DYATT SPEAKING NOLE
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NEW TERRITORIES LEASES
DRAFT SPEAKING NOTE FOR USE WITH CHINESE FOREIGN MINISTRY
ANNEX B
1. When Vice Premier Deng Xiaoping saw the Governor on
30 March, the Vice Premier spoke about the future of Hong
Kong, the part it could play in the modernisation programme,
and the need to maintain business confidence and investment.
He said that he regarded Hong Kong as part of China and that
one day China would wish to make political changes. But he
could not say whether this would be before 1997 or even as
late as the next century. However, whatever happened special
arrangements would be made to maintain living standards and
guarantee investment. He therefore formally invited the
Governor to tell investors in Hong Kong to put their hearts
at ease. The Governor passed on this message when he
returned to Hong Kong. This had a good effect. But as the
Governor explained to the Vice Premier, there is a short-term
problem about land leases which cannot be dealt with by
general assurances of this kind, helpful though they are.
2. The problem is that, at present, all individual leases
for land in the New Territories end in 1997. The Hong Kong
Government cannot, grant leases beyond that period without
special legal authority. The remaining period of existing
leases, and the period for which new leases can be granted are
therefore steadily getting shorter. This does not prevent
speculative investment, which also has the effect of inflating
/the price
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