TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 101

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DSR 11C

E)

(ii) Problems for HMG. Almost certainly would be

combined with Chinese demand that HMG concede Chinese

sovereignty. Still, better than (C), as it guarantees

length of tenure. Powers of continuing administration

could be tied to Chinese declaration. So could land

leases. Both require Chinese assurances about the

period of warning to be made public in some firms.

for continued British administration would have to be

Chief drawback lies in the fact

negotiated with Chinese.

Basis

that the assurance is only effective so long as the

Chinese do not institute a period of warning. As soon

as that happened we would face weakening confidence in

Hong Kong, although certainly firms and others would have

time to make their plans.

(iii)

Effect. Major boost to confidence. Sufficient

to halt slide of confidence. But only provided it was

quickly followed by UK legislation to bring British

jurisdiction and powers of administration into line with

new concept of validity of 15 years constantly rolled

forward until notice given by CPG. The legal mechanics

would need to be worked out.

Unilateral action by HMG to take powers to issue land

leases beyond 1997;

(i)

assurance of tacit Chinese approval.

Likelihood. Possible, particularly if done in the

form of automatically renewable periodic leases and with

no mention of 1997. Chinese might see it as a necessary

way of preserving investor confidence.

requiring little action on their part.

Has advantage of

(ii) Problems for HMG. Only a temporary palliative

unless coupled with power of continuing administration.

(iii) Effect. If done now, a short-term beneficial

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