TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 6

SECRET

-2-

CHINESE ASSURANCES

4.

Appreciate Chinese assurances to intending investors in Hong

Kong. Do they apply equally to leaseholders in New Territories?

Would Chinese be prepared to say so publicly or confidentially to

intending investors? Clear however that confidence will not be

maintained for long by general assurances. Practical issues

require practical solutions, so sensible to act on leases before

slide in confidence starts.

LONGER TERM

5.

Recognise distinction between long-term future and immediate

concrete problems. Not too soon to begin thinking seriously about

long-term future. But emphasise not our intention to try and tackle

long-term through leases issue. Need for means of dealing with leases

that will not prejudice positions of either side on future.

REACTION TO CHINESE RESPONSES

6.

problem.

[If Chinese do no more than repeat previous assurances]: Must

keep in touch on problem. But cannot delay too long and will need

to discuss immediately if crisis of confidence appears imminent.

7. [IA response to acceptance of need to act now]: Detailed

Should be discussed by officials. Suggest they be asked

to recommend measures to maintain confidence of investors in Hong

Kong economy and to ensure continuing prosperity and stability of

the Territory. Measures should include question of individual land

leases. Must not conflict with the position of either side on status

of Hong Kong. This should hold confidence until 1989 or 1990.

Do Chinese wish to suggest other points to be covered?

SECRET

/PRESS

1

?

}