Downing Street Years - Margaret Thatcher [160]
I began that meeting with a prepared statement setting out the British position. I said that Hong Kong was a unique example of successful Sino-British co-operation. I noted that the two main elements of the Chinese view concerned sovereignty and the continued prosperity of Hong Kong. Prosperity depended on confidence. If drastic changes in the administrative control of Hong Kong were to be introduced or even announced now there would certainly be a wholesale flight of capital. This was not something which Britain would prompt — far from it. But nor was it something we could prevent. A collapse of Hong Kong would be to the discredit of both our countries. Confidence and prosperity depended on British administration. If our two Governments could agree on arrangements for the future administration of Hong Kong; if those arrangements would work and command confidence among the people of the Colony; and if they satisfied the British Parliament — we would then consider the question of sovereignty.
I had hoped that this practical and realistic line of argument would prove persuasive. After all, China gained large amounts of foreign currency and investment by having a capitalist Hong Kong on her doorstep. Even at the height of the Cultural Revolution, though riots had been fomented in the Colony by the communists, the Red Guards had never been permitted to launch a full-scale attack on Hong Kong. I tried to persuade Mr Zhao that we should agree a fairly noncommittal joint public statement saying that our common objective was to maintain the prosperity of Hong Kong and that there would be early official talks between us about this.
However, it was quite clear from the Chinese Prime Minister’s opening remarks that they would not compromise on sovereignty and that they intended to recover their sovereignty over the whole of Hong Kong — the island as well as the New Territories — in 1997 and no later. The fundamental position underlying the Chinese position was that the people of Hong Kong were Chinese and not British. That said, Hong Kong could become a special administrative zone administered by local people with its existing economic and social system unchanged. The capitalist system in Hong Kong would remain, as would its free port and its function as an international financial centre. The Hong Kong dollar would continue to be used and to be convertible. In answer to my vigorous intervention about the loss of confidence which such a position, if announced, would bring, he said that if it came to a choice between sovereignty on the one hand and prosperity and stability on the other China would put sovereignty first. The meeting was courteous enough. But the Chinese refused to budge an inch.
I knew that the substance of what had been said would be conveyed to Deng Xiaoping whom I met the next day. Mr Deng was known as a realist. Indeed, it was he who effectively unlocked the way to a solution in Hong Kong. He had accepted that two different economic systems could exist in one country, a fact demonstrated by the setting up of special economic zones behind Hong Kong, within China itself. On this occasion, however, he was obdurate. He reiterated that the Chinese were not prepared to discuss sovereignty. He said that the decision that Hong Kong would return to Chinese sovereignty need not be announced now, but that in one or two years’ time the Chinese Government would formally announce their decision to recover it. I repeated that what I wanted was agreement in further talks that after 1997 British administration would continue with the same system of law, the same political system, and the same independent currency. If we could at a later stage reach such an