Positive mood after HK talks with China

HOPES that Britain and China may be able to agree on non-political issues in Hong Kong rose yesterday when the British team leader described the first day of long- delayed talks as 'excellent' and the two sides agreed to resume separate discussions on funding the colony's new airport.

There is now guarded optimism that an apparent thaw in relations between the two countries might this week result in the first important agreements since Chris Patten became Governor of Hong Kong two years ago. China appears to have decided to draw a line between the fierce row over political reform in the colony and the need to make decisions about other matters connected with the transfer of sovereignty in 1997.

The Sino-British Joint Liaison Group (JLG), set up to deal with the nuts and bolts of the handover, began meeting yesterday for the first time since December. 'Progress? Excellent progress,' was how the British team leader, Hugh Davies, described the start of the three-day session in Hong Kong. His Chinese counterpart, Guo Fengmin, said the talks had been 'useful'. They announced that talks on funding the airport would reconvene on Friday.

Construction of the dollars 20.3bn ( pounds 13.5bn) Chek Lap Kok airport has been under way despite the two-year dispute on how to fund the project, but a long-term funding plan cannot be arrived at without agreement with China.

Meanwhile, the JLG itself is grappling with a huge backlog of administrative and legal items that arise with the change of sovereignty. On the table at this week's meeting is the difficult question of which of the valuable defence sites presently occupied by the British military will be inherited by the People's Liberation Army. Seven years of discussions have failed to reach agreement on what land can be sold by the Hong Kong government before 1997 for commercial development.

This week the JLG will also discuss outstanding questions on the right of abode in Hong Kong, passports and the judiciary. Literally hundreds of small practical agreements must be reached over the next three years if there is to be a smooth administrative transition. Agreement on such issues, however, has no bearing on the row over political reforms, which is still simmering.