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2.
MDLIAN
(I) THERE WOULD BE NO PROBLEM WITH PRIVATE CIVILIAN CONTRACTS BECAUSE THEY DID NOT INVOLVE THE 'TRANSFER OF SOVEREIGNTY'.
(II) NOR WOULD LAND LEASES HAVE ANY PROBLEM. CLEAR PROVISIONS HAD BEEN MADE IN ANNEX III TO THE JD ON HOW TO HANDLE LAND LEASES STRADDLING 1997.
(III) HOWEVER, THOSE ACTS OF GOVERNMENT WOULD NATURALLY BE INVALID AFTER 1997. THE CHINESE SIDE'S STARTING POINT WAS THAT THEY HOPED THESE COULD REMAIN TO BE VALID AFTER 30 JUNE 1997. ONE WAY TO DO IT WAS OF COURSE TO NEGOTIATE WITH THE SARG ON 1 JULY 1997 WHEN IT WAS ESTABLISHED: AND IT WOULD THEN BE FOR THE SARG TO RECOGNISE THESE CONTRACTS. BUT THIS WOULD BE TOO LATE. THE QUESTION HAD TO BE
RESOLVED NOW.
(IV) AS THE SARG HAD YET TO BE SET UP, THE CONTRACTS COULD ONLY BE RECOGNISED BY THE CHINESE GOVERNMENT ON BEHALF OF THE SARG. THE CHINESE STARTING POSITION WAS TO PROTECT THE INTERESTS OF THE INVESTORS. THE CHINESE SIDE HOPED THAT THESE LEASES, CONTRACTS AND AGREEMENTS WOULD REMAIN VALID BEYOND 1997. THE LONG-STANDING POLICY OF CHINA WAS TO PROTECT AND SUPPORT INVESTMENT OF PRIVATE CAPITAL IN
HONG KONG,
5. LU ALSO SAID THAT AS THE CT 9 PROJECT TRANSCENDED 1997, NEGOTIATIONS WITH THE CHINESE GOVERNMENT WAS A MUST: LEST THERE WOULD BE NO/NO PROTECTION IN LAW EXCLAM. CHONG KONG STANDARD QUOTED LEGCO MEMBER HENRY TANG, WHO LED THE DELEGATION, AS SAYING LU HAD PROMISED TO ANNOUNCE A LIST OF CONTRACTS WHICH WOULD NEED CHINESE APPROVAL TO
BE VALID AFTER 1997.)
6.
LU ADDED THAT TO THE CHINESE SIDE, CONVERGENCE ENCOMPASSED ALL FRONTS, INCLUDING BOTH POLITICAL AND ECONOMIC MATTERS. THOSE WHICH DID NOT CONVERGE WITH THE BASIC LAW WOULD FALL OUT OF USE FROM 1 JULY 1997 AND CHINA WOULD START IT ALL OVER AGAIN. NEVERTHELESS, HE REITERATED THAT HIS COMMENTS COVERED ONLY THOSE (CONTRACTS) SIGNED BY THE GOVERNMENT. AS FOR THOSE CIVIL MATTERS, THEY WOULD HAVE NO PROBLEM SINCE THEY OBVIOUSLY DID NOT CONTRAVENE THE BASIC LAW.
7.
LU SAID THE CURRENT ROW HAD NOT BEEN STIRRED UP BY THE CHINESE
SIDE. HE HAD WRITTEN TO MR PATTEN BEFORE HIS POLICY ADDRESS SAYING THAT THE CHINESE SIDE WOULD NOT WANT TO RAISE A PUBLIC DEBATE ON
DIFFERENCES BETWEEN THE TWO SIDES. BUT THE GOVERNOR INSISTED ON CONFRONTATION AND THE CHINESE SIDE COULD DO NOTHING BUT TO FOLLOW SUIT. LU MAINTAINED THAT THE CHINESE SIDE WERE NOT TRYING TO MAKE A
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