Opinion | No need to fret about a land lease 'cliff' in 2047

All the talk now in world business circles is about a so-called financial "cliff", when savage spending cuts and sharp tax increases are scheduled to kick in to compensate for past failures to reach a sensible bipartisan deal on the United States budget.

Hong Kong faced its own famous cliff, of a socio-political nature, in 1997. Under various unequal treaties imposed on China in the 19th century, Hong Kong Island and the tip of the Kowloon peninsula were ceded in perpetuity to Britain, but the great bulk of Hong Kong, some 90 per cent, still called to this day the New Territories, was the subject of a 99-year lease running from July 1, 1898.

Notwithstanding that Chinese governments had long since repudiated all three treaties, there was the problem of what the British would do when their lease ran out.

The Sino-British Joint Declaration of 1984 restored the whole of Hong Kong to China and provided that life in the city would continue past 1997 "unchanged for 50 years".

Because of the wording, many people assume that the 1997 crunch date has been replaced by a new "cliff" in 2047. They may have been strengthened in this false belief by the fact that land sold by the Hong Kong government between 1985 and 1997 was subject to leases that ran for the balance of British administration plus 50 years, that is, they too would expire in 2047.

But the "logic" is flawed because it overlooks fundamental differences between the situations prevailing at the relevant times.