ECRE i
ESSENTIAL FACTS
UK Objectives
1. To make the Chinese focus on the problem and its comparative urgency,
and to explain distinction between short-term issues such as land
leases, and long-term future of Hong Kong.
Chinese Attitudes
2. Present Chinese Government do not recognise 19th century treaties
establishing British administration in Hong Kong. But Hong Kong is
valuable to them (between one-third and one-half of China's foreign
exchange is earned through Hong Kong).
3. Chinese have made general statements about maintenance of the
status quo and the prosperity of Hong Kong (Vice Premier Deng Xiaoping
asked the Governor in March 1979 to tell investors in Hong Kong to 'put
their hearts at ease'); but they have not clearly indicated their
views on the long-term future. Hua Guofeng agreed with the Prime
Minister in November 1979 that we should keep in touch on the matter.
4. In May 1980, Deng Xiaoping's assurance was reaffirmed by Vice
Premier Gu Mu during the visit to China of Hong Kong's Financial
Secretary.
But he was not specific about the future. He referred to
Hong Kong's continuing 'as a capitalist society', but said that the
time was not yet ripe to make concrete proposals. He claimed that the
Chinese Government would find a solution in accordance with the
principles laid down by Vice Premier Deng.
Land Leases in New Territories
5. The most pressing issue is that of the leases in the New Territories
At present, all land leases in the New Territories are written to expire
in 1997; there is a risk that, as this date draws closer, businessmen
will cease to invest there leading to a serious loss of confidence. A
/solution
SECRET