SECRET
AKK OHoli
RECEIVED IN ASSISTRY NO. 51 Sii E. You
16 FEB 1981
Youde
21 229
pa
A
3A
1950
so
16) B
7631
165
D
Mr Donald
DESK OFFICER INDEX
REGISTRY
PA
Action Taken
LAND LEASES: TIN SHUI WAI
AW 1676
see (26
1. There have been recent developments on the lease for the Tin Shui Wai project. The picture is a little murky.
2.
You will recall the intimation, ostensibly from the Chinese majority shareholder, China Resources, that the lease for the project might reasonably stretch beyond 1997 (Dr Wilson's letter of 5 June 1980). Later in the year, there was a second indirect approach proposing a 75 year lease. The Secretary for the New Territories followed this up in discussions with China Resources on 1 December, but received no clear response (Dr Wilson's letter of 9 December 1980). Mr Morrice minuted on these developments on 19 December. was then rumoured that China Resources had requested confirmation from Peking that they could sign a 75 year lease (Dr Wilson's letter of 24 December).
FALL 1980
9AE
14A)
F
3.
It
More recently, however, doubt has been cast on the origins of this proposal. A contact of Liao Chengzhi, Director of the Hong Kong and Macao Office of the State Council, has quoted him as saying that
Dr Wilson's China Resources had no authority to ask for such a lease. subsequent meeting with NCNA (his letter of 17 January 1981), and that of the Secretary for the New Territories with China Resources (Dr Wilson's letter of 27 January), indicate that, whoever may have originated the idea, it probably does not have the backing we had hoped for from Peking.
4.
One source however contradicts this. Mr Banks, an employee "of Mr John Wu of Trafalgar Holdings, called in to see me yesterday. (He has been in touch with Dr Wilson in Hong Kong.) Mr Banks said that Mr Wu was in Peking after Christmas (he was not sure of the date). The Deputy Director of the Hong Kong and Macao Office and the Director's Personal Assistant had been receptive to the following idea. 5. China, as the overall "landlord" (under the 1898 lease) should give the "tenant" (the British and/or Hong Kong Governments) a "licence" to grant a sub-lease (i.e. a Crown lease) of land for a period longer than the "head lease" this extending beyond 1997. did not dissent when it was suggested that 75 years would be appropriate.
They
This would
6. Trafalgar Holdings are also working on another ploy. involve a Crown lease tenant (or sub-tenant) insuring against the
The twist political risk in the New Territories through Lloyds. would be that the underwriters would reinsure with the China Insurance Company (through its London office).
Mr Banks believes this
to be a starter. Hogg Robinson are interested in considering the business. They believe that China Insurance would not necessarily reject the idea.
17.
SECRET