TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 43

DRAFT

SECRET

THE FUTURE OF HONG KONG : OPTIONS AND PROBLEMS

Aim

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 belong to the Crown by

virtue of cession 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 immediate 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 future of Hong Kong will be determined largely by the wishes

of the Chinese Government. It is a fundamental difficulty for HMG

that their title to occupy and administer Hong Kong, while confirmed

by unilateral Orders in Council and Letters Patent, rests upon a

series of Treaties with the Imperial Chinese Government.

In our own

legal view, the greater part of the Territory should revert to China

in 1997, and this effectively precludes a 'normal' progression through

self-government to independence. The attitude of post-Imperial

Both the KMT and Chinese Governments has in any case ruled this out.

Communist administrations have condemned the Treaties ceding and

leasing Hong Kong as 'unequal'. This condemnation has not always

amounted to outright non-recognition of the Treaties.

It is thus

/an

SECRET