Positive reaction to $60b offer

THERE were positive signs from China yesterday regarding a British offer to substantially raise the amount of capital to be injected into the Chek Lap Kok airport and its associated railway.

The offer to pump more than $60 billion into the Provisional Airport Authority and the Mass Transit Railway Corporation to facilitate an early agreement with Beijing on the projects was endorsed by the Executive Council yesterday.

Details of the multi-billion-dollar bid to kick-start the vast infrastructure plan were revealed exclusively in the South China Morning Post.

Governor Chris Patten said the new offer, discussed during a three-hour session of Exco, would address all Chinese concerns, given the healthy state of Hong Kong's reserves.

''I hope that [China] would find this an excellent Lunar New Year present for Hong Kong, for China, for everyone,'' Mr Patten said.

Chinese sources welcomed the prospect of a much bigger level of capital investment in the two corporations by the Government and a Hong Kong affairs adviser, Tsang Yok-shing, added a note of optimism.


Mr Tsang returned from Beijing after presenting Chinese officials with proposals from the Democratic Alliance for the Betterment of Hong Kong that require the territory to inject $90 billion of the $99.2 billion total cost of the two projects.

Mr Tsang, alliance chairman, said he believed that if Britain agreed to raise the level of capital investment and sought consultation with China for any borrowings by the two corporations exceeding $5 billion, the airport financing problem could be resolved.

A mainland official stressed that China remained flexible on the amount of capital injection although it insisted that the overall financing arrangements should be considered as a package.

Noting that China was always flexible on the level of government fundings, he said: ''The British side should at least explain to us why they could not accept our proposal.


''There should not be any different understandings over the definition of government borrowings . . . That's what we have discussed all the way after the signing of the Memorandum of Understanding on the airport,'' the official said.

He said the land issue was also negotiable as China was flexible on whether it would allow the 62 hectares of airport railway land to be counted outside the annual land disposal quota of 50 hectares.


However, the official stressed that the Airport Consultative Committee should be given a more important role to monitor the costs of the whole programme.

Mr Patten said the Government would pass the new proposal to the Chinese side as soon as possible and he would like to see an early meeting of the Joint Liaison Group Airport Committee.

Under the fourth financing plan, the $60 billion injection would comprise the $45.3 billion contained in the third financing package, plus the payment from Hong Kong resources of an extra capital injection that the Government had originally suggested might come from the future Special Administrative Region government's Land Fund.


But the increase in capital injection is understood to be contingent on China allowing the 62 hectares of land along the airport railway to be counted separately from the 50 hectares sold by the territory every year under Annex Three of the Joint Declaration.