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FM HONG KONG 111031Z MAY 79

Akcouoli

INDEX

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TO IMMEDIATE FOREIGN AND COMMONWEALTH OFFICE

TELNO.566 OF 11 MAY,

INFO IMMEDIATE PEKING,

PEKING TEL NO.423: FUTURE OF HONG KONG.

TA MAY 1979

Jw.5

See aut

Last

NO. 51

RECBTAY

Taken

1 I AGREE THAT SUNG'S REMARKS AND THE AMBASSADOR'S DISCUSSION

WITH HIM PROVIDE A USEFUL OPENING FOR CLARIFYING WITH WEST

EUROPEAN DEPARTMENT WHAT WE INTEND. THE MFA'S PROMISE TO

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PROVIDE AN EXPLANATION'' IS AN ADDED ARGUMENT FOR MAKING OUR POSITION CLEAR BEFORE THE CHINESE GO FIRM ON THEIR OWN VIEWS.

2. MY TELNO.519 SET CUT THE THREE ALTERNATIVE COURSES NOW OPEN TO US. WE AWAIT YOUR VIEWS ON WHICH YOU THINK BEST. THIS NEED NOT, HOWEVER, PREVENT US FROM SPEAKING FURTHER TO THE CHINESE AS SUGGESTED BY PEKING, AT THIS STAGE WE CAN LIMIT OURSELVES TO

LAND LEASES WITHOUT GOING ON TO TALK ABOUT CONTINUING POWERS OF

ADMINISTRATION.

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3. I SUGGEST THAT THE EMBASSY SHOULD SPEAK TO CUI ON THE FOLLOWING

LINES: WE AGREE THAT THERE IS NO HURRY ABOUT DEALING WITH THE LONG TERM FUTURE OF HONG KONG. AS THE GOVERNOR SAID TO DENG THIS IS A MATTER TO BE SETTLED BETWEEN THE CPG AND HMG. AS HE ALSO EXPLAINED, HOWEVER, THERE IS A SHORT TERM PROBLEM ABOUT LAND LEASES WHICH MUST BE TACKLED SOON IF INVESTMENT IS TO CONTINUE UNABATED. WE INTEND THEREFORE TO TAKE THE NECESSARY LEGISLATIVE STEPS TO ELIMINATE THE DATE FROM EXISTING LAND LEASES IN THE NEW TERRITORIES AND TO SUBSTITUTE A MORE INDEFINITE

FORM OF WORDS. THIS HAS TO BE DONE BY LEGISLATION SINCE THERE IS AT PRESENT NO LEGAL CONCEPT OF A LEASE WITHOUT A FIXED DATE. IT IS ALSO NECESSARY BECAUSE THERE ARE THOUSANDS OF INDIVIDUAL LEASES WHICH MUST BE ALTERED BY A BLANKET PROVISION. OUR PRESENT

INTENTION IS TO TAKE THIS ACTION WHEN THE LEGISLATIVE COUNCIL RESUMES IN OCTOBER. IN ANNOUNCING THIS LEGISLATION WE WOULD MAKE IT CLEAR THAT THE EFFECT WAS PURELY PERMISSIVE ON THE BRITISH

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