Patten confronts Peking over Hong Kong airport

CHRIS PATTEN, governor of Hong Kong, has run into a new storm with Peking just hours after returning from London, where he received cabinet authority to go ahead with election preparations that would antagonise China.

Throughout last week China, directly and indirectly, stepped up its pressure on Mr Patten's 'democracy' reforms by questioning financial arrangements for the colony's huge capital projects that would span the transition from British colonial status to Chinese sovereignty in 1997.

The main target was Hong Kong's dollars HK158.2bn ( pounds 13.8bn) airport, now being built at Chek Lap Kok island to replace the colony's congested and antiquated runway at Kai Tak, Kowloon. The airport is Asia's largest capital project - it includes extensive land reclamation, bridge building, roads and railways above and underground - and is considered necessary for the colony's status and economic well-being as an international financial centre.

It was also chosen by Mr Patten's predecessor, Sir David Wilson, as a symbol of confidence in the future after the colony's inhabitants were unnerved by the Chinese army's assault on Tiananmen Square in June 1989.

The airport was planned to be operating before the 1997 handover. But China's increasingly hostile intervention is making this unlikely.

On Friday, Peking reiterated that it would not honour any contracts for the airport or debts that ran past 1997 that did not have its approval. Earlier, it said it would not take part in regular talks with Britain and the colony's government on the airport unless they bowed to its interpretation of a Memorandum of Understanding signed by John Major in 1991. Fearful at the time that it would be saddled with huge debts when it took on reponsibility for Hong Kong, China said there was a secret clause which limited Hong Kong government borrowings for the airport's construction to dollars HK5bn.

This was quickly denied by both the Foreign Office in London and Sir Hamish Macleod, the colony's financial secretary. 'The Memorandum says that the Hong Kong government will be free to borrow as necessary while informing the Chinese government of borrowings up to dollars HK5bn. It then says that a 'common view' will have to be reached to go above the dollars HK5bn,' Sir Hamish said.

The accusations and counter-accusations snowballed rapidly, ending with Mr Patten announcing he was would put a new plan to finance the airport before his Executive Council (cabinet) this week.

Over recent months, Mr Patten and his officials seem to have finessed Chinese stonewalling by leaving all dealings involving the airport to two free-standing government-created bodies - the Provisional Airport Authority (PAA) and Mass Transit Railway Corporation (MTRC). This has enabled work on key core projects to go ahead on schedule unhindered.

It is this approach that the Chinese have finally challenged publicly, saying that the MTRC and PAA borrowings are part of the dollars HK5bn ceiling on government debt.

(Photograph omitted)