SECRET
FUTURE OF HONG KONG: ESSENTIAL FACTS
1.
Confidence and investment in Hong Kong are bearing up so far, but
something positive will be needed on the future of the Territory within
the next few years if they are to be maintained. The most pressing
issue is that of individual land leases in the New Territories.
At
present, these are written to expire in 1997; for longer leases to
be issued the 1898 Order in Council would have to be amended. There
is a risk that the shortening length of leases will signal to business-
men that no arrangement has been reached about Hong Kong's future and
that they will lose confidence and wish to disinvest.
2. It was hoped that, when the Secretary of State met Deng Xiaoping
in April, he would accept the need to take early steps to forestall a
slide in confidence, whether by solution of the land lease problem or
some other means. In the event, he went no further than to repeat,
more strongly, his past assurances to investors to 'put their hearts
at ease' and drew parallels between China's policy towards Hong Kong
and those towards Taiwan and Tibet. Indeed, Deng had briefed the press
in advance of the Secretary of State's arrival to the effect that China
had already made clear its position in Hong Kong in terms of assurances
to investors. The clear implication was that he would be able to go no
further than this regarding the future of Hong Kong in his discussions
with Lord Carrington.
3. It is evident that the Chinese are not yet ready to respond more
fully on the problem. Nevertheless, feelers have gone out Huang Hua
expressed interest in hearing our thoughts on land leases and Ambassador
Ke Hua followed up this discussion with HM Ambassador in Peking.
Hong Kong and General Department
13 May 1981
SECRET