TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 49

CONFIDENTIAL

in assuring the Hong Kong Financial Secretary that Hong Kong

had a capitalist future beyond 1997.

4. One practical problem for the short term is that of Crown

land leases in the New Territories. At present all such leases

are written to expire in 1997, as there is no legal basis for

extending them beyond that year. A legal solution will be

required before long if adverse effects on confidence in the

territory are to be averted. (Note: Hong Kong is generally

referred to as a territory rather than a Crown Colony in

deference to Chinese sensibilities.)

5.

No discussions have been held with the Chinese on the main

lease of the New Territories.

However, during ex-Premier

Hua Guofeng's visit to London in November 1979 the subject of

Hong Kong's future was touched upon in talks between Hua and the

Prime Minister. It was agreed that the UK and China had a

common interest in the well-being of Hong Kong and should keep

in contact on the subject. Crown land leases and the problem

of confidence were raised by the Secretary of State during talks

with the Chinese Foreign Minister Huong Hua in October 1980.

But the future was not discussed.

The problem of individual

land leases may again come up during the Secretary of State's

visit to Peking in April.

CONFIDENTIAL

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