7386 D073815 140M S/74 Cr.P.C. Gp.839/3
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change of attitude by China seems unlikely but the long term trend is probably unfavourable to the
prospect of Hong Kong's continued existence as a Colony, even if this is what we ourselves would want.
9. A major consideration is the running out of the lease on the New Territories in 1997. On our interpretation of international law, there is a distinction between the status of the New Territories, held on a 99 year lease under the Second Convention of Peking (1898), and that of the Island of Victoria, the southern tip of the Kowloon peninsula and Stone Cutters Island, ceded in perpetuity by the 1842 Treaty of Nanking and the 1860 Convention of Peking. However, the logic of the Chinese position that all three treaties were "unequal" and hence invalid and the
fact that they could enforce that claim makes the distinction more theoretical than real; and in fact
Hong Kong Government policy in such matters as new towns is based on the recognition that the Colony is indeed a single entity (although Crown leases to private individuals in the New Territories are granted for periods of less than the remaining portion of the 1997 lease).
10.
The existence of a termination date of the lease
and the Chinese attitude to all three treaties
produces a paradoxical situation. HMG, and foreign investors in the Colony, must base policy on the assumption that 1997 will mark a watershed in Hong Kong's affairs: to the Chinese, however, the date is without significance and Chinese policy can be based on the proposition that repossession of all three areas of Hong Kong will take place at any time suitable
to China's interests.
11. The time will come when we shall need to have at
least an implicit understanding and preferably a clear-cut agreement with China about the future of the Colony and this will have to be well before 1997. It is probably not in our interests, nor perhaps those of China, that the position should remain unclear
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