SECRET
CALL ON THE LORD PRIVY SEAL BY SIR LAWRENCE KADOORIE CBE
FUTURE OF HONG KONG AND LEASES IN THE NEW TERRITORIES
ESSENTIAL FACTS
The Problem
1. The Lease on the New Territories is due to expire on 1 July 1997.
Although the New Territories are only a part of Hong Kong, the
territory would not be viable without them. In any case, the
Chinese consider the Treaties relating to the cession of Hong Kong
and the lease of the New Territories as "unequal treaties" forced
on China during a period of internal weakness and do not therefore
recognise any of them. The long-term problem is the status and
administration of Hong Kong after 1997. But there is also a shorter
term problem.
2. Leases by the Crown to individual investors in the New Terri-
tories at present expire three days before 1 July 1997. Although
most investments in Hong Kong are amortised over short periods (some
of five years or less), it will not be long before some firms,
particularly those contemplating major infrastructure works, are
frightened off by the 1997 terminal date. Moreover, 15 years is the
normal term for mortgages in Hong Kong; financial bodies will be
reluctant to conclude loan agreements extending beyond the nominal
lease period. The 15 year period is also important because of the
guarantee by HMG of loans to Hong Kong for that term by the Asian
Development Bank (mainly for projects in the New Territories).
could thus be a key year.
1982
SECRET
/Chinese Assurances