HL Deb 04 July 1991 vol 530 cc1121-6

4.13 p.m.

The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness)

My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:

"The British and Chinese Governments this morning issued a joint statement about the result of intensive discussions over the last few months on a new airport for Hong Kong. Sir Percy Cradock, the Prime Minister's Personal Adviser on Foreign Policy, visited Peking from 27th to 30th June for meetings with Chinese leaders and officials. Agreement was reached on the Hong Kong airport project, and the two sides initialled a Memorandum of Understanding. This will provide a firm basis for building a modern airport to serve the expanding needs of Hong Kong and the future Special Administrative Region. The Chinese and British Governments confirm their wish to deepen their co-operation over Hong Kong within the framework of the joint Declaration and the confidence in the future of the territory as an international economic, financial and trading centre.

"The statement was released this morning because of the time difference with Hong Kong.

"The text of the Memorandum of Understanding concerning the construction of the new airport in Hong Kong and related questions has been placed in the Library of the House. The Chinese Government have invited the Prime Minister to visit China, and he looks forward to doing so soon and to signing the Understanding on that occasion. It will come into effect on signature. In the meantime the Chinese Government have assured us that they will raise no objection to the Hong Kong Government proceeding with the most urgent work relating to the airport.

"Much work remains to be done if we are to ensure a smooth transition in 1997 and to give the Hong Kong Special Administrative Region the best possible basis for success thereafter. The Chinese Foreign Minister has agreed to the proposal which I made in April that in future we should meet twice yearly to discuss Hong Kong and other questions. The meetings between the Governor and Mr. Lu Ping, the senior Chinese official dealing with Hong Kong in Peking, are also being put on a regular basis. We hope that this will provide a new impetus to effective co-operation.

"The conclusion of this Understanding ends months of uncertainty about Hong Kong's airport project and settles a difficult problem in our relations with China. Moreover, the Chinese Government have expressed in the clearest possible terms their support for the airport project and have undertaken to provide clear assurances to investors.

"I am grateful for the invaluable advice which the Governor of Hong Kong and his advisers in the Executive Council have provided throughout the discussions. The Government believe that the outcome will be generally welcomed in this House, in Hong Kong and more widely. It should provide a fresh impetus to international confidence in Hong Kong's continuing success."

That concludes the Statement.

4.17 p.m.

Lord Cledwyn of Penrhos

My Lords, we are grateful to the Minister for repeating the Statement about Hong Kong. We know that there is a real need for the new airport in Hong Kong and that the future prosperity and stability of that great city depend upon it. We therefore warmly welcome the announcement that agreement has been reached between the Government and the Government of the People's Republic of China, who will now support the construction of a new airport. That has important implications for Hong Kong after 1st July 1997. I shall be grateful if the Minister will tell the House what are the consequences of the agreement for Hong Kong and for relations between the United Kingdom and China?

Will the Minister further tell the House whether there are any prospects for British companies that may compete for airport-related projects? Further, will he say whether the Chinese have now finally agreed to Chep Lap Kok as a site for the new airport? Are the Government satisfied that the financial arrangements made with China are on a firm footing upon which we can depend?

We appreciate the contribution made by Sir Percy Cradock and the Governor of Hong Kong. The Minister too has played his own part in those negotiations over a period of time. I congratulate them all on this significant achievement.

Lord Mayhew

My Lords, we too on these Benches warmly welcome the agreement. We feel that Sir Percy Cradock and the noble Earl, Lord Caithness, deserve congratulations on its successful conclusion. The regularisation of the meetings between the Secretary of State and the Governor and their opposite numbers tend towards permitting the Chinese Government a share of responsibility for administration before 1997. That is always a source of some anxiety. I hope that when the Prime Minister visits China to sign the agreement he will bring home to the Chinese Government the anxiety felt here and in Hong Kong about the future of democracy in Hong Kong after 1997.

I ask for an assurance from the Minister that the agreement is in no way linked with any new assurance about the financial reserves that will be left in Hong Kong in 1997.

The Earl of Caithness

My Lords, I am grateful for the warm welcome given to the Statement by the noble Lord the Leader of the Opposition and the noble Lord, Lord Mayhew. It is a good understanding that will be much to the benefit of Hong Kong, China, the future SARG, which will take over in the middle of 1997, and to Britain.

The noble Lord the Leader of the Opposition asked about the consequences for Hong Kong. The important point is that the Understanding now gives certainty. Any commercial trading entity—and Hong Kong is certainly one of those; it has a fabulous historical record—needs certainty in which to trade. It now has that certainty as a result of the initialling of the Memorandum of Understanding. It will help relations between Britain and China. We have had good relations but, as my right honourable friend the Secretary of State made clear, it is important to our future relations that settlement be reached on the issue. We are both members of the P5 and the agreement that we have achieved on this bodes well for future agreements in other parts of the world.

This will lead to opportunities for British business, but it cannot expect to be given contracts on a plate. It will have to compete on a fair and equal basis, and I am sure that the House wishes British industry well in this regard. It must remain competitive.

The Chinese Government have left it up to the Hong Kong Government to decide exactly where the airport will be sited. It will be at Chep Lap Kok, and that is why part of the airport core project is the building of the bridge on to Lantau Island. I can confirm from the information we have received from the Hong Kong Government that the financial arrangements are sound and the executive committee has supported the governor on them.

I am also grateful for the comments of the noble Lord, Lord Mayhew. I take issue with him when he says that because there are regular meetings between the Governor, Mr. Lu Ping, the Secretary of State and his opposite number, it means that there is a share in the administration between China and the Hong Kong Government. He is wrong on that. As the Joint Declaration clearly states in paragraph 4, the effective running of Hong Kong will be under the Hong Kong Government. We give our full support to the governor and to the Hong Kong Government at the moment.

4.22 p.m.

Lord Boyd-Carpenter

My Lords, I join in the congratulations to my noble friend for his contribution to the successful outcome of the negotiations which he has appropriately himself reported to your Lordships' House.

I did not quite follow in the Statement whether the broad plan for the airport now agreed is the same as that which was discussed a few months ago and in respect of which, as my noble friend will recall, the Chinese Government were unhappy at the likely effect on the financial reserves of Hong Kong. Is it the same scheme or has it been modified? Can my noble friend also say whether it is expected that the airport will be completed before the hand-over to China in 1997 and whether it will continue at that time?

Finally, I wish on a personal note to add what an enormous relief it will be when the airport is completed. One will no longer have the alarming experience of landing at the present terrifying airport.

The Earl of Caithness

My Lords, I agree with my noble friend that arriving at Kai Tak airport is an interesting experience. It is rather different from the approach to Heathrow.

I am grateful too for my noble friend's personal comments. An enormous tribute is due not only to the Governor and the officials in Hong Kong but also to the Hong Kong Department of the Foreign and Commonwealth Office. They have all burned the midnight oil. I am grateful to each and every one of them for the enormous amount of hard work that they have put in.

On the financial arrangements, it was of concern to China that sovereignty should not be returned to it in the middle of 1997 with the financial state of Hong Kong in a parlous way. That was also very much our concern. That is why it is agreed in the Memorandum of Understanding that a certain amount will be left in the financial reserves. It will be £25 million, which the Hong Kong Government feel is a prudent amount, and it shows our good faith that we wish to hand over an ongoing and positively functioning concern at that time.

One other point which my noble friend mentioned is completion of the airport. We have highlighted what we consider to be the airport core programme. It is the best intention of the Hong Kong Government to complete that by 1st July 1997. That will be the first runway, the ancillary services to go with it and the terminal. We hope to get the airport up and running by 1st July 1997. If there are to be further extensions such as a second runway they will have to be agreed with the Chinese in the normal way.

Lord MacLehose of Beoch

My Lords, I too wish to thank the noble Earl for repeating the Statement. I congratulate the Government and the noble Earl personally, as well as Sir Percy Cradock and the Governor of Hong Kong, on this welcome development. It had become absolutely inescapable that without Chinese support we could not finance the building of the airport. It was therefore highly realistic to come to an agreement along the lines which have been set out in the Statement in order to secure support. I hope that the Government will deal robustly with the inevitable cries of "weakness" and "kowtow" that will be made. It was entirely right to try to make an agreement of this kind, and make it work, rather than to leave Hong Kong and abandon our obligations to its people without the modern airport that is essential to their prosperity.

The Earl of Caithness

My Lords, I am particularly grateful for the words of the noble Lord, Lord MacLehose of Beoch. No other noble Lord is perhaps as acquainted with Hong Kong as he is. His support for the understanding between the British and Chinese Governments is extremely welcome. Some people will take what I consider to be a blinkered view, saying that one must not agree anything with China and if one does it is kowtowing. That is totally unrealistic and impractical. The welcome that the Understanding has already received in Hong Kong shows that those who take that view do not have the true interests of Hong Kong at heart.

We wish to have closer relationships with China; it is in the annex to the Joint Declaration that we must work for closer co-operation between the two sides. What we want to do in 1997 is to hand back the sovereignty of Hong Kong as a going concern in a prosperous and exciting part of the world, which is what it is at the moment.

Lord Geddes

My Lords, I join in the thanks to my noble friend for repeating the Statement and I join unreservedly in the compliments and congratulations to him, his right honourable friend the Foreign Secretary and particularly to Sir Percy Cradock and Sir David Wilson. The latter has worked under extremely difficult circumstances in Hong Kong and he is to be warmly congratulated.

The building of the new airport is essential to Hong Kong, not least for the one and only vital ingredient for the territory—confidence. The announcement must make an enormous difference to the confidence of people in Hong Kong. As I have said in your Lordships' House on more than one occasion, that is the vital element.

I apologise if I did not hear the Statement correctly, but will my noble friend be kind enough to say concerning the reserves whether the 25 million was pounds? I have two further questions. Whatever the figure, is it effectively a guarantee by the Hong Kong Government that that amount will be left as a minimum in the reserves? My second question is somewhat pedantic. If it is pounds, is the amount £25 million or the Hong Kong dollar equivalent of £25 million? The amounts could well be different by 1997.

The Earl of Caithness

My Lords, they are different now. I apologise if I said £25 million. What I should have said, and I hope I did say, is that 25 billion Hong Kong dollars will be left. I obviously did not make that clear and I apologise to the House for not doing so. In answer to my noble friend's second question, no, it is not a guarantee. Perhaps I may read paragraph E of the Memorandum of Understanding. It is in the Library and is worth repeating: On the basis of the above understandings the Hong Kong Government will plan its finances with the firm objective that the fiscal reserves on 30th June 1997 to be left for the use of the Hong Kong Special Administrative Region Government will not be less than HK dollars 25 billion".

Lord Mayhew

My Lords, in warmly welcoming the agreement I asked the noble Earl whether there was a link of any kind between this agreement and a fresh understanding about the amount of reserves that would be left in Hong Kong in 1997. He did not answer that question, but in reply to his noble friend Lord Boyd-Carpenter he implied that that was the case. It may be a good thing or a bad thing. I should not like to pronounce upon it, but would it not have been appropriate to put that important fact into the Statement that he originally read?

The Earl of Caithness

My Lords, it could be put into the Statement, just as the whole of the Memorandum of Understanding could have been read out as part of the Statement, but I am sure that your Lordships would not have wished me to do so. It amounts to some five pages and it is in the Library. The noble Lord refers to an important point, but there are many other important points in the Memorandum of Understanding.