TNAG-0847-FCO40-1057-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-th-1979 — Page 103

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5.

1.

NEW TERRITORIES LEASES

The bulk of the territory of Hong Kong (the New Territories)

was leased from China in 1898 under an agreement which expires in

1997. The many thousands of land leases granted by the Crown in

the New Territories also end in 1997. Although there is no immediate

problem, the increasingly short span of existing leases, and the

inability of the Hong Kong Government to grant new leases extending

beyond 1997, will soon begin to deter investment unless something

is done.

2. The solution which we have in mind is to issue future leases

in the New Territories without a fixed term, and to convert existing

leases into indeterminate leases of the same kind. There would be a

need for legislation in Hong Kong and a covering Order in Council in

the UK would be highly desirable. This solution would be consistent

with the Chinese view that Hong Kong is Chinese territory, and

with their desire to keep their options open as to its future.

But it would be interpreted by public opinion in Hong Kong as an

indication that the Chinese did not rule out the possibility that

British administration in Hong Kong might contin ue after 1997, and

it would thus provide a boost to confidence as well as dealing with

the legal problem posed by the terminal date in the leases.

3. It would, of course, be essential to ensure that there was

no Chinese objection before going ahead. 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. Deng did not specifically

endorse the idea but did not react adversely. Ministers will need

to decide in due course what action should be taken to follow up

the soundings taken by the Governor.

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