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3. There would be a need for legislation in Hong Kong to create
indeterminate leases and to make blanket provision for the conversion
of all existing leases into the new form. The provision for con-
tinuing administration after 1997 can only be dealt with by an Order
in Council in the United Kingdom since the Governor's present
powers in the New Territories derive from an Order in Council of
1898 which expires, with the lease of the New Territories, in 1997.
THE CHINESE POSITION
4.
they
The present Chinese Government do not recognise the 19th century
treaties under which Hong Kong came under British rule. In theory at
least they make no distinction between those parts of the Colony
ceded in perpetuity (Hong Kong Island and small areas of Kowloon)
and those which were leased in 1898 (the New Territories):
regard the whole of Hong Kong as Chinese territory temporarily under
British administration. They have repeatedly stated that the
question of Hong Kong's reversion to China is a matter to be settled
through negotiations "when the time is ripe", but have given no firm
indication when they think that time will be.
THE NEED TO OBTAIN CHINESE AGREEMENT
5. It is our belief that the proposed action on land leases does not
conflict with the Chinese view that Hong Kong is Chinese territory,
and is consistent with their desire to keep their options open as to
its future. However, the provision for continuing administration
self-evidently opens up the possibility that British rule in Hong
Kong may continue after 1997. This is likely to be the most difficult
part of the package for the Chinese to swallow. While they share our
wish to bolster confidence, they may take the view that we are seeking
to prejudge the outcome of negotiations which will not take place
until much nearer 1997. ♫
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