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who will certainly have reported in detail on the concerns of
potential investors and the growing press interest in the issue.
I think their problem is rather that they are uncertain how far
they can go in making assurances more specific without prejudicing
their position over a long-term solution. Their room for
manoeuvre is limited by their rejection last year of our proposals,
with a specific mention of the continuance of British administration.
They are clearly concerned by the implications for Taiwan а
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much more important problem of whatever arrangements they may
make for Hong Kong.
6. Despite Gu Mu's expressed readiness to discuss the future,
I agree with the Governor that it will take a long time to produce
concrete arrangements on the ultimate future of Hong Kong which
will help over the short-term difficulties. But there are signs
that the Chinese are moving towards a pragmatic attitude on New
Territories leases from which reasonable reassurance for investors
can be extracted. The line apparently taken by the communist
China Resources Company over their intended development in
Tin Shui Wai suggests that part of the answer may be Chinese
acceptance of leases extending beyond 1997. The proposal of
'indeterminate' leases would, according to the departmental Legal
Adviser, require new legislation of the kind we had in mind last
year. But a reasonably long fixed term lease, say 25 years, would,
in our Legal Adviser's opinion, be possible without additional
legislation, even though extending beyond 1997.
7. If the Chinese were prepared tacitly to agree to such an
arrangement, there would still be the question of how much public
( acknowledgement
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