TNAG-0937-FCO40-1156-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-th-1980 — Page 98

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acknowledgement we would want from them in order to satisfy

investors that their position was indeed underwritten beyond

1997. We cannot be too ambitious here. Anything referring to

continuing British administration is almost certainly out.

It may, however, be possible to get a statement confirming that

the general assurances already made refer to real estate and

specifically to land leased from 'the authorities in Hong Kong'

or some such phrase.

8.

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This suggests that when the Secretary of State visits China

in October he should, as the Governor suggests, start on the

short-term problem of land leases. This would not exclude agreeing

on a dialogue on the long-term future: we do not want to rebuff

the Chinese if they are really ready to talk. But it would be

a mistake to allow a continuing exchange on an evolving situation

to hold up work on the leases question.

9.

The Governor and Ambassador have also discussed the question

of our response if the Chinese were to demand some kind of

political quid pro quo for a more forthcoming attitude on the

leases question. A possibility might be a declaration on our part

on ultimate Chinese sovereignty over the territory, possibly

coupled with agreement to their longstanding request to have an

official representative in Hong Kong. This would have to be

looked at very carefully. A declaration on sovereignty would posė

major legal problems and could of course in itself disturb

confidence in Hong Kong if it were not part of a satisfactory

package. In practice, however, it seems unlikely that the Chinese

are thinking on these lines at present.

9 July 1980

CC FED

Drip

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R D Clift

Hong Kong and General Department