A

B

34

Mr Murray

Issue with

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HONG KONG: NEW TERRITORIES LEASES

(79

paragrogh added.

Шускаю 27/4

30 APR 1979

I have now discussed with Mr Rushford oible ways of f

changing the proposed Order in Council empowering the Governor

of Hong Kong to issue leases of indeterminate length, to take account of Deng Xiaoping's objection to any direct reference to continuing British administration (paragraphs 11 and 12 of the Governor's letter of 10 April to Mr McLaren).

A copy of the proposed Order in Council as it emerged from the discussions

prior to the Governor's visit to China is at Flag B.

2. We need to take account of two possible reasons for Deng's

objection. It is most likely that he was simply objecting in principle to any written reference to British administration in the future, particularly since he seems to have been assuming

at the time that we wanted overt Chinese endorsement of the proposed text. It is, however, also possible that he wanted the reference to British administration removed because he thought the

leases should be so phrased that they could continue in force in the scenario he envisaged, in which Hong Kong would pass nominally under Chinese sovereignty, while continuing to be run on its

present basis. Even if the latter was not the immediate cause of Deng's objection, we still need to take account of it since it is axiomatic that our proposals should be consistent with our understanding of the Chinese view of the future of Hong Kong, and Deng's remarks somewhat change our understanding of what the

Chinese think that future will be.

3. The reference to continuing British administration occurs at two points in the present text, in Clauses 2 and 3. In Clause 2, we originally included the reference to reassure the Chinese that in introducing the new legislation we did not mean to imply that British administration would continue for ever. In the changed circumstances arising from the Governor's meeting with Deng, the simplest thing would be to omit the reference altogether from Clause 2. Mr Rushford is confident that this would

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/in

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