TNAG-0937-FCO40-1156-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-th-1980 — Page 205

CONFIDENTIAL

New Territories Leases (Brief No 3)

2. I do not go along with the fairly widely-held view that the Chinese failed to understand our proposal on the leases or the need for action to deal with the short-term problem. I believe the Chinese had a very good understanding of what we wanted to do, but were caught in a dilemma of principle because it was impossible for them to commit themselves to a concept which envisaged the prospect of a continued British administration after 1997. If I am right, then there may be no point in re-opening the issue with the Chinese in any form, at least in the next year or two. Against this must be set the Governor's view that the issue must be resolved before long, but I see no way of doing this with the present proposal. We could:-

(a) Proceed without Chinese acquiescence: but this would infuriate

the Chinese and the knowledge of their disapproval would cause a crisis of confidence in Hong Kong;

(b) Re-open the matter in Peking to prepare for mention of it during a Ministerial visit; but this would undoubtedly draw the comment from the Chinese that they stood firm on what Premier Hua said in London;

(c) Continue to discuss the problem with NCNA in Hong Kong, who are best placed to grasp the issues involved, perhaps aiming at asking NCNA "What do you suggest?"; but almost certainly the Chinese comment would be that this is a UK problem, not a Chinese one.

3.

I think the Minister might ask Sir M MacLehose if he thinks we have some time in hand before this issue becomes urgent. I suggest this because it seems to me that any industrial or commercial activity based on land investment in Hong Kong at the present moment probably takes no longer view than 1997, and this situation should continue for several years yet. Mr Blaker might also suggest that we and the Government of Hong Kong should now go deeper into the whole issue with the lawyers to see if there is any action which we can take which would have the same effect on the leases as the "open-endedness" we were proposing, without embracing in it the concept that a British administration might continue after 1997. This is a tall order, but we should try.

CONFIDENTIAL

/Parliamentary