TNAG-0944-FCO40-1163-Future-of-Hong-Kong-1980 — Page 8

DSR 11C

SECRET

-3-

j) If the Chinese asked the Secretary of State to suggest

a way round the leases problem, he could

alternative scenarios in (c) and (d) above)

suggest detailed discussions by officials of th

k) The Secretary of State could usefully ask the Chinese

whether their 'hearts at ease' statements applied to

leaseholders as well as investors.

1) The speaking note for the Secretary of State's brief

should begin by referring to exchanges over the past

year and, in particular, Vice Premier Gu Mu's remarks

to Sir P Haddon-Cave and then develop the theme of the

need for confidence-building in Hong Kong. There would

be a separate brief on leases in case detailed

discussion developed on this.

m) The Hong Kong Government would provide a note on the

economic consequences for Hong Kong of a failure to

come to an arrangement with the Chinese on leases, as

a contribution to the background briefing for the

Secretary of State.

Distribution:

Sir E Youde

Sir M MacLehose

Sir P Cradock

HKGD

FED

SECRET

S4200(22454) DD.0532198 300M 7/79 GWB LTD GP.870