SECRET
CONFIDENCE IN HONG KONG LAND LEASES IN THE NEW TERRITORIES:
ESSENTIAL FACTS
1.
Initial exchanges on possible forms of land lease should be
Should avoid suggestion that we have reached firm
exploratory.
conclusions.
Broad alternatives appear to be:
a) fixed term leases extending beyond 1997. These should provide
reasonable reassurance for investors and would imply (though not
state) some form of British administration after 1997. They
could thus pose political problems for the Chinese;
b)
2.
a periodic lease renewable each year unless land required by the
Hong Kong Government for 'public purposes'. This would not imply
post-1997 jurisdiction so directly, but it would be less
attractive to investors.
An additional problem over (a) is that it would probably require
a fresh legal basis since the power of the Hong Kong Government to act
in this way is not clearly established. It could be put beyond doubt
by an Order in Council. This would not refer to the continuance of
British administration of the New Territories after 1997, although
it would imply it. It is not possible to gauge the Chinese reaction
to such a move.
3. If the Chinese accepted the principle of such a legal act the
timing of its implementation could be discussed. Whilst there is a
clear advantage in establishing the legal basis for extended leases
before they are issued, publication of the Order in Council itself might
attract undue public attention or speculation. An alternative would
be to employ the instrument retrospectively and only if and when the
legality of the Governor's action in issuing a lease going beyond
1997 were challenged in the open court. The proposed Order in Council
could then be put to the Chinese simply as a contingency measure.
SECRET
/We