TNAG-0849-FCO40-1059-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 137

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land leases;

and all these leases (many thousands) expire in 1997,

when the lease of the New Territories itself comes to an end.

Although there is no immediate problem, the increasingly short span

of existing leases, and what the Hong Kong Government perceives as

an inability to grant new leases existing beyond 1997, will soon

begin to deter investment unless something is done. The need is to

find a means of enabling the leases to extend beyond 1997 if that

is acceptable to the Chinese authorities at the time: and for the

new procedure to be known by tong aon residents and investors to

have the acquiescence of ieking.

4. The solution which we have devised, in consultation with the

Governor of Long Long and hi. Ambassador in Teking, is to issue future

leases in the hew 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 liong Kong is Chinese terri-

tory, 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 were prepared to envisage the

possibility that British administration in Hong Kong might continue

after 1997, and it would thus provide the necessary boost to confi-

dence as well as dealing with the legal impediment of the terminal

date in the leases.

5. with the authority of the previous Government therefore, the

Governor of Hong Kong explained what we have in mind to the Chinese

leadership when he visited Peking in March. Hle outlined the proposal

during conversations with Deng Xiaoping and other Chinese leaders,

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