TNAG-0848-FCO40-1058-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 129

1978

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PS/Lord Goronwy-Roberts

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SECRET

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HONG KONG: NEW TERRITORIES LEASES

1. The Secretary of State has agreed that the Governor of Hong Kong should use the opportunity provided by his visit to Peking in the last week of March to take preliminary soundings on the question of property leases in the New Territories. The Prime Minister has been informed and is content (Dr Owen's minute of February and Mr Cartledge's letter of 12 February). This

submission contains recommendations on the line which the

Governor should take during his visit.

Substance

2. The difficulty posed by the expiry of property leases in the New Territories in 1997, and the solution we have in mind were outlined in paragraphs 5-7 of my submission of 29 January. A rather fuller account is given in paragraphs 1-7 of the Governor's

letter of 21 December 1978.

(aka cuole) 3. The nub of the problem is that the many thousands of land leases

in the New Territories have all been written to expire three days before 1 July 1997, when the Lease of the New Territories from China

itself runs out. This fact has so far had no real effect on the climate for investment in Hong Kong and, with relations between China and Hong Kong currently as good as they have ever been, it is unlikely to do so in the immediate future. But the steadily shortening span of existing leases, and the inability of the Hong Kong Government to grant new leases extending beyond 1997, will fairly soon begin to deter major new investment, and create problems of confidence, unless some practical solution can be found.

Any solution must, it goes without saying, be acceptable to the Chinese. Given the economic and commercial benefits they derive from Hong Kong and will continue to have need of for a long time to

there is a reasonable chance that they will be ready to help.

4.

come

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