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special terms was that, in January 1974, when the Executive Council originally approved the grants, Hong Kong was faced with an oil crisis (together with a slump in land prices); the Government was happy to offer the land at concessionary prices and with greater security of tenure than usual, in order to assure future oil supplies. The other oil companies here recognised that, in the circumstances of 1974, the Chinese could expect special treatment. However, they have been given an assurance that, in future, Chinese companies will have to compete on the open market for land to use for oil storage or filling stations and that further private grant treaties will not be made in this sector.
4.
Although all the five cases I have listed can be justified by reference to the Government's economic policies, there is clearly a political dimension as well. The investments in question are all large. They help to give China a stake in Hong Kong's economic prosperity. They are also seen, both by people here and by foreign investors, as an earnest of China's support for the. status quo. They thus help to bolster confidence.
5.
The only other special grant of land which is in prospect is that for a new headquarters for China Resources about which I wrote to John Stewart on 19 April. We will keep you in touch with any further moves in this field.
CC
J T Masefield Esq (FED FCO)
ET Davies Esq (PEKING)
Research Department
(Far East Section, FCO)
(D C Wilson)
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