TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 95

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DRAFT PAPER

SECRET

THE FUTURE OF HONG KONG: OPTIONS AND PROBLFM3

Aim

*DSR 11C

1.

To consider possible options for the future of Hong Kong

in the medium and long-term and the implications for HMG.

Present Position and the British and Chinese Attitudes

2. Hong Kong as a whole is one Crown Colony. But only Hong

Kong Island and the southern part of the Kowloon Peninsula

are ceded to the Crown in perpetuity. The New Territories,

including the outlying islands, are held under a 99-year

'lease' from China, which expires on 1 July 1997. In practice

the ceded areas would not be viable on their own and there is

a uniform system of government for the Territory as a whole;

but there are legal distinctions which have political and

economic significance. The most important is that whereas

in the ceded areas leases of Crown land are granted for 75

years, in the New Territories they expire 3 days short of the

end of the Lease from China. As the period shortens the

risk grows of potential investors being discouraged and of damage to confidence.

3. The source of HMG's difficulties is that its title to

occuply and administer Hong Kong, while confirmed by uni-

lateral Orders in Council and Letters Patent, rests upon a

SECRET

/series