - even at the cost of damage to the economies of Hongkong and the mainland, the South China Morning Post has learned. The Chinese official in charge of Hongkong affairs, Mr Lu Ping, said yesterday it would be ''impossible, totally impossible and absolutely impossible'' for both sides to resume talks if the draft bills are tabled. Privately, officials reckoned it was almost certain that China's co-operation could not be expected on anything. ''It is not a bluff. The Chinese Government has prepared for the worst and will fight to the end,'' a source said. Despite its earlier support, various sources said Beijing would either withdraw its backing or refrain from endorsing the financial arrangements for the Chek Lap Kok airport plan. The work of the Land Commission would also be thrown into disarray and a lot of transitional matters that require Chinese co-operation would be seriously affected, it has been learned. One source said China had virtually held up its own work on scrutinising the new airport project, foreseeing that co-operation on the multi-billion development could not proceed under the present political climate. ''The new airport project will be paralysed unless the Government is able to finance it itself. Do you think it is possible?'' a source said. ''On its face value, the Chinese Government may still stick to the provisions of the Joint Declaration and the Memorandum of Understanding on the airport plan over matters such as the convening of meetings. ''But it will not come to agreements with the British side. Under this scenario, I don't think the transitional matters can go on smoothly.'' Even if the two sides were able to go back to the negotiating table, which is a remote possibility, the source said Beijing considered it would be impossible to do business with the Governor, Mr Chris Patten, who ''can no longer be trusted''. For co-operation to be possible Mr Patten must go, he said, adding that Beijing saw that as unlikely now. It is understood that British corporations such as the Jardine Group deemed as unfriendly by Beijing could be the first victims. When asked if the interests of the Jardine Group would be damaged, the Guangdong Governor, Mr Zhu Senlin, said yesterday: ''The Jardine Group has adopted an unfriendly attitude towards China. We will not co-operate with them.'' The managing director of the Jardine Group could not be reached for comment yesterday while a director and legislator Mr Martin Barrow refused to comment. Mr Zhu hinted that British firms would suffer the same fate as a French consortium which was denied contracts relating to building the Guangzhou underground railway after France sold jet fighters to Taiwan. He indicated China still wanted to co-operate with British firms which were ''friendly and co-operative'' towards the mainland. Citing the Shell group's $20 billion oil refinery project in Guangdong, Mr Zhu said he thought the project would go ahead despite the Sino-British deadlock. The scheme, which involves the building of oil refining facilities in Aotao and a terminal in nearby Huizhou, would be the largest joint venture in China with British participation. Huizhou mayor Mr Li Jinwei feared the political dispute would delay the project, which was the largest foreign investment in his city. He said the project still required final approval from the State Planning Commission, but conceded that economic relations would be affected if the two countries were locked in dispute. But Mr Li said he was optimistic the project would still go ahead because Shell was jointly owned by British and Dutch interests. British Ambassador Sir Robin McLaren said it would never be helpful for trade and political matters to be mixed up in the way suggested. He said the Governor of the Bank of England would visit Beijing this week while another major British trade delegation was heading for the Chinese capital in May. A mainland foreign trade official said politics and economics were inseparable. Mr Lu Zhen, director of the department of Foreign Loans and Management of the Foreign Trade Ministry, said: ''We should also consider our country's foreign relations when we scrutinise contracts involving foreign companies.'' The political dispute would be considered when China decided on the contracts for the Guangzhou underground, he said.