TNAG-0944-FCO40-1163-Future-of-Hong-Kong-1980 — Page 3

SECRET

Некото

RECEIVED 2

2 OCT 1980

TALKS WITH THE CHINESE FOREIGN MINISTER ON 2 JCTOBER 1980

BRIEF NO ̊4(a):

INMEN

jmmon Token

$2.50

LONG-TERM FUTURE OF HONG KONG AND INDIVIDUAL

LAND LEASES IN THE NEW TERRITORIES

118

POINTS TO MAKE

1.

Noted remarks of Deng Xiaoping, Hua Guofeng and Gu Mu that

investors in Hong Kong should 'put theirs hearts at ease', but helpful

to discuss with Huang Hua distinction between long-term future of

Hong Kong and short-term problems for investors.

2..

Long-term problem is delicate and difficult. Although not too

soon to begin thinking about it, need not deal with this now,

3.

Short-term objective is to sustain Hong Kong's prosperity

and stability in the meantime. There is plenty of scope for mutually

beneficial cooperation, for example, in the fields of water supply,

electricity and other major projects..

A.

But a key problem is how to maintain willingness of people

and firms to invest in the New Territories. To maintain such invest-

ment will shortly be difficult because of shortening period of

individual land leases. Way must be found to give investors rights

to property which could continue beyond 1997 without prejudicing

Chinese basic position. This problem will be critical from mid-1982

since the standard mortgage in the Territory is 15 years. Arrangements

to deal with the question of individual land leases in the New

Territories are desirable by end of 1981. We think a step-by-step

approach working on individual cases could create these.

f. Depending on Huang Hua's response ]

5.

The short-term technical matters cannot be put off for too long:

We may revert to this subject when both sides have had time to think.

SECRET