TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 5

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SECRET

SECRETARY OF STATE'S VISIT TO CHINA: 1-5 APRIL 1981

BRIEF NO 8(a): FUTURE OF HONG KONG

POINTS TO MAKE

FOR HUANG HUA

1. When we met in London in October I mentioned problem of

preserving confidence in Hong Kong.

Present system whereby individual

land leases in New Territories expire in 1997 an important factor.

Hope we can find solution which would maintain confidence without

prejudicing Chinese position. Intend to raise with Vice Chairman

Deng.

FOR DENG XIAOPING

PREVIOUS CONTACTS

2.

Problem discussed on several occasions between Ministers, most

recently during Chairman Hua Guofeng's and Foreign Minister Huang Hua's

visit to London. Also useful contact with Hong Kong officials.

noted in particular Vice Chairman Deng's statement to the Governor

and also Vice Premier Gu Mu's remarks to Sir Philip Haddon-Cave.

that he said it was time to begin thinking about the longer term.

We agree.

Meanwhile common interest in confidence and stability.

Have

Note

LAND LEASES

3.

General confidence holding, but volatile. Once market begins

to slide, will be difficult to stop and may affect mutual interests

in Hong Kong, value of Hong Kong dollar, investment etc.

of the problem is land leases in New Territories.

symbol of uncertainty over future.

One example

Fast becoming

Present need under UK law to

Either

terminate leases in 1997 threatens to be major investment problem

as time approaches (mortgages normally run for 15 years).

amendment of UK law or some agreed solution vital next year or two.

/CHINESE ASSURANCES

SECRET

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