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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 loase).
15. 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 could mark a watershed in Hong Kong's affairs. The Chinese appear to regard us, but not necessarily themselves, as bound by the New Territories lease or by the other treaties relating to Hong Kong.
Chinese policy can therefore 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. The assessment of their interests in paragraphs 6 and 7 above leads to the conclusion that they are unlikely to try to recover the Colony in the 1980s either by quick forcible takeover or by negotiation; and if the continuation of special arrangements would be in their interests, they may well be able to find a formula to overcome the pressure imposed by the 1997 date.
16.
But from our point of view it will become increasingly desirable to have at least an implicit understanding and preferably a clear-cut agreement with China about the future of the Colony. Both investors and the population at large will almost certainly begin to question their future with increasing insistence as 1997 approaches. The dangers of a declining economy and an increasingly ungovernable society seem obvious. A crucial difficulty for the timing of an approach to China is that meaningful discussion presupposes the existence of an ordered, well-established Government in Peking. It seemed likely that the present Chinese leadership had reached agreement on the handling of the succession to Mao Tse-tung and Chou En-lai but the unexpected appointment of Hua Kuo-feng as Prime Minister demonstrates the uncertainties which are likely to continue at least until Mao's death and probably beyond; and there remains the question of whether the successor Government can impose itself on China as a whole which may well not be apparent for some years. We will also need time to
/assess
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