TNAG-1167-FCO40-1447-Future-of-Hong-Kong-1982 — Page 21

E)

F)

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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 the Chinese People's Government (CPG). The legal mechanics would need to be worked out.

Unilateral action by HMG to take powers to issue land leases beyond 1997; assurance of tacit Chinese approval

i) Likelihood. Possible, particularly if done in form

of automatically renewable periodic leases and with no mention of 1997. Chinese might see it as a necessary way of preserving investor confidence. Has advantage requiring little action on their part.

ii) Problems for HMG. Only a temporary palliative unless

coupled with power of continuing administration.

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

But lacks long-term credibility unless coupled with arrangements for administration after 1997. Not sufficient to halt slide of confidence.

Unilateral action by HMG to remove the limit in the 1898 Order in Council on powers of administration in the New Territories; Chinese acquiescence

i) Likelihood.

Part of the rejected 1979 proposals. Chinese acquiescence would need to be obvious. They are not likely to acquiesce if (as seems possible) they think that any such change should be coupled with concessions on sovereignty. Would therefore lead to solution similar to (C).

ii) Problems for HMG. As in (C)(ii) above.

iii) Effect. As in (C) (iii) above.

CONCLUSION

12.

Stronger verbal assurances from the Chinese (option A) would not by themselves have a significant effect on confidence in Hong Kong; and neither would a statement that 1997 had no relevance (B), unless it opened the way to action by HMG on the continuation of administrative powers. Measures to solve the land lease problem with Chinese consent (E), would be only of short-term effect. Option (D), providing a period of warning before any change were made in the status of Hong Kong, is marginally the most attractive from the UK point of view.

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