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c) persuading the PRC to renew the 1898 lease on the
New Territories with or without a time limit. This
is legally the simplest solution for HMG. But there
is no prospect that it would be acceptable to the PRC;
d) unilateral action by HMG to extend their powers of
administration over the New Territories beyond 1997.
In international law our position could only be tenable
so long as the PRC acquiesced. They would not do so.
A similar suggestion proposed by HMG in 1979 was turned
down. We believe that the Chinese attitude would be
the same now;
e) allowing the Chinese to take back the New Territories
at the end of the lease period, and continuing to govern
the ceded territories. These would, however, without
the New Territories, not form a viable industrial and
economic entity (see paragraph 14). Nor would the
Chinese agree to this solution. Principle for them
requires Hong Kong to be dealt with as a whole;
f) acquiescing in unilateral action by China to declare
Hong Kong a Special Administrative Region under the
Constitution of the PRC. The PRC would assume
responsibility for the Territory including external
affairs although considerable autonomy would be
given to the inhabitants. There would be no rôle
for Britain though there could be some for UK civil
servants on contract.
These options are considered in more detail
in Annex F.
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