TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 99

'

MEDIUM TERM

SECRET

-5-

DSR 11C

Land Leases in the New Territories

While it would be surprising if the Chinese Government

on the problem as a whole, were ready to move significantly within the next 5 years

7.

there is one immediate issue affecting confidence in the

Territory. This is the question of extending land leases for

lots in the New Territories. There have already been contacts

at ministerial level and between the Governor of Hong Kong and

Chinese leaders. These have produced general assurances for

investors but no specific acceptance of lease extensions.

particular the Chinese rejected a British proposal in 1979

which indluded a provision for continuing British adminis-

tration beyond 1997. When more signs of lack of business

In

confidence appear, the Chinese may be more ready to meet us,

possibly with a de facto acceptance of a lease beyond 1997

granted to a Communist-backed organisation. If they do not,

we shall have to approach them again with a view to an

agreed arrangement before the end of 1982.

Possible Chinese Demands in Medium Term

8. During discussions on land leases one possibility is

SECRET

/that