TNAG-0944-FCO40-1163-Future-of-Hong-Kong-1980 — Page 64

7.

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b) To issue leases beyond 1997 for a fixed term. These

would obviously be more attractive to investors but would

probably require new legislation. We would need to see how

receptive the Chinese were before pursuing this idea.

We would have to explain the legal difficulties although

we would be able to make clear that it would not be

necessary for an Order in Council to refer to the

combination of British administration after 1997 (the

point which probably caused the Chinee most trouble

when we made our proposals last year).

There is some disagreement between the Governor and

Sir P Cradock as to whether enabling legislation should best be

made before any leases were issued or retroactively, ie only if

and when some part (eg a sub-lessee) challenged the validity of

a lease in the courts. The Ambassador favours the former course,

the Governor the latter. I believe strongly that we should keep

both options open. We cannot be sure which would be seen by the

Chinese as likely to cause less embarrassment. Since the important

point is that any scheme must be endorsed by Peking, it would be

wrong to take a firm decision now.

бир

5 September 1980

CC FED

SECRET

R D Clift

Hong Kong and General Department