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Agreement On Tunnel Signals Improved Chinese-British Mood

June 18, 1993

HONG KONG (AP) _ Britain and China agreed Friday to dig a third tunnel under Hong Kong’s harbor, signaling a desire to move ahead on economic issues despite their dispute over democracy for Hong Kong.

The $833 million tunnel will link Hong Kong island with a new airport being planned for the British colony, which returns to Chinese rule in 1997.

Last year, China was so angry at Hong Kong Gov. Chris Patten’s proposals for broadening democracy in the colony that it threatened to void business contracts straddling 1997.

From December until last month, talks on the airport and other projects were virtually frozen.

The agreement on the harbor tunnel, one of 10 major road, bridge, rail and landfill projects related to the airport, drew praise from Hong Kong legislators plus a boost for the stock market. Shares reversed the initial fall to post slight gains.

Announcing the agreement to reporters, British negotiator Tony Galsworthy cautioned that the two sides still lacked agreement on how to finance the rest of the massive $21 billion airport project. China says Britain’s proposals threaten to saddle it with debt.

″I think we made some progress this morning. But let’s not kid ourselves; we still haven’t reached agreement on the financial plan,″ Galsworthy said.

The agreement was reached by the Joint Liaison Group, which oversees Hong Kong’s transfer to Chinese sovereignty. China’s attitude to the airport is a barometer of how smooth the transfer will be.

The tunnel project, to be financed by private funds, must be approved by Hong Kong’s partly elected Legislative Council.

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