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New Territories without a fixed term; to convert existing leases
into indeterminate leases; and to take legal steps to enable
British administration to continue after 1997 should the Chinese
(and, of course, the British) Government so wish.
7.
8.
Action since then has been as follows:-
a) 30 March: Governor outlined proposed solution to
Vice Premier Deng Xiaoping. Deng's reaction non-
committal but not negative.
b) 5 July: Ambassador gave detailed explanation to
Chinese Foreign Ministry, stressing that proposed action
entirely consistent with Chinese position and would not
prejudice their future freedom of action.
c) 24 September: Chinese reply given to HM Ambassador.
Proposed legal action described as "unnecessary and
inappropriate".
British Government warned of adverse
consequences should we persist.
In the light of the Chinese reaction we clearly cannot proceed
with the original plan.
9.
Reasons for Chinese response still not entirely clear. But
Chinese seem to believe that general assurances are all that is
needed to maintain investors' confidence, and have evidently
failed to understand the need for action to deal with the short-
term problem posed by the 1997 date in New Territories property
leases. Therefore important to reiterate the point that if
solution we have proposed not acceptable to Chinese another
will have to be found sooner rather than later.
Official Chinese Representation in Hong Kong
10. Chinese Communist Government first raised question of
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