LOOKING BACK: HOW LONDON AND BEIJING DECIDED THE FATE OF HONG KONG

By Frank Ching
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LOOKING BACK: HOW LONDON AND BEIJING DECIDED THE FATE OF HONG KONG

By Frank Ching
April, 2010

 

For the last quarter century, ever since Britain agreed in 1984 to hand Hong Kong back to China, there have been nagging questions in the back of many people’s minds: If Britain had played its cards differently, could it have changed the outcome and continued to govern the colony beyond 1997? And was Britain deceptive in reporting what then-Vice Premier Deng Xiaoping had said to the governor, Sir Murray MacLehose, when the two men met in March 1979?

Recently declassified British records, plus well-placed Chinese sources, make it clear that London in effect put the Hong Kong issue on China’s agenda by pressing the Chinese to make a decision on the colony’s future. At the time, Deng and other Chinese leaders were preoccupied with the country’s new reform and open policy, its economic development and the possibility of national reunification—not with Hong Kong but with Taiwan. Thus the possibility did exist, at least briefly, that Britain might be allowed to continue governing Hong Kong past 1997.

The records also make clear that there was very little that Britain could have done to change the outcome. And Sir Murray, while of course not disclosing the full content of his private conversation with Deng, did not lie about what the Chinese leader had said. That was because Deng at the time had not yet made up his mind what to do with Hong Kong.

As the first western journalist to report—on July 23, 1982 in The Wall Street Journal—that China had decided to take back Hong Kong in 1997, I was naturally curious as to exactly when that decision was made.

This key period in Hong Kong’s history began in December 1978 when Chinese Foreign Trade Minister, Li Qiang, after a highly publicized visit to the colony, took the unusual step of issuing an invitation to Sir Murray to visit Beijing. Ever since Hong Kong became a British colony in 1841, no governor had ever been invited to the Chinese capital. And while Beijing insisted that the three treaties under which Britain had obtained Hong Kong, Kowloon and the New Territories were null and void and that the territory was occupied illegally by Britain, this invitation was actually issued to Sir Murray as the governor of Hong Kong.

Looking for a Reliable Regime

Because of the looming expiration of the 99-year New Territories lease in 1997, Britain had been looking for an opportunity to discuss the situation with China. The problem was that, for a long time, there was no government in China with which Britain felt it could talk. Even though China appeared reasonably stable by the early 1970s, both Chairman Mao Zedong and Premier Zhou Enlai were clearly not going to last much longer.

Thus Sir Murray, in a secret cable back to London on 13th February 1976—a month after Zhou’s death and at a time when Mao was clearly on his last legs—cautioned that “even supposing we did reach an understanding about the long term problem with the present government, there would be nothing to prevent a different regime from overthrowing it in the light of their interests when the time came.”

So, when the dust settled after Mao’s death and the pragmatic Deng Xiaoping emerged as China’s new strong man, the British discerned a window of opportunity. But time was of the essence since Deng in 1979 was already in his 75th year and there was no telling how long he would remain in power.

Britain felt that it had a relatively good hand to play, since Hong Kong was of great value to China, accounting for a third of its foreign exchange earnings. Besides, Deng’s pursuit of the “Four Modernizations” meant that Hong Kong would be able to contribute even more to China’s development.

Actually, Hong Kong’s value to China went far beyond economic gain. For one thing, Hong Kong was extremely valuable as an intelligence center. Isolated from the rest of the world, the Chinese used Hong Kong to learn about what was going on internationally. Hong Kong was their qixiangtai, or weather observatory.

Hong Kong was also useful to help circumvent an embargo against China imposed during the Korean War. What China could not import, it often could obtain in Hong Kong. Even after the Korean War ended, China was still subject to regulations of the Coordinating Committee for Multilateral Export Controls, or Cocom, which was set up by western countries to control the export of technology to communist ones. The value of smuggling to China was acknowledged when the tycoon Henry Fok died in 2006. The “patriotic businessman” was openly praised for breaking the United Nations embargo and smuggling supplies into China.

The Governor Sees a Problem

Sir Murray MacLehose, a canny diplomat, wanted to use the new, post-Mao environment to rid Hong Kong of the shadow of 1997. As early as 1976, he had foreseen that, by about 1985 “an understanding – explicit or implicit – must be reached with China about what will happen to Hong Kong after the lease of the New Territories expires in 1997.” Otherwise, he said, “the colony could rapidly go downhill to a point at which it became valueless to either the United Kingdom or China, and probably ungovernable.”

The deadline for Sir Murray was not 1997 but sometime in the mid-1980s because of a practical issue: all individual land leases in the New Territories expired in June 1997. And since mortgages tended to be for 15 years, from 1982 on those mortgages would get shorter and shorter and there would be an inevitable impact on investment and on confidence in general.

The governor's solution was to change British law so as to allow the colonial government to issue leases in the New Territories without a fixed term. This, of course, required China’s acquiescence but since China did not recognize the validity of the original treaty, its expiration should have no significance.

The colonial government informed the Xinhua News Agency in Hong Kong—China’s official representative in the colony—that it wished to discuss the question of land leases during the governor’s visit. The British felt that what they proposed did not conflict with China’s position that Hong Kong was under Chinese sovereignty and would be taken back some time in the future. In fact, they felt their proposal of continued British administration was actually in China’s interest. The question was putting the case to someone in a position of authority.

Sir Murray wanted to broach the issue in Beijing first with Liao Chengzhi, the director of the State Council’s Hong Kong and Macau Affairs Office. Alternatively, he could talk first with Foreign Minister Huang Hua. The idea was to ensure that Deng was fully briefed before the governor met him. However, that was not to be. The Chinese scheduled him to meet Deng first, on March 29.

Deng Talks Straight

According to a record of the conversation, the straight-talking Deng launched directly into the issue of the future of Hong Kong, reiterating the Chinese position that sovereignty lay with China. He pointed out that 1997 was still 18 years away and said that China would respect the special status of Hong Kong whatever it eventually decided to do.

Deng asked Sir Murray to tell investors to “put their hearts at ease.” The governor, in his response, said that Hong Kong’s future was a matter for the Chinese and British governments but that he, as governor, had a more immediate problem “concerning the leases issued to people in the New Territories…. They were all written with a validity lasting only until June 1997.”

As the time of the leases shortened, the governor explained, “this would deter the sort of investment Hong Kong wanted.” Sir Murray said he had thought of a way to solve the problem, which would not conflict with China’s position. What he had in mind, the governor said, was “replacing the leases valid to 1997 with leases valid as long as Britain administered the New Territories. This would get rid of the date.”

“By 1997,” Deng responded, “China might take over Hong Kong. But this would not affect her economy….There were two solutions by 1997, to take Hong Kong over, or to allow present realities to remain. Whatever political solution was adopted, investors would not be affected.” Sir Murray insisted that what he proposed would not affect the Chinese position, and all China had to do was not to object. But, the governor said, he had to do something over the next year or two if investment was to continue to come in.

On that rather uncertain note the meeting concluded.

From the British standpoint, the Deng meeting was not wholly satisfactory but, on the other hand, the great man had not ruled out a continuation of the status quo beyond 1997. So the British decided to proceed with their idea of new legislation that would allow the governor of Hong Kong to issue leases with an indefinite termination date. They went to great lengths not to use words that might be sensitive, avoiding terms like “British administration” and “the Crown.”

Sir Percy Seeks an Answer

The British knew that if they pressed ahead without Chinese consent, it would certainly backfire. So, on July 5 1979, Sir Percy Cradock, the British ambassador, went to see Assistant Foreign Minister Song Zhiguang, who was concurrently Director General of the Department of Western European Affairs. Mr. Song, who had been ambassador to the United Kingdom earlier in the decade, was given a copy of the British proposal, which Sir Murray intended to make public on October 10 on the opening of the Legislative Council.

The answer did not come for 11 weeks and, when it did, it dealt the British a devastating blow. “The Chinese government,” Britain was told, “considers as unnecessary and inappropriate the legal steps that the British side now proposes to take regarding the term of administration of the New Territories by the Governor of Hong Kong and the question of leases for land in the New Territories. Therefore, the Chinese government urges the British side to desist from taking the proposed actions, for the repercussions therefrom would adversely affect the interests of both the Chinese and British sides.”

In reporting this to the Foreign Office in London, Sir Percy said it was important for Britain to “keep this rebuff secret.” No doubt, he knew that if the news got out, there would be panic in Hong Kong. Although China had not yet made up its mind to take back the colony, it had rejected a British proposal for getting rid of the 1997 deadline imposed by the New Territories lease.

The British, by bringing up the issue, had put it on the Chinese agenda. Many elements of the Chinese government favored the continuation of British rule in Hong Kong after 1997. The Department of Treaty and Law and the West European Department drafted a joint paper advocating continued British administration. The Foreign Trade Ministry, the Xinhua News Agency and others also called for the maintenance of the status quo.

Avoiding the Deadline

The British strategy was to explain publicly that China had agreed to the elimination of the deadline represented by the expiration of the New Territories lease. By implication, of course, it would mean that Deng and other Chinese leaders had agreed to the continuation of colonialism in China into the 21st century.

The Communists’ position from 1949 on was that the British administration of Hong Kong was a legacy of history. It was not their doing but they accepted it. However, if the People’s Republic of China was to agree to the continuation of British rule beyond 1997, it would definitely be the responsibility of the Chinese Communist Party. Deng himself later explained that he could not become another Li Hongzhang, the Qing dynasty official who had signed the 1898 Convention that turned the New Territories over to Britain.

Because London pressed for an answer, Deng eventually decided he had no choice but to take back Hong Kong. Even so, he coupled that decision with his dream of reunification with Taiwan by applying his formula of “one country, two systems,” which had been devised with Taiwan in mind, to the British colony, hoping that it would be a model for the breakaway island.

A decision to take back Hong Kong in 1997 was formally made by the Politburo on December 26, 1981—a fact never before reported. So by the time Prime Minister Margaret Thatcher visited Beijing in 1982, China’s position was firm. Nothing that the Iron Lady did could change China’s mind. What remained for the British to do was to educate the Chinese on the details of how the colony was run. The culmination of this process was the Joint Declaration on the Question of Hong Kong signed by the two countries in 1984. In this document, China declared its intention to recover Hong Kong on July 1, 1997. Britain declared its willingness to restore the colony to China on that date.
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Frank Ching is a Hong Kong-based author and columnist who specializes in Chinese politics and diplomacy. His book Ancestors was updated and republished in 2009 by Rider, an imprint of Ebury Publishing, a Random House Group company. He was The Wall Street Journal's Beijing correspondent during the early years of British-Chinese negotiations about the future of Hong Kong.

04/01/2010