TNAG-0849-FCO40-1059-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 18

OR

SEORET

Hanke

A..

المين

125

SECRET

FM HONG KONG 300951Z JUN

TO PRIORITY F.C.O.

TELEGRAM NUMBER 999 OF 30 JUNE, 1979.

INFO PRIORITY PEKING.

по

2 JUL 1979

No 182 18

21

See (131

4M IPT: DRAFT SPEAKING NOTE ON NEW TERRITORIES LEASES.

FOLLOWING IS TEXT:

1. WHEN VICE PREMIER DENG XIAOPING SAW THE GOVERNOR ON 30 MARCH, THE VICE PREMIER SPOKE ABOUT THE FUTURE OF HONG KONG, THE PART IT

COULD PLAY IN THE MODERNISATION PROGRAMME, AND THE NEED TO MAINTAIN

BUSINESS CONFIDENCE AND INVESTMENT. HE SAID THAT HE REGARDED HONG

KONG AS PART OF CHINA AND THAT ONE DAY CHINA WOULD WISH TO MAKE POLITICAL CHANGES, BUT HE COULD NOT SAY WHETHER THIS WOULD BE BEFORE 1997 OR EVEN AS LATE AS THE NEXT CENTURY. HOWEVER, WHATEVER HAPPENED, SPECIAL ARRANGEMENTS WOULD BE MADE TO MAINTAIN LIVING STANDARDS AND GUARANTEE INVESTMENT. HE THEREFORE FORMALLY INVITED THE GOVERNOR, TO TELL INVESTORS IN HONG KONG TO PUT THEIR HEARTS AT EASE. THE GOVERNOR PASSED ON THIS MESSAGE WHEN HE RETURNED TO HONG KONG. THIS HAD A GOOD EFFECT. BUT AS THE GOVERNOR EXPLAINED TO THE VICE PREMIER, THERE IS A SHORT-TERM PROBLEM ABOUT LAND LEASES WHICH CANNOT BE DEALT WITH BY GENERAL ASSURANCES OF THIS

KIND, HELPFUL THOUGH THEY ARE.

2. THE PROBLEM IS THAT, AT PRESENT, ALL INDIVIDUAL LEASES FOR LAND IN THE NEW TERRITORIES END IN 1997. THE HONG KONG GOVERNMENT

CANNOT GRANT LEASES BEYOND THAT PERIOD WITHOUT SPECIAL LEGAL

AUTHORITY, THE REMAINING PERIOD OF EXISTING LEASES, AND THE

PERIOD FOR WHICH NEW LEASES CAN BE GRANTED ARE THEREFORE

STEADILY GETTING SHORTER. THIS DOES NOT PREVENT SPECULATIVE

INVESTMENT. WHICH ALSO HAS THE EFFECT OF INFLATING THE PRICE OF LAND, BUT IT IS ALREADY BEGINNING TO DETER THE TYPE OF

INDUSTRIAL DEVELOPMENT OF MOST VALUE TO THE ECONOMY, SOME VERY

LAPGE AND BENEFICIAL LONG-TERM INVESTMENTS ARE BEING MADE, BUT

SEORET

I WE KNOW