TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 213

ESSENTIAL FACTS

SECRET

FUTURE OF HONG KONG

1.

The Chinese Government have neither formally accepted nor

abrogated the 19th Century Treaties on Hong Kong. The bulk of the

Territory (the New Territories) is leased from China under the

1898 Convention of Peking. The Lease expires in 1997. The Chinese

position is that all of Hong Kong is Chinese territory temporarily administered by Britain but they are in no hurry to upset the status quo, which suits them well for economic and other reasons. Britain/

China relations have never been better.

2.

Vice-Chairman Deng told the Governor in 1979 to make it

clear to investors that they should 'put their hearts at ease' and repeated these general assurances to Lord Carrington in April

this year.

3.

Despite this, concern in Hong Kong and in commercial circles about the Territory's future will increase as 1997 draws closer,

unless some arrangement is reached with the Chinese. HMG has

stressed Britain's continuing commitment to Hong Kong and its people.

Besides this general question of confidence, HMG has to face the problem of the legal basis of their administration of the New Territories after 1997. We shall have to time any approach to the Chinese carefully. The department is preparing a contingency paper

on the subject which is under discussion with the Governor and

HM Ambassador, Peking, before submission to Ministers.

4.

Hong Kong and General Department

29 September 1981

SECRET