TNAG-0848-FCO40-1058-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 170

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strictly legal reasons, a covering Order-in-Council in the UK. I am in touch with the Governor and Mr Cradock as well as the

Legal Advisers about the form which such an Order-in-Council might

take.

6.

Since the proposed course of action would be as much in the interests of China as of Britain, and would not require any modification of the Chinese formal position, we hope that it would be possible to obtain Chinese agreement to it without giving away anything in return. We are nevertheless studying the various demands which the Chinese might make, and possible responses to them. 7.

8.

In the Governor's view a limited step of this kind, accepted by China, would be sufficient to prevent the dangerous erosion of confidence which might otherwise take place in the early to mid-

1980s. Businessmen and others would still have to make their own

political judgement about the likely duration of British rule in

Hong Kong. But Chinese agreement to the action we have in mind would in itself give a massive boost to confidence, and the 1997 deadline would no longer be a problem, at least until the 1990s.

As regards timing, Mr Cradock takes the view that the

present combination of circumstances in China Deng Xiaoping firmly in the saddle, normalisation of US/China relations a recent achievement, and friendly overtures to Taiwan are about as favourable as we are likely to get. This argues for an approach sooner rather than later. The Secretary of State will be visiting China in April, and has endorsed the Governor's recommendation, supported by Mr Cradock, that he (Sir Murray MacLehose) should go to Peking in March and take preliminary soundings (Mr Walden's minute of 26 January). will be submitting separately on this.

19.

I

The ideas in paragraphs 5 to 8 above are very sensitive and it would be best if the Secretary of State could avoid going into detail in discussion with Mr Wyatt. I suggest that he might say something along the following lines:

(a) we agree that Britain and China have a common interest

Hong Kong

(b)

in the maintenance of British rule in China for a long time to come;

we also agree that the 1997 deadline is a serious

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