China gives OK to new Hong Kong airport


BEIJING -- After more than a year of negotiations with Britain, China announced yesterday that it will support the building of a new, much-needed airport in Hong Kong, ending a stalemate that had deeply undermined confidence in the colony's financial and political future.

But the price of the breakthrough was a major British concession, an agreement giving China a strong say in Hong Kong's financial affairs before the scheduled return of the colony to Chinese rule in 1997. These pre-1997 powers were not provided to China in the original, 1984 Sino-British agreement to return Hong Kong.

China also gained the significant diplomatic victory of a visit to Beijing in the near future by British Prime Minister John Major to sign a new agreement on the airport, a visit that was announced for the first time yesterday.

Mr. Major and Japanese Prime Minister Toshiki Kaifu, who is scheduled to visit China on Aug. 10, will be the first leaders of major nations to journey to Beijing since troops killed pro-democracy demonstrators in and around Beijing's Tiananmen Square in June 1989.

"The British dictatorship in Hong Kong has just taken a big whack," a Western diplomat said here yesterday.

"This agreement means that the British can no longer make financial decisions unilaterally in Hong Kong without consulting with and getting permission from another sovereign power, China. Hong Kong now is under condominium rule.

"Plus China is also getting a visit from the head of a major state, one of the nations that had been the hardest on China" in terms of post-Tiananmen sanctions, the diplomat added.

The $16.2 billion airport, to be built on reclaimed land off an island near Hong Kong and connected with the city by the second-longest bridge in the world, was first announced in 1989 and was to be a confidence-booster as Britain prepared to leave its last major colony.

The new airport has been considered sorely needed because of mounting congestion and safety questions at Hong Kong's Kai Tak Airport, which is expected to handle 20 million passengers this year with only a single runway.

But Chinese concerns that the huge project might drain Hong Kong's financial reserves and leave the colony deep in debt when China takes over from Britain in six years led to rounds of public bickering and delicate, behind-the-scenes negotiations between the two countries over the last 18 months.

More than the issue of the airport's financing, many analysts believed, China's real aim in criticizing the project was to establish that it could openly participate in governing Hong Kong before officially coming to power in 1997 -- participation that Britain had long maintained was not China's right.

But China's criticism of the project effectively accomplished that political goal months ago, as it became clear that, without China's assent, the necessary private investment in the airport project could not be attracted.

In the memorandum of understanding between China and Britain announced yesterday, Britain agreed to leave Hong Kong with not less than $3.2 billion worth of financial reserves in 1997. Hong Kong's total current reserves are not known, because part of the reserves are in secret funds held to prop up the colony's currency.

Britain also agreed not to saddle Hong Kong with more than $650 million of debt to be repaid after China takes over in 1997 without China's agreement and to regularly consult with China on the full range of airport financial decisions.

In return, China gave Britain and potential investors the assurance that any outstanding airport debts would be honored after China assumes control of the colony.

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