TNAG-0843-FCO40-1053-Visit-of-Lord-Carrington--Secretary-of-State-for-Foreign-and-1979 — Page 53

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think that time will be.

THE NEED TO OBTAIN CHINESE AGREEMENT

6. In our view the proposed action on land leases does not

conflict with the Chinese view that Hong Kong is Chinese

territory, and is consistent with their desire to keep their

options open as to its future. However, the provision for

continuing administration self-evidently opens up the possibility

that British rule in Hong Kong may continue after 1997. This is

likely to be the most difficult part of the package for the Chinese

to swallow. While they share our wish to bolster confidence, they

may take the view that we are seeking to prejudge the outcome of

negotiations which will not take place until much nearer 1997.

7. For all these reasons it will be essential to ensure that

there is no Chinese objection before going ahead. We cannot risk

a public Chinese rebuff after we have taken action since that

would be very damaging to confidence. With the authority of the

previous Government, therefore, the Governor of Hong Kong outlined

the proposed solution to Deng Xiaoping and other Chinese leaders when he visited Peking in March. (He did not, however mention

the point about continuing administration). Deng did not

specifically endorse the idea but did not react adversely.

It

is by no means certain that he fully understool what was involved.

NEXT STEPS

8.

With Hua Guofong's visit due at the end of October the Chinese

are likely to be anxious to avoid creating difficulties for Sino-

British relations over the next few months. There would therefore

be advantage in taking early action on the leases.

The Governor

/has

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