PM/79/15
PRIME MINISTER
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also av. Hkkool,
HKK.006/3
IND
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CER 079
MF Quant
Action Jæken rus to
HK + GD.
Ps Lord Gornwy
Ps Pus
1113/2 Sur A Duff.
Mr Cortags, An Kurmay Legal Advisers FED See lia
UK/China Relations: Hong Kong
18 HKGD
1. The Chinese have invited the Governor of Hong Kong to visit Peking, and I have authorised him to accept the invitation for the last week in March, a few weeks before my own visit in April.
This will be the first such visit since 1955.
Roberts
2. Hong Kong provides about one third of China's foreign exchange earnings and acts as an entrepot centre for Chinese foreign trade, and a source of financial and commercial expertise. The stability and prosperity of Hong Kong are therefore very important to the Chinese leadership. The Chinese clearly want friendly relations with the Hong Kong Government, and have recently sent a very senior man to head their unofficial office there. They are also doing everything they can to bolster business confidence and reassure the population about their longer term intentions.
3. The conclusion last year of the peace treaty with Japan, the normalisation of US/China relations, and the fact that the Chinese are now clearly reconciled to living for some time to come with the anomaly of Taiwan all suggest that the Chinese may be ready to talk constructively about the medium term future of Hong Kong. The Governor's visit will provide a good opportunity to take preliminary soundings on certain practical issues.
4.
One important problem with far reaching implications concerns property leases in the New Territories. The New Territories make up the bulk of Hong Kong and are leased from China under a treaty concluded in the last century. The lease is due to expire in 1997, and until now property leases in the New Territories have
This is bound always specified that year as their terminal date.
to become a very serious deterrent to new investment as time goes on. The Governor's assessment, with which I agree, is that confidence will begin to erode quite quickly in the early-to-mid 1980s if
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