TNAG-0848-FCO40-1058-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 169

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or to any other arrangement which effectively tied their hands, even if we were to renounce sovereignty as Mr Wyatt suggests. They would also

be vulnerable, at the UN and in the third world generally, to charges that they were legalising colonialism. The possibility that the Chinese will seek a British acknowledgement that Hong Kong is Chinese territory as a quid pro quo for their endorsement of a solution to the 1997 problem cannot be ruled out at this stage. However, this would be a very major concession with far-reaching

legal and other implications. Unless it were made in the context

5.

the of very firm and bankable Chinese assurances about the future/effect on confidence in Hong Kong could be very serious. There is certainly nothing to be gained from volunteering to give up sovereignty.

The approach to the problem on which we have been working, in consultation with the Governor and the Ambassador in Peking, is less ambitious than the one Mr Wyatt has suggested and relates specifically to land leases in the New Territories. The details are not yet ready for submission to Ministers, but what we have in mind is briefly as follows. All the land leases granted in the New Territories have been written to expire three days before 1 July 1997. As time goes on the shortening span of existing leases, and the inability of the Hong Kong Government to grant new leases either with a terminal date after 1997 or without a specific terminal date at all, will become an increasing point of concern and a deterrent to new investment. The answer in our view is to convert existing leases expiring in 1997 to leases of "undetermined" length and to issue future leases in the same way. A limited solution on these lines would be consistent with the Chinese position that the problem of Hong Kong will be solved "when the time is ripe". It would also have the advantage of not requiring any positive action on the part of the Chinese; all they would need to do would be to raise no objection to action by the UK and Hong Kong governments, and, perhaps, to allow us to say in public that they had not objected (the same effect would be achieved if mainland Chinese concerns, eg the Bank of China, were to take out some of the new leases). There would be a need for legislation in Hong Kong (since leases of undetermined length are unknown under Common Law) and, for political rather than

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