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(b)
Government and, either directly or through the NCNA, the neighbouring Chinese authorities. Immigration, water supply, transport links, the supply of electricity to Gwangdong (Kwangtung) Province and the involvement of Hong Kong firms in co-operative ventures in China are possible examples. He would also need a defensive line on traditional issues such as the long-standing Chinese request for official Chinese representation in Hong Kong. More importantly, consideration will need to be given to what, if anything, the Governor should say on the central question of the future of Hong Kong. The expiry of the New Territories Lease in 1997 is already throwing a long shadow forward. Lord Goronwy-Roberts has approved the outline of a paper reviewing the background to the problem and recommending the policy we should follow in the 1980s and I hope shortly to send an expanded version to the Governor and HM Ambassador in Peking for their comments.
The intention is that the resulting draft should be
submitted to Ministers after discussion by the PUS' Planning Committee. In the meantime I am in correspon- dence with Sir M MacLehose and Mr Cradock in Peking on the specific question of property leases in the New Territories which may provide the key to a more general understanding with the Chinese about the future of Hong Kong in the medium term. As things stand at present, all New Territories leases are due to expire in 1997, and if nothing is done to remove the significance of this date, business confidence may begin to evaporate in the early 1980s. Our present thinking is that the answer may lie in issuing new leases of indefinite duration, and bringing existing leases into lime, but any solution will require the acquiescence of the Chinese. It would probably be inappropriate for the Governor to raise issues of this kind himself, but he will need some
defensive briefing in case the Chinese do so.
Timing
The need to clear our minds on the important issues
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