TNAG-1038-FCO40-1288-Future-of-Hong-Kong-1981 — Page 147

REUTERS

Mr I McCrory

News Department

Foreign and Commonwealth Office

King Charles Street London SW1

8 April 1981

Reuters Limited 85 Fleet Street London EC4P 4AJ Telephone 01-250 1122 Telex 24145 Registered office

Dear Mr McCrory,

Further to our telephone conversation this morning, I would be grateful if you could endeavour to clarify for me whether the hypothesis I outlined is,

in fact, feasible.

To recapitulate, some three years ago when I was based in Hong Kong as a Reuters correspondent, I wrote a feature about the problem of the lease on Hong Kong's New Territories, based on interviews with a large number of senior Government officials and local businessmen. Subsequent to its publication, it was suggested to me by a lawyer in the Colony that a solution could exist which would provide the Hong Kong Government with what would represent under British law a de facto extension of the lease beyond 1997 while at the same time not necessitating any recognition by the Chinese authorities of the 1898 Treaty of Peking.

His suggestion was that, under British law, if a landlord approaches a tenant and offers to sub-let part of the property for a period going beyond the tenure of the existing lease, this would represent a de facto extension of the original lease, by the period by which the sub-let goes beyond the original lease. Under this hypothesis, were the Chinese Government to lease an area of the New Territories for a period of, for example, forty years from the present date, this would represent an extension of the lease on the New Territories until the year 2021. This would therefore satisfy the need of the Hong Kong Government for an extension of the lease, but insofar as it represented purely a commercial transaction for the Chinese authorities, would not constitute recognition of the Treaty of Peking.

I would be very grateful if you could ascertain for me whether such a transaction. could constitute a solution to the problem of the lease on the New Territories, and whether any subsequent rollovers of such a sub-let would, if the original hypothesis is correct, represent further extension of the original lease.

Thanking you in anticipation,

Yours sincerely,

тън трет

Barry Simpson

Chief Sub-Editor

Registered no.145516 England