TNAG-1839-FCO40-2614-House-of-Commons-Select-Committee-on-Foreign-Affairs-enquiry-1989 — Page 59

that the whole of Hong Kong is Chinese territory. Their

longstanding position was that the treaties relating to

Hong Kong were unequal ones left over from history; that

the question should be settled peacefully through

negotiation when the time was ripe; and that pending a

settlement the status quo should be maintained. They

made it clear that the settlement of the question of Hong

Kong was a matter of China's sovereign right.

3. The fact that the New Territories are subject by

treaty to a lease with a fixed expiry date - 30 June 1997

and would thus revert to China on that date, meant

that the British Government would inevitably have to

reach an agreement with the Chinese Government about Hong

Kong's future. The rest of Hong Kong would not be viable

without the New Territories, which contain most of the

territory's agriculture and industry and its contaijner

port at Kwai Chung. Moreover, by the late 1970s, as the

remaining period of the lease on the New Territories

continued to shorten, concern about Hong Kong's future,

both locally and amongst foreign investors, began to

grow. In particular, the inability of the Hong Kong

Government to grant new individual land leases in the New

Territories extending beyond 1997 would eventually

discourage new investment and undermine confidence.

Simply to have ignored the 1997 deadline was not

option:

that would have led to a steady erosion of

confidence or possibly a sudden panic as the reality of

Hong Kong's uncertain future became closer and clearer.