TNAG-1041-FCO40-1291-Future-of-Hong-Kong-1981 — Page 29

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ANNEX

FUTURE OF HONG KONG

Extract (paragraphs 3-15) of Mr Clift's submission of

3 December 1981

255

3.

The Lease of the New Territories ends in 1997. This will

soon begin to affect investment confidence in Hong Kong. Unless

the future is clarified, this will happen by 1985 at the latest,

perhaps sooner.

4.

5.

Chinese and British views. The Chinese claim that all the

treaties affecting Hong Kong are 'unequal'. But they have not

formally abrogated them. They are deliberately equivocal about the significance to them of 1997. On the British side, the legal

position is clear cut. Unless new powers are taken, the

Governor's right to administer the New Territories ceases in 1997.

In British law there is a distinction between the New Territories

and the rest of Hong Kong which is held in perpetuity. But, in practical terms, the whole territory is now indivisible. The Lease

problem therefore affects the future of the whole of Hong Kong.

So far attempts to get the Chinese to focus on this, including specific suggestion for an interim solution made in 1979, have failed. For the Chinese leadership, doing anything to

prolong British administration is a political minefield. They are happy with the present position by which Britain administers Hong Kong and China gains great economic benefit from it. But they

have made it clear that they are in no hurry to deal with the

problem of the future. They believe that their general assurances

to investors to 'put their hearts at ease' are sufficient. This

is not so; unless uncertainty over the Governor's powers after

1997 is removed, confidence will fade, perhaps quite soon. More-

administration will become increasingly difficult as the

time shortens within which the Government can legally act.

6.

When the Chinese are prepared to discuss the future, the

analogy with their policy towards Taiwan suggests that they might

concede a wide degree of autonomy if their sovereignty over

the Territory was recognised. It is uncertain whether the Chinese would be able to accept a form of autonomy including formal

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/agreement