TNAG-0843-FCO40-1053-Visit-of-Lord-Carrington--Secretary-of-State-for-Foreign-and-1979 — Page 26

DYATT SPEAKING NOLE

SECRET

NEW TERRITORIES LEASES

DRAFT SPEAKING NOTE FOR USE WITH CHINESE FOREIGN MINISTRY

ANNEX B

1. When Vice Premier Deng Xiaoping saw the Governor on

30 March, the Vice Premier spoke about the future of Hong

Kong, the part it could play in the modernisation programme,

and the need to maintain business confidence and investment.

He said that he regarded Hong Kong as part of China and that

one day China would wish to make political changes. But he

could not say whether this would be before 1997 or even as

late as the next century. However, whatever happened special

arrangements would be made to maintain living standards and

guarantee investment. He therefore formally invited the

Governor to tell investors in Hong Kong to put their hearts

at ease. The Governor passed on this message when he

returned to Hong Kong. This had a good effect. But as the

Governor explained to the Vice Premier, there is a short-term

problem about land leases which cannot be dealt with by

general assurances of this kind, helpful though they are.

2. The problem is that, at present, all individual leases

for land in the New Territories end in 1997. The Hong Kong

Government cannot, grant leases beyond that period without

special legal authority. The remaining period of existing

leases, and the period for which new leases can be granted are

therefore steadily getting shorter. This does not prevent

speculative investment, which also has the effect of inflating

/the price

SECRET