Since the signing in 1984 of the Sino-British Joint Declaration on the Question of Hong Kong (the "Joint Declaration"), a number of issues involving the administration of Hong Kong have caused friction between Great Britain ("Britain") and the People's Republic of China ("China"). One of the most contentious of such issues concerns the financing of a new airport in the territory. Construction of the airport, which is to be called Chek Lap Kok New Airport, has already begun on outlying Lantau Island. The total cost for completing the airport, and a number of bridges, tunnels and railway lines needed to link the airport to Hong Kong Island, is estimated to be in excess of US$20 billion, making it one of the largest infrastructure projects currently under way in the world.

The airport project has become a focus of controversy between Britain and China because it is not scheduled to be completed until 1997, the year that sovereignty over Hong Kong reverts to China. Because most of the financing for the airport will extend past the date on which Hong Kong is returned to Chinese rule, banks will not lend to the project unless they are assured that China will honor such debts. Because of China's leverage over the colony's access to private financing for the project, Britain has been forced to seek out China's formal approval of any financing plan for the airport project.

On November 4, 1994, Britain and China reached a six-point accord on the airport project that established certain broad outlines for the financing of the two largest components of the project, the airport itself and the airport railway (the "November Fourth Accord"). One of the most significant elements of the accord was that the two sides agreed that the total aggregate debt incurred by the Hong Kong government in connection with the project would be kept below HK$23 billion (US$3 billion). This agreement represented a significant victory for China, which was concerned that Britain was going to saddle the colony with excessive debt before returning it to Chinese sovereignty. The British side had argued that the current low interest rate environment made it sensible to finance the airport with a much greater degree of debt. However, they ultimately conceded to Chinese demands to cap the debt at a relatively low percentage of the total cost of the airport.

The November Fourth Accord is only the most recent of a number of agreements concerning the airport that Britain and China have reached since the project was first proposed in 1989. Britain ostensibly began this massive infrastructure project in an effort to demonstrate to the world that Britain had confidence in, and influence over, the future of Hong Kong despite China's repression of the student democracy protests in Tiananmen Square. However, ever since the project was proposed, it has been China, and not Britain, that has successfully used the project to demonstrate its power over Hong Kong's future.

Within months of the initial announcement of the project, China began to express its reservations concerning costs, demanding that the project be scaled down. Following more than a year of negotiations, Britain and China came to an agreement on the airport that acknowledged China's right to have input in the planning and financing of the project. This agreement, called the Memorandum of Understanding Concerning the Construction of the New Airport in Hong Kong and Related Questions (the "Memorandum of Understanding"), called for the completion of as many of the principal components of the airport project as possible prior to the date of Hong Kong's return to China and for the creation of a joint Sino-British committee to oversee the major financing and construction aspects of the project.

The continuing negotiations and agreements between Britain and China concerning the airport project illustrate the degree to which control over major aspects of Hong Kong policymaking has already passed from British to Chinese hands. This article briefly reviews the Hong Kong airport dispute and places it in a legal context. In particular, this article aims to evaluate the agreements reached by Britain and China over the financing of the airport project in light of the principles for the transition from British to Chinese rule set forth in the Joint Declaration.

Section II of the article describes the Chek Lap Kok New Airport project and some of the organizations most actively involved in seeing through the project. Section III argues that the degree of Chinese control over the financing of the airport project demonstrates that China has obtained greater influence in Hong Kong's pre-1997 affairs than was envisioned by the Joint Declaration. Finally, Section IV of the article looks ahead to the future of the negotiations over the airport project and speculates that, as 1997 draws nearer, Chinese control over the project will further deviate from the principles of the Joint Declaration.