CONFIDENTIAL
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17. The most important is whether at some stage (and the time is not yet ripe) we shall be able to persuade the Chinese of the merits of our idea of a statutory Land Authority, which would survive after 1997 and in which all Crown Land would be vested before 1997. If we secured that objective, it would be possible to envisage the grant of a lease by the Authority before 1997 to the Crown acting in right of the UK (e.g. in the name of the Secretary of State for Foreign and Commonwealth Affairs, as a corporation sole). The latter could license the use of the premises to whoever he liked before 1997, but it might help to avoid difficulties with the Chinese if he chose some servant of the Crown acting in right of the U.K. After 1997 he could license its use by e.g. the Consul-General.
18. A second imponderable is whether a statutory Land Authority should or should not be treated as a part of "the British Hong Kong Government" for the purposes of para 3 of Annex III to the Joint Declaration. We think it probably should but, until we approach the Chinese again on the whole. question of a statutory Land Authority, we cannot be sure that they will take the same view.
19. If it proves impossible to establish a Statutory Land Authority, some special arrangement will be necessary to allow continued title to property acquired by HMG before 1997. This special arrangement, which would need to be agreed with the Chinese, could possibly be in the form of a lease to be issued by the SAR Government. But this will need further detailed consideration.
20. For these reasons, we do not think we can at this stage reach firm conclusions as to how to secure before 1997 land titles upon which the Consul-General can rely therafter. It would seem therefore better to concentrate first on trying to identify suitable premises.
CONFIDENTIAL
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