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On balance, I prefer a succession of 25-year leases, ie with the terminal dates rolling forward as the issuing dates advanced. This might provide the necessary reassurance without alarming the Chinese.
e) If leases on these lines seemed an acceptable option, they could be combined with a demonstration, probably tacit, that the Chinese Government approved. The most satisfactory would be an opportunity to grant such a lease to a Chinese-controlled body (eg China Resources at Tin Shui Wai) to be followed by another grant to a non- Communist firm.
f) All this, however, begs the question of whether the Chinese
would agree to our legislating on a new form of lease. In Peking telegram No 472 of 17 July, Mr George pointed out that we cannot be sure whether the Chinese rejected our approach last year because they disliked the idea in general, or because of the preference to continuing British administration. I accept this, but I am afraid it is likely that, because they felt obliged to turn down our last initiative, they will find it very difficult to agree to a new one, even on simpler lines. They are bound at any rate to look at it very suspiciously and we are not likely to get a quick answer.
g) We have agreed with both Hong Kong and Peking that it is
extremely important to avoid exposing the Secretary of State to a rebuff during his visit. It is anyway hard to see Huang Hua or other leaders engaging with him in a detailed discussion on technicalities. It follows that it would be best for Lord Carrington to be briefed to concentrate on stressing the continuance of the problem, and suggesting that the matter should be taken up by senior officials. This might possibly be during the visit itself (eg by you with Song Zhiguang) or later.
h) Such an approach would also leave open the option, to
which HMA Peking attaches importance, of engaging in longer term discussions with the Chinese if they appeared ready for this. It does not look likely at the moment, but we should not discount it (Peking Telegram No 472).
i) In the end, it is very likely that we will get no
significant shift out of the Chinese. Despite Gu Mu's relatively encouraging noises during his discussion with Sir Philip Haddon-Cave on 8 May, he also made clear that they saw the solution as coming from China and that it was not time to make a presentation of concrete proposals'. Our problem is that the Chinese are not under pressure on the issue. On the contrary, they must look at it very warily to avoid pre-empting their legal and political position, both over Hong Kong itself and over Taiwan and their disputed border with the Soviet Union. They also need to watch domestic Chinese opinion and not to give the Soviet Union propaganda points.
/j)
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