*
THIS POLICY APPLIED TO HONG KONG AND MACAO ALSO. THE
REASON FOR THE ASSURANCE ON SPECIAL STATUS WAS SIMPLE.
CHINA NEEDED HONG KONG AND THE POLICY WAS BENEFICIAL
TO SOCIALIST CONSTRUCTION.
2. AFTER INITIAL REMARKS ABOUT THE GOOD COOPERATION
BETWEEN HONG KONG AND CHINA AND THE NEED FOR CONTINUING INVESTMENT IN NEW LAND IN THE NEW TERRITORIES, THE GOVERNOR REFERRED TO THE LEASES ISSUE. HEBWAID THAT THE LONG TERM FUTURE WAS A MATTER BETWEEN THE CPG AND
THERE WAS HOWEVER THE IMMEDIATE PROBLEM OF
HG.
INDIVIDUAL LEASES IN THE NEW TERRITORIES, WHICH WOULD NOT WAIT.
AS THE LENGTH OF THESE LEASES SHORTENED INVESTMENT OF THE RIGHT TYPE WOULD BE DETERRED. THE MATTER WAS NOT RELEVANT TO CHINA'S UNDERLYING POSITION ON HONG KONG, BUT INCREASED HIS OWN PROBLEMS. IF THIS QUESTION COULD BE
SOLVED THEN INVESTMENT COULD BE ATTRACTED WHICH WOULD KEEP
HONG KONG KONG COMPETITIVE IN WORLD MARKETS. SUCH A
SOLUTION WOULD BE OF BENEFIT TO THE UK AND CHINA.
3. AFTER A DISCUSSION OF POINTS ARISING ON IMMIGRATION AND INVESTMENT, WHICH WE WILL BE REPORTING SEPARATELY, DENG REVERTED TO THE LEASES ISSUE AND ASKED THE GOVERNOR
TO TELL INVESTORS TO ''PUT THEIR HEARTS AT EASE''.
THE GOVERNOR REPLIED THAT THE PROBLEM COULD NOT BE GOT OVER BY GENERAL ASSURANCES. HIS PROPOSAL WAS TO REPLACE A SYSTEM
OF LEASES VALID UNTIL JUNE 1997 BY LEASES WHICH WERE VALID
AS LONG AS BRITAIN ADMINISTERED THE NEW TERRITORIES. THIS
WOULD REMOVE THE QUESTION OF THE DATE.
4. DENG'S IMMEDIATE REACTION WAS THAT ANY WORDING SHOULD
AVOID MENTION OF BRITISH ADMINISTRATION, IN VIEW OF THE
CHINESE POSITION. HE COULD NOT CONFIRM THAT THE POLITICAL
SITUATION WOULD REMAIN UNCHANGED, BUT APPEARED TO BE
REASSURED BY THE GOVERNOR SAYING THAT HIS PROPOSAL DID NOT
AFFECT THE CHINESE POSITION. THE GOVERNOR REPEATED THE
CONCERN OF INVESTORS ABOUT THE DATE OF LEASES. DENG
REAFFIRMED THE CHINESE POSITION. HE SAID THAT, '' TO PUIT CVORE PLAINLY, IN THIS CENTURY AND EVEN AT THE BEGINNING OF
THE NEXT CENTURY HONG KONG WOULD STILL BE CONTINUING WITH
ITS CAPITALIST SYSTEM WHILE CHINA WAS GETTING AHEAD WITH ITS.
SOCIALIST SYSTEM. THERE WERE TWO POSSIBLE SOLUTIONS IN 1997,
TO TAKE OVER HONG KONG OR TO RECOGNISE PRESENT REALITIES.
NEITHER SOLUTION WOULD AFFECT INVESTMENT. AFTER THE
GOVERNOR HAD MADE CLEAR THAT HIS PROPOSAL DID NOT AFFECT THE
CHINESE POSITION AND REQUIRED ONLY THAT THEY DID NOT OBJECT
TO ITS IMPLEMENTATION, DENG APPEARED TO RECOGNISE THAT IT REQUIRED NO ACTION ON THEIR PART. (CUI MINGTANG OF THE MFA INTERVENED TO STRESS THAT ONLY THE REMOVAL OF THE DATE IN INDIVIDUAL LEASES WAS REQUIRED.) DENG CONCLUDED BY SAYING
THAT THE KEY POINT WAS FOR INVESTORS TO FEEL EASY.