TNAG-0850-FCO40-1060-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 83

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FM HONG KONG 0999152 OCT

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RECERED IN REOKA" NC. 51 10 OCT 1979

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TO PRIORITY FOREIGN AND COMMONWEALTH OFFICE NO TELEGRAM NUMBER 1402 OF 9 OCTOBER, 1979.

INFO PRIORITY PEKING,

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| 215.10

KECISTRY

Sae (235

208

PEKING TELNO 864 AND YOUR TELNO 799, PARA 1(C): NEW

TERRITORIES LEASES.

1. THE CHINESE LINE IS THAT DENG'S REMARKS (AND NOW I SUPPOSE HUA'S) HAVE DEALT WITH CONFIDENCE FOR A LONG TIME TO COME AND THAT OUR PROPOSALS ARE THEREFORE UNNECESSARY. MY POINT ABOUT THE PRESSURE OF MARKET FORCES WAS THAT WITHIN THE NEXT THREE OR FOUR YEARS (AND PERHAPS MUCH EARLIER) THESE WILL PROVE THE CHINESE WRONG, AND THEY WILL HAVE TO FACE THE VACT THAT A SOLUTION OF SOME SORT MUST BE FOUND. I WAS NOT SUGGESTING

THAT IT WOULD BE OUR SOLUTION, INDEED THAT IS NOW MOST UNLIKELY.

2. THREE OR FOUR YEARS FROM NOW WILL STILL BE TOO SOON TO TACKLE

THE LONG-TERM FUTURE OF HONG KONG, BUT THE CHINESE MAY HOPE THAT

THEY CAN KEEP CONFIDENCE GOING LONG ENOUGH TO ALLOW THE SHORT-

TERM AND AT LEAST MEDIUM-TERM PROBLEMS TO BE TACKLED TOGETHER.

THE COULD DO THIS BY COUPLING SOMETHING ON LEASES (NOT NECESSARILY

ALONG THE LINESE WE SUGGESTED) WITH CONCESSIONS BY US ON SOVEREIGNTY AND CHINESE REPRESENTATION AND PERHAPS OTHER THINGS THEY MAY WANT HERE. PERHAPS, AS THE AMBASSADOR SUGGESTS, TAIWAN ALSO COMES INTO THE PICTURE AS THEY SEE IT.

3. OF COURSE WE MADE OUR PROPOSAL WHEN WE DID IN THE HOPE OF DISPOSING OF THE SHORT-TERM PROBLEM WITHOUT HAVING TO PAY THE POLITICAL PRICE THAT WOULD BE INEVITABLE IN MEDIUM OR LONG TERM SOLUTIONS, IT WAS A FAIR TRY BUT FAILED, EITHER BECAUSE OF ONE OF THE REASONS OUTLINED ABOVE, OR BECAUSE OF NATURAL DISINCLINATION TO TACKLE A SENSITIVE PROBLEM BEFORE IT BECAME UNAVOIDABLE, OUR ONLY ADVANCE IT THAT WE HAVE FIRMLY PUT THE CHINESE ON RECORD THAT WE SEE A SHORT-TERM PROBLEM.

SEGRET

I THINK