Handover of Hong KongFrom Wikipedia, the free encyclopedia

The transfer of sovereignty over Hong Kong,[1][2][3] commonly known as the handover of Hong Kong (or simply the Handover, also the Return in mainland China and Hong Kong), occurred at midnight on 1 July 1997, when the United Kingdom ended administration for the colony of Hong Kong and returned control of the territory to China. Hong Kong became a special administrative region and continues to maintain governing and economic systems separate from those of mainland China.

This event ended 156 years of British colonial rule in Hong Kong. The territory was Britain's last substantial overseas possession. With a population of about 6.5 million in 1997, Hong Kong constituted 97 per cent of the total population of all British Dependent Territories at the time. The retrocession is considered by some to definitively mark the end of the British Empire.

Overview

Britain acquired Hong Kong Island in 1842, the Kowloon Peninsula in 1860, and the lease of the New Territories in 1898.

By the 1820s and 1830s, the British had conquered parts of India and had intentions of growing cotton in these lands to offset the amount of cotton they were buying from America. When this endeavour failed, the British realised they could grow poppies at an incredible rate. These poppies could then be turned into opium, which the Chinese highly desired, but their laws prohibited. So the British plan was grow poppies in India, convert it into opium, smuggle the opium in China and trade it for tea, and sell the tea back in Britain. The illegal opium trade was highly successful, and the drug was very profitably smuggled into China in extremely large volumes.[4]

The United Kingdom obtained control over portions of Hong Kong's territory through three onerous treaties imposed on Qing China after the Opium Wars:

1842 Treaty of Nanking: Hong Kong Island ceded in perpetuity 1860 Convention of Peking: Kowloon Peninsula and Stonecutter's Island additionally ceded 1898 Convention for the Extension of Hong Kong Territory: the New Territories and outlying

islands leased for 99 years until 1997

Despite the finite nature of the New Territories lease, this portion of the colony was developed just as rapidly as, and became highly integrated with, the rest of Hong Kong. As the end of the lease approached, and by the time of serious negotiations over the future status of Hong Kong in the 1980s, it was thought impractical to separate the ceded territories and return only the New Territories to China. In addition, with the scarcity of land and natural resources in Hong Kong Island and Kowloon, large-scale infrastructure investments had been made in the New Territories, with break-evens lying well past 30 June 1997.[5]

When the People's Republic of China obtained its seat in the United Nations as a result of the UN General Assembly Resolution 2758 in 1971, it began to act diplomatically on its previously lost sovereignty over both Hong Kong and Macau. In March 1972, the Chinese UN representative, Huang Hua, wrote to the United Nations Decolonization Committee to state the position of the Chinese government:

"The questions of Hong Kong and Macau belong to the category of questions resulting from the series of unequal treaties which the imperialists imposed on China. Hong Kong and Macau are part of Chinese territory occupied by the British and Portuguese authorities. The settlement of the questions of Hong Kong and Macau is entirely within China's sovereign right and do not at all fall under the ordinary category of colonial territories. Consequently they should not be included in the list of colonial territories covered by the declaration on the granting of independence to colonial territories and people. With regard to the questions of Hong Kong and Macau, the Chinese government has consistently held that they should be settled in an appropriate way when conditions are ripe."[6]

The same year, on 8 November, the United Nations General Assembly passed the resolution on removing Hong Kong and Macau from the official list of colonies.[6]

In March 1979 the Governor of Hong Kong, Murray MacLehose, paid his first official visit to the People's Republic of China (PRC), taking the initiative to raise the question of Hong Kong's sovereignty with Deng Xiaoping.[7] Without clarifying and establishing the official position of the PRC government, the arranging of real estate leases and loans agreements in Hong Kong within the next 18 years would become difficult.[5]

In response to concerns over land leases in the New Territories, MacLehose proposed that British administration of the whole of Hong Kong, as opposed to sovereignty, be allowed to continue after 1997.[8] He also proposed that contracts include the phrase "for so long as the Crown administers the territory".[9]

In fact, as early as the mid-1970s, Hong Kong had faced additional risks raising loans for large-scale infrastructure projects such as its Mass Transit Railway (MTR) system and a new airport.

Caught unprepared, Deng asserted the necessity of Hong Kong's return to China, upon which Hong Kong would be given special status by the PRC government.

MacLehose's visit to the PRC raised the curtain on the issue of Hong Kong's sovereignty: Britain was made aware of the PRC's intent to resume sovereignty over Hong Kong, and began to make arrangements accordingly to ensure the sustenance of her interests within the territory, as well as initiating the creation of a withdrawal plan in case of emergency.

Three years later, Deng received the former British Prime Minister Edward Heath, who had been dispatched as the special envoy of Prime Minister Margaret Thatcher to establish an understanding of the PRC's plans with regards to the retrocession of Hong Kong; during their meeting, Deng outlined his plans to make the territory a special economic zone, which would retain its capitalist system under Chinese sovereignty.[10]

In the same year, Edward Youde, who succeeded MacLehose as the 26th Governor of Hong Kong, led a delegation of five Executive Councillors to London, including Chung Sze-yuen, Lydia Dunn, and Roger Lobo.[11] Chung presented their position on the sovereignty of Hong Kong to Thatcher, encouraging her to take into consideration the interests of the native Hong Kong population in her upcoming visit to China.[11]

In light of the increasing openness of the PRC government and economic reforms on the mainland, the then British Prime Minister Margaret Thatcher sought the PRC's agreement to a continued British presence in the territory.[12]

However, the PRC took a contrary position: not only did the PRC wish for the New Territories, on lease until 1997, to be placed under the PRC's jurisdiction, it also refused to recognise the onerous "unfair and unequal treaties" under which Hong Kong Island and Kowloon had been ceded to Britain in perpetuity after the Opium Wars.[13] Consequently, the PRC recognised only the British administration in Hong Kong, but not British sovereignty.[13]

Talks

Before the negotiations

In the wake of Governor MacLehose's visit, Britain and the PRC established initial diplomatic contact for further discussions of the Hong Kong question, paving the way for Thatcher's first visit to the PRC in September 1982.[14]

Margaret Thatcher, in discussion with Deng Xiaoping, reiterated the validity of an extension of the lease of Hong Kong territory, particularly in light of binding treaties, including the Treaty of Nanking in 1842, the Convention of Peking in 1856, and the Convention for the Extension of Hong Kong Territory signed in 1890.

In response, Deng Xiaoping cited clearly the lack of room for compromise on the question of sovereignty over Hong Kong; the PRC, as the successor of Qing dynasty and the Republic of China on the mainland, would recover the entirety of the New Territories, Kowloon and Hong

Kong Island. China considered treaties about Hong Kong as unequal and ultimately refused to accept any outcome that would indicate permanent loss of sovereignty over Hong Kong's area, whatever wording the former treaties had.[15]

During talks with Thatcher, China planned to invade and seize Hong Kong if the negotiations set off unrest in the colony. Thatcher later said that Deng told her bluntly that China could easily take Hong Kong by force, stating that "I could walk in and take the whole lot this afternoon", to which she replied that "there is nothing I could do to stop you, but the eyes of the world would now know what China is like".[16]

After her visit with Deng in Beijing, Thatcher was received in Hong Kong as the first British Prime Minister to set foot on the territory whilst in office. At a press conference, Thatcher re-emphasised the validity of the three treaties, asserting the need for countries to respect treaties on universal terms: "There are three treaties in existence; we stick by our treaties unless we decide on something else. At the moment, we stick by our treaties."[12]

At the same time, at the 5th session of the 5th National People's Congress, the constitution was amended to include a new Article 31 which stated that the country might establish Special Administrative Regions (SARs) when necessary.[17]

The additional Article would hold tremendous significance in settling the question of Hong Kong and later Macau, putting into social consciousness the concept of "One country, two systems". The concept would prove useful to deploy until the territories were secured and conditions were ripe for its gradual abrogation.

Negotiations begin

A few months after Thatcher's visit to Beijing, the PRC government had yet to open negotiations with the British government regarding the sovereignty of Hong Kong.

Shortly before the initiation of sovereignty talks, Governor Youde declared his intention to represent the population of Hong Kong at the negotiations. This statement sparked a strong response from the PRC, prompting Deng Xiaoping to denounce talk of "the so-called 'three-legged stool'", which implied that Hong Kong was a party to talks on its future, alongside Beijing and London.[18]

At the preliminary stage of the talks, the British government proposed an exchange of sovereignty for administration and the implementation of a British administration post-handover.[12]

The PRC government refused, contending that the notions of sovereignty and administration were inseparable, and although it recognised Macau as a "Chinese territory under Portuguese administration", this was only temporary.[19]

In fact, during informal exchanges between 1979 and 1981, the PRC had proposed a "Macau solution" in Hong Kong, under which it would remain under British administration at China's discretion.[7]

However, this had previously been rejected following the 1967 Leftist riots, with the then Governor, David Trench, claiming the leftists' aim was to leave the UK without effective control, or "to Macau us".[20]

The conflict that arose at that point of the negotiations ended the possibility of further negotiation. During the reception of former British Prime Minister Edward Heath during his sixth visit to the PRC, Deng Xiaoping commented quite clearly on the impossibility of exchanging sovereignty for administration, declaring an ultimatum: the British government must modify or give up its position or the PRC will announce its resolution of the issue of Hong Kong sovereignty unilaterally.[21]

In 1983, Typhoon Ellen ravaged Hong Kong, causing great amounts of damage to both life and property.[22] The Hong Kong dollar plummeted on Black Saturday, and the Financial Secretary John Bremridge publicly associated the economic uncertainty with the instability of the political climate.[23] In response, the PRC government condemned Britain through the press for "playing the economic card" in order to achieve their ends: to intimidate the PRC into conceding to British demands.[24]

British concession

Governor Youde with nine members of the Hong Kong Executive Council travelled to London to discuss with Prime Minister Thatcher the crisis of confidence—the problem with morale among the people of Hong Kong arising from the ruination of the Sino-British talks. The session concluded with Thatcher's writing of a letter addressed to the PRC Premier Zhao Ziyang.

In the letter, she expressed Britain's willingness to explore arrangements optimising the future prospects of Hong Kong while utilising the PRC's proposals as a foundation. Furthermore, and perhaps most significantly, she expressed Britain's concession on its position of a continued British presence in the form of an administration post-handover.

Two rounds of negotiations were held in October and November. On the sixth round of talks in November, Britain formally conceded its intentions of either maintaining a British administration in Hong Kong or seeking some form of co-administration with the PRC, and showed its sincerity in discussing PRC's proposal on the 1997 issue. Obstacles were cleared.

Simon Keswick, chairman of Jardine Matheson & Co., said they were not pulling out of Hong Kong, but a new holding company would be established in Bermuda instead.[25] The PRC took this as yet another plot by the British. The Hong Kong government explained that it had been informed about the move only a few days before the announcement. The government would not and could not stop the company from making a business decision.

Just as the atmosphere of the talks was becoming cordial, members of the Legislative Council of Hong Kong felt impatient at the long-running secrecy over the progress of Sino-British talks on the Hong Kong issue. A motion, tabled by legislator Roger Lobo, declared "This Council deems it essential that any proposals for the future of Hong Kong should be debated in this Council before agreement is reached", was passed unanimously.[26]

The PRC attacked the motion furiously, referring to it as "somebody's attempt to play the three-legged stool trick again".[27] At length, the PRC and Britain initiated the Joint Declaration on the question of Hong Kong's future in Beijing. Zhou Nan, the then PRC Deputy Foreign Minister and leader of the negotiation team, and Sir Richard Evans, British Ambassador to Beijing and leader of the team, signed respectively on behalf of the two governments.[28]

Sino-British Joint DeclarationMain article: Sino-British Joint Declaration

The Sino-British Joint Declaration was signed by the Prime Ministers of the People's Republic of China and the United Kingdom governments on 19 December 1984 in Beijing. The Declaration entered into force with the exchange of instruments of ratification on 27 May 1985 and was registered by the People's Republic of China and United Kingdom governments at the United Nations on 12 June 1985.

In the Joint Declaration, the People's Republic of China Government stated that it had decided to resume the exercise of sovereignty over Hong Kong (including Hong Kong Island, Kowloon, and the New Territories) with effect from 1 July 1997 and the United Kingdom Government declared that it would restore Hong Kong to the PRC with effect from 1 July 1997. In the document, the People's Republic of China Government also declared its basic policies regarding Hong Kong.

In accordance with the "One country, two systems" principle agreed between the United Kingdom and the People's Republic of China, the socialist system of the People's Republic of China would not be practised in the Hong Kong Special Administrative Region (HKSAR), and Hong Kong's previous capitalist system and its way of life would remain unchanged for a period of 50 years. This would have left Hong Kong unchanged until 2047.

The Joint Declaration provided that these basic policies should be stipulated in the Hong Kong Basic Law. The ceremony of the signing of the Sino-British Joint Declaration took place at 18:00, 19 December 1984 at the Western Main Chamber of the Great Hall of the People. The Hong Kong and Macao Affairs Office at first proposed a list of 60–80 Hong Kong people to attend the ceremony. The number was finally extended to 101.

The list included Hong Kong government officials, members of the Legislative and Executive Councils, chairmen of the Hongkong and Shanghai Banking Corporation and Standard Chartered Bank, prominent businessmen such as Li Ka-shing, Pao Yue-kong and Fok Ying-tung, and also Martin Lee Chu-ming and Szeto Wah.

Universal Suffrage

The Hong Kong Basic Law ensured, among other things, that Hong Kong will retain its legislative system, and people's rights and freedom for fifty years, as a special administrative region (SAR) of China. The central government in Beijing maintains control over Hong Kong's foreign affairs as well as the legal interpretation of the Basic Law. The latter has led democracy advocates and some Hong Kong residents to argue, after the fact, that the territory has yet to achieve universal suffrage as promised by the Basic Law, leading to mass demonstrations in 2014.[29][30][31] In 2019, demonstrations that started as a protest against an extradition law, also led to massive demonstrations (1,7 million on 11 August and 18 August 2019), again demanding universal suffrage, but also the resignation of Carrie Lam (the current Chief executive).[32]

Drafting of Basic LawMain article: Basic Law of Hong Kong

The Basic Law was drafted by a Drafting Committee composed of members from both Hong Kong and Mainland China. A Basic Law Consultative Committee formed purely by Hong Kong people was established in 1985 to canvas views in Hong Kong on the drafts.

The first draft was published in April 1988, followed by a five-month public consultation exercise. The second draft was published in February 1989, and the subsequent consultation period ended in October 1989.

The Basic Law was formally promulgated on 4 April 1990 by the NPC, together with the designs for the flag and emblem of the HKSAR. Some members of the Basic Law drafting committee were ousted by Beijing following 4 June 1989 Tiananmen Square protests, after voicing views supporting the student protesters.

The Basic Law was said to be a mini-constitution drafted with the participation of Hong Kong people. The political system had been the most controversial issue in the drafting of the Basic Law. The special issue sub-group adopted the political model put forward by Louis Cha. This "mainstream" proposal was criticised for being too conservative.[citation needed]

According to Clauses 158 and 159 of the Basic Law, powers of interpretation and amendment of the Basic Law are vested in the Standing Committee of the National People's Congress and the National People's Congress, respectively. Hong Kong's people have limited influence.

Tide of migration

After the Tiananmen Square protests of 1989, the Executive Councillors and the Legislative Councillors of Hong Kong unexpectedly held an urgent meeting, in which they agreed unanimously that the British Government should give the people of Hong Kong the right of abode in the United Kingdom.[33]

More than 10,000 Hong Kong residents rushed to Central in order to get an application form for residency in the United Kingdom. On the eve of the deadline, over 100,000 lined up overnight

for a British National (Overseas) application form. While mass migration began well before 1989, the event led to the peak migration year in 1992 with 66,000 leaving.[34]

Many citizens were pessimistic towards the future of Hong Kong and the transfer of the region's sovereignty. A tide of emigration, which was to last for no less than five years, broke out. At its peak, citizenship of small countries, such as Tonga, was also in great demand.[35]

Singapore, which also had a predominantly Chinese population, was another popular destination, with the country's Commission (now Consulate-General) being besieged by anxious Hong Kong residents.[36] By September 1989, 6000 applications for residency in Singapore had been approved by the Commission.[37]

Some consul staff were suspended or arrested for their corrupt behaviour in granting immigration visas. In April 1997, the acting immigration officer at the US Consulate-General, James DeBates, was suspended after his wife was arrested for smuggling of Chinese migrants into the United States.[38] The previous year, his predecessor, Jerry Stuchiner, had been arrested for smuggling forged Honduran passports into the territory before being sentenced to 40 months in prison.[39]

Canada (Vancouver and Toronto), United Kingdom (London, Glasgow, and Manchester), Australia (Sydney and Melbourne), and the United States (San Francisco and New York) were, by and large, the most popular destinations. The United Kingdom devised the British Nationality Selection Scheme, granting 50,000 families British citizenship under the British Nationality Act (Hong Kong) 1990.[40]

Vancouver was among the most popular destinations, earning the nickname of "Hongcouver".[41] Richmond, a suburb of Vancouver, was nicknamed "Little Hong Kong".[42] All in all, from the start of the settlement of the negotiation in 1984 to 1997, nearly 1 million people emigrated; consequently, Hong Kong suffered serious loss of human and financial capital.[43]

Last governorMain article: 1994 Hong Kong electoral reform

Chris Patten became the last governor of Hong Kong. This was regarded as a turning point in Hong Kong's history. Unlike his predecessors, Patten was not a diplomat, but a career politician and former Member of Parliament. He introduced democratic reforms which pushed PRC–British relations to a standstill and affected the negotiations for a smooth handover.

Patten introduced a package of electoral reforms in the Legislative Council. These reforms proposed to enlarge the electorate, thus making voting in the Legislative Council more democratic. This move posed significant changes because Hong Kong citizens would have the power to make decisions regarding their future.

Handover ceremonyMain article: Hong Kong handover ceremony

The handover ceremony was held at the new wing of the Hong Kong Convention and Exhibition Centre in Wan Chai on the night of 30 June 1997.

The principal British guest was Prince Charles, who read a farewell speech on behalf of the Queen. The newly elected Labour Prime Minister, Tony Blair, the Foreign Secretary Robin Cook, the departing Governor Chris Patten and General Sir Charles Guthrie, Chief of the Defence Staff, also attended.

Representing the People's Republic of China were the President, Jiang Zemin, the Premier, Li Peng, and the first chief executive Tung Chee-hwa. The event was broadcast around the world.[44]

[45]

Before the negotiations

In the wake of Governor MacLehose's visit, Britain and the PRC established initial diplomatic contact for further discussions of the Hong Kong question, paving the way for Thatcher's first visit to the PRC in September 1982.[14]

Margaret Thatcher, in discussion with Deng Xiaoping, reiterated the validity of an extension of the lease of Hong Kong territory, particularly in light of binding treaties, including the Treaty of Nanking in 1842, the Convention of Peking in 1856, and the Convention for the Extension of Hong Kong Territory signed in 1890.

In response, Deng Xiaoping cited clearly the lack of room for compromise on the question of sovereignty over Hong Kong; the PRC, as the successor of Qing dynasty and the Republic of China on the mainland, would recover the entirety of the New Territories, Kowloon and Hong Kong Island. China considered treaties about Hong Kong as unequal and ultimately refused to accept any outcome that would indicate permanent loss of sovereignty over Hong Kong's area, whatever wording the former treaties had.[15]

During talks with Thatcher, China planned to invade and seize Hong Kong if the negotiations set off unrest in the colony. Thatcher later said that Deng told her bluntly that China could easily take Hong Kong by force, stating that "I could walk in and take the whole lot this afternoon", to which she replied that "there is nothing I could do to stop you, but the eyes of the world would now know what China is like".[16]

After her visit with Deng in Beijing, Thatcher was received in Hong Kong as the first British Prime Minister to set foot on the territory whilst in office. At a press conference, Thatcher re-emphasised the validity of the three treaties, asserting the need for countries to respect treaties on universal terms: "There are three treaties in existence; we stick by our treaties unless we decide on something else. At the moment, we stick by our treaties."[12]

At the same time, at the 5th session of the 5th National People's Congress, the constitution was amended to include a new Article 31 which stated that the country might establish Special Administrative Regions (SARs) when necessary.[17]

The additional Article would hold tremendous significance in settling the question of Hong Kong and later Macau, putting into social consciousness the concept of "One country, two systems". The concept would prove useful to deploy until the territories were secured and conditions were ripe for its gradual abrogation.

Negotiations begin

A few months after Thatcher's visit to Beijing, the PRC government had yet to open negotiations with the British government regarding the sovereignty of Hong Kong.

Shortly before the initiation of sovereignty talks, Governor Youde declared his intention to represent the population of Hong Kong at the negotiations. This statement sparked a strong response from the PRC, prompting Deng Xiaoping to denounce talk of "the so-called 'three-legged stool'", which implied that Hong Kong was a party to talks on its future, alongside Beijing and London.[18]

At the preliminary stage of the talks, the British government proposed an exchange of sovereignty for administration and the implementation of a British administration post-handover.[12]

The PRC government refused, contending that the notions of sovereignty and administration were inseparable, and although it recognised Macau as a "Chinese territory under Portuguese administration", this was only temporary.[19]

In fact, during informal exchanges between 1979 and 1981, the PRC had proposed a "Macau solution" in Hong Kong, under which it would remain under British administration at China's discretion.[7]

However, this had previously been rejected following the 1967 Leftist riots, with the then Governor, David Trench, claiming the leftists' aim was to leave the UK without effective control, or "to Macau us".[20]

The conflict that arose at that point of the negotiations ended the possibility of further negotiation. During the reception of former British Prime Minister Edward Heath during his sixth visit to the PRC, Deng Xiaoping commented quite clearly on the impossibility of exchanging sovereignty for administration, declaring an ultimatum: the British government must modify or give up its position or the PRC will announce its resolution of the issue of Hong Kong sovereignty unilaterally.[21]

In 1983, Typhoon Ellen ravaged Hong Kong, causing great amounts of damage to both life and property.[22] The Hong Kong dollar plummeted on Black Saturday, and the Financial Secretary John Bremridge publicly associated the economic uncertainty with the instability of the political climate.[23] In response, the PRC government condemned Britain through the press for "playing the economic card" in order to achieve their ends: to intimidate the PRC into conceding to British demands.[24]

British concession

Governor Youde with nine members of the Hong Kong Executive Council travelled to London to discuss with Prime Minister Thatcher the crisis of confidence—the problem with morale among the people of Hong Kong arising from the ruination of the Sino-British talks. The session concluded with Thatcher's writing of a letter addressed to the PRC Premier Zhao Ziyang.

In the letter, she expressed Britain's willingness to explore arrangements optimising the future prospects of Hong Kong while utilising the PRC's proposals as a foundation. Furthermore, and perhaps most significantly, she expressed Britain's concession on its position of a continued British presence in the form of an administration post-handover.

Two rounds of negotiations were held in October and November. On the sixth round of talks in November, Britain formally conceded its intentions of either maintaining a British administration in Hong Kong or seeking some form of co-administration with the PRC, and showed its sincerity in discussing PRC's proposal on the 1997 issue. Obstacles were cleared.

Simon Keswick, chairman of Jardine Matheson & Co., said they were not pulling out of Hong Kong, but a new holding company would be established in Bermuda instead.[25] The PRC took this as yet another plot by the British. The Hong Kong government explained that it had been informed about the move only a few days before the announcement. The government would not and could not stop the company from making a business decision.

Just as the atmosphere of the talks was becoming cordial, members of the Legislative Council of Hong Kong felt impatient at the long-running secrecy over the progress of Sino-British talks on the Hong Kong issue. A motion, tabled by legislator Roger Lobo, declared "This Council deems it essential that any proposals for the future of Hong Kong should be debated in this Council before agreement is reached", was passed unanimously.[26]

The PRC attacked the motion furiously, referring to it as "somebody's attempt to play the three-legged stool trick again".[27] At length, the PRC and Britain initiated the Joint Declaration on the question of Hong Kong's future in Beijing. Zhou Nan, the then PRC Deputy Foreign Minister and leader of the negotiation team, and Sir Richard Evans, British Ambassador to Beijing and leader of the team, signed respectively on behalf of the two governments.[28]

Sino-British Joint DeclarationMain article: Sino-British Joint Declaration

The Sino-British Joint Declaration was signed by the Prime Ministers of the People's Republic of China and the United Kingdom governments on 19 December 1984 in Beijing. The Declaration entered into force with the exchange of instruments of ratification on 27 May 1985 and was registered by the People's Republic of China and United Kingdom governments at the United Nations on 12 June 1985.

In the Joint Declaration, the People's Republic of China Government stated that it had decided to resume the exercise of sovereignty over Hong Kong (including Hong Kong Island, Kowloon,

and the New Territories) with effect from 1 July 1997 and the United Kingdom Government declared that it would restore Hong Kong to the PRC with effect from 1 July 1997. In the document, the People's Republic of China Government also declared its basic policies regarding Hong Kong.

In accordance with the "One country, two systems" principle agreed between the United Kingdom and the People's Republic of China, the socialist system of the People's Republic of China would not be practised in the Hong Kong Special Administrative Region (HKSAR), and Hong Kong's previous capitalist system and its way of life would remain unchanged for a period of 50 years. This would have left Hong Kong unchanged until 2047.

The Joint Declaration provided that these basic policies should be stipulated in the Hong Kong Basic Law. The ceremony of the signing of the Sino-British Joint Declaration took place at 18:00, 19 December 1984 at the Western Main Chamber of the Great Hall of the People. The Hong Kong and Macao Affairs Office at first proposed a list of 60–80 Hong Kong people to attend the ceremony. The number was finally extended to 101.

The list included Hong Kong government officials, members of the Legislative and Executive Councils, chairmen of the Hongkong and Shanghai Banking Corporation and Standard Chartered Bank, prominent businessmen such as Li Ka-shing, Pao Yue-kong and Fok Ying-tung, and also Martin Lee Chu-ming and Szeto Wah.

Universal Suffrage

The Hong Kong Basic Law ensured, among other things, that Hong Kong will retain its legislative system, and people's rights and freedom for fifty years, as a special administrative region (SAR) of China. The central government in Beijing maintains control over Hong Kong's foreign affairs as well as the legal interpretation of the Basic Law. The latter has led democracy advocates and some Hong Kong residents to argue, after the fact, that the territory has yet to achieve universal suffrage as promised by the Basic Law, leading to mass demonstrations in 2014.[29][30][31] In 2019, demonstrations that started as a protest against an extradition law, also led to massive demonstrations (1,7 million on 11 August and 18 August 2019), again demanding universal suffrage, but also the resignation of Carrie Lam (the current Chief executive).[32]

Drafting of Basic LawMain article: Basic Law of Hong Kong

The Basic Law was drafted by a Drafting Committee composed of members from both Hong Kong and Mainland China. A Basic Law Consultative Committee formed purely by Hong Kong people was established in 1985 to canvas views in Hong Kong on the drafts.

The first draft was published in April 1988, followed by a five-month public consultation exercise. The second draft was published in February 1989, and the subsequent consultation period ended in October 1989.

The Basic Law was formally promulgated on 4 April 1990 by the NPC, together with the designs for the flag and emblem of the HKSAR. Some members of the Basic Law drafting committee were ousted by Beijing following 4 June 1989 Tiananmen Square protests, after voicing views supporting the student protesters.

The Basic Law was said to be a mini-constitution drafted with the participation of Hong Kong people. The political system had been the most controversial issue in the drafting of the Basic Law. The special issue sub-group adopted the political model put forward by Louis Cha. This "mainstream" proposal was criticised for being too conservative.[citation needed]

According to Clauses 158 and 159 of the Basic Law, powers of interpretation and amendment of the Basic Law are vested in the Standing Committee of the National People's Congress and the National People's Congress, respectively. Hong Kong's people have limited influence.

Tide of migration

After the Tiananmen Square protests of 1989, the Executive Councillors and the Legislative Councillors of Hong Kong unexpectedly held an urgent meeting, in which they agreed unanimously that the British Government should give the people of Hong Kong the right of abode in the United Kingdom.[33]

More than 10,000 Hong Kong residents rushed to Central in order to get an application form for residency in the United Kingdom. On the eve of the deadline, over 100,000 lined up overnight for a British National (Overseas) application form. While mass migration began well before 1989, the event led to the peak migration year in 1992 with 66,000 leaving.[34]

Many citizens were pessimistic towards the future of Hong Kong and the transfer of the region's sovereignty. A tide of emigration, which was to last for no less than five years, broke out. At its peak, citizenship of small countries, such as Tonga, was also in great demand.[35]

Singapore, which also had a predominantly Chinese population, was another popular destination, with the country's Commission (now Consulate-General) being besieged by anxious Hong Kong residents.[36] By September 1989, 6000 applications for residency in Singapore had been approved by the Commission.[37]

Some consul staff were suspended or arrested for their corrupt behaviour in granting immigration visas. In April 1997, the acting immigration officer at the US Consulate-General, James DeBates, was suspended after his wife was arrested for smuggling of Chinese migrants into the United States.[38] The previous year, his predecessor, Jerry Stuchiner, had been arrested for smuggling forged Honduran passports into the territory before being sentenced to 40 months in prison.[39]

Canada (Vancouver and Toronto), United Kingdom (London, Glasgow, and Manchester), Australia (Sydney and Melbourne), and the United States (San Francisco and New York) were, by and large, the most popular destinations. The United Kingdom devised the British Nationality

Selection Scheme, granting 50,000 families British citizenship under the British Nationality Act (Hong Kong) 1990.[40]

Vancouver was among the most popular destinations, earning the nickname of "Hongcouver".[41] Richmond, a suburb of Vancouver, was nicknamed "Little Hong Kong".[42] All in all, from the start of the settlement of the negotiation in 1984 to 1997, nearly 1 million people emigrated; consequently, Hong Kong suffered serious loss of human and financial capital.[43]

Last governorMain article: 1994 Hong Kong electoral reform

Chris Patten became the last governor of Hong Kong. This was regarded as a turning point in Hong Kong's history. Unlike his predecessors, Patten was not a diplomat, but a career politician and former Member of Parliament. He introduced democratic reforms which pushed PRC–British relations to a standstill and affected the negotiations for a smooth handover.

Patten introduced a package of electoral reforms in the Legislative Council. These reforms proposed to enlarge the electorate, thus making voting in the Legislative Council more democratic. This move posed significant changes because Hong Kong citizens would have the power to make decisions regarding their future.

Handover ceremonyMain article: Hong Kong handover ceremony

The handover ceremony was held at the new wing of the Hong Kong Convention and Exhibition Centre in Wan Chai on the night of 30 June 1997.

The principal British guest was Prince Charles, who read a farewell speech on behalf of the Queen. The newly elected Labour Prime Minister, Tony Blair, the Foreign Secretary Robin Cook, the departing Governor Chris Patten and General Sir Charles Guthrie, Chief of the Defence Staff, also attended.

Representing the People's Republic of China were the President, Jiang Zemin, the Premier, Li Peng, and the first chief executive Tung Chee-hwa. The event was broadcast around the world.[44]

[45]

-----------------------------------------------------------------------------------------------------------

This article appeared in the Briefing section of the print edition of the Economist under the headline "Seeing red" Aug 8th 2019

Hong Kong remains crucially important to mainland China

How the Communist Party react to protests there will determine the future of Asia’s pre-eminent financial centre

FOR THE past nine weeks and counting huge anti-government protests have rocked Hong Kong, with no obvious end in sight. On August 5th pro-democracy protesters organised the first general strike in the territory for half a century. It shut down parts of the transport system. Banks, advertising companies and many other businesses also closed, or urged their employees to work from home.

The absolute number of protesters on the streets has fallen—from an estimated 2m who marched, largely peacefully, on June 16th, to 350,000 strikers. But the fluid tactics of the black-clad vanguard, which is increasingly using violence, has challenged the resources of a police force determined to crack down on the protests. As the methods of the protesters have changed, so too has their target: what began as opposition to a bill that would have allowed suspects in Hong Kong to be extradited to mainland China has become a popular revolt against the local government—and, for at least some on the streets, against Chinese rule itself.

How China and the international community, particularly America, react to the continuing crisis will shape the future of Asia’s pre-eminent financial centre. Already it is clear that, were somehow the protests to be quelled peacefully, Hong Kong cannot simply revert to its imagined old form. Gone, possibly for ever, is the notion, rooted in colonial days but slavishly repeated by China after the territory’s handover from the British in 1997, that Hong Kong can endeavour to be an “economic” city in which politics plays a minor role, and only then among an enlightened, disinterested elite. Politics has, now, firmly taken hold.

The battle outside raging

Chinese officials and Communist Party media divine Western “black hands” behind the protests. The rhetoric from the mainland has escalated markedly since July 21st, when protesters defaced the national insignia of the central liaison office, the central government’s representative in the territory. At the end of July Major General Chen Daoxiang, commander of the usually invisible Hong Kong garrison of the People’s Liberation Army (PLA) called the unrest “absolutely impermissible”, sending the message that the PLA would not hesitate to step in to restore order if Xi Jinping, China’s ruler, demanded it. In an unsubtle message, the garrison released a video showing Chinese forces using machine-guns to suppress mock riots.

This has led to anxious speculation in Hong Kong and around the world that Chinese security forces might be preparing to intervene in a territory to which, in its formula of “one country, two systems” it had promised “a high degree of autonomy”. On August 5th, at a press conference after two weeks hidden from public view, a rattled Carrie Lam, Hong Kong's chief executive, spoke of Asia’s financial hub being on the “verge of a very dangerous situation”. A day later, at an even rarer press conference, a spokesperson for the Hong Kong and Macau affairs office in Beijing emphasised the mainland’s faith in Mrs Lam, but also warned that Hong Kong’s “shocking” protests had gone beyond legitimate free assembly and were pushing the territory into a “dangerous abyss”.

China is no longer as directly dependent on Hong Kong for its economic welfare as it once was, when foreign firms operating from the territory, managerial expertise and access to international markets via its port were critical. At the time of the handover in 1997, the territory’s economy was equivalent to nearly a fifth of China’s. Today the figure is 3%, and its port is no longer important in shipping goods from the mainland (see chart).

The structure of Hong Kong’s economy has changed little in two decades. In terms of their contribution to the economy, trade and logistics along with finance are remarkably similar (22% and 19% respectively). The same old family-run conglomerates in Hong Kong have a lock on property development, port operators, utilities and supermarkets. Meanwhile Shenzhen, across the border, has been transformed into a hub for new giant tech firms such as Huawei, Tencent and ZTE.

The old road is rapidly ageing

Yet Hong Kong remains more important to the mainland than might at first appear, and not just as a showcase for how China acts in a way befitting a country claiming greater status on the world stage. The paradox is that the more autocratic the mainland gets the more it needs Hong Kong commercially. Had China reformed its financial and legal system, the territory would be irrelevant to its global business. Instead the opposite has happened: China has grown fast and globalised, but not opened up.

As a result, Hong Kong’s economy is disproportionately useful to China. It has a status within a body of international law and rules that gives it seamless access to Western markets. The status is multifaceted. It includes: a higher credit rating; lower risk-weights for bank and counterparty exposures; the ability to clear dollars easily; independent membership of the WTO; “equivalence” status for its stock exchange with those in America, Europe and Japan; recognition as a “developed” stockmarket by index firms and co-operation agreements with other securities regulators.

Cross-border bank lending booked in Hong Kong has roughly doubled in the past decade, much of it Chinese companies borrowing dollars intermediated through the territory. Hong Kong’s stockmarket is now the world’s fourth largest, behind Tokyo’s but ahead of London’s (see chart). About 70% of the capital raised on it is for Chinese firms, but strikingly the mix has shifted from state enterprises to tech firms such as Tencent, Meituan and Xiaomi. These firms have specifically chosen not to do mainland listings because the markets there are too immature and closed off from Western investors. Alibaba, an e-commerce conglomerate, is also in the process of doing a Hong Kong listing (at present it is only listed in New York).

Most Chinese foreign direct investment flows through Hong Kong. The stock domiciled in the territory has roughly doubled in the last decade, to $2trn. Hong Kong’s share of total FDI flowing into mainland China has remained fairly constant, at 60%. Although the amount of multinational money flowing into and out of China has soared, most firms still prefer to have Hong Kong’s legal stamp.

Meanwhile, the number of multinationals with their regional headquarters in the territory has increased by two-thirds since 1997, to around 1,500. Hong Kong hosts the most valuable life insurer in the world, excluding mainland China, AIA, while a global firm with a big Asian arm, Prudential, is about to shift its regulatory domicile to Hong Kong.

This all means that how turmoil in Hong Kong is resolved matters to more than just to its own people. Already boards of multinationals are debating over whether to move their regional domicile to Singapore. Indeed, one existing weak spot for Hong Kong is that major American tech firms, such as Google, Amazon and Facebook, have set up their regional headquarters in Singapore, perhaps because of cyber-worries. An executive with a biotech startup says the company is moving money out of the territory and considering an American listing instead.

China will not take action in Hong Kong lightly: it knows how much is at stake economically and how much its biggest firms depend on the territory, quite apart from the reputational risk. Yet it also sees the situation spiralling into a threat to the Communist Party itself—one that America, it believes, is trying to exploit.

Its evidence for this is that the American government, already caught up in a gargantuan tussle with China over trade, cyber-technology and dominance in Asia, is taking an increasing interest in developments in Hong Kong. President Donald Trump called the demonstrations “riots”, echoing the language coming from Beijing. Yet his administration is staffed with China hawks. Many see the protests as a response to the way China has undermined Hong Kong’s autonomy.

Should the party intervene more forcibly, says a senior administration official, it would be “a tragedy for Hong Kong, bad for China and the latest act of decoupling from the free world and regressing to the darkness of the Mao years.” The official likens Hong Kong’s status, in some respects, to “West Berlin during the cold war”. “‘One country, two systems,’” the official adds, “risks dying a premature death.”

As the present now, will later be past

China knows that America has a formidable weapon to wield in the form of the Hong Kong Policy Act of 1992, which recognises Hong Kong as a separate legal and economic entity from China with all the rights of an open economy. An intervention by the Chinese army might lead the administration to declare Hong Kong to be in breach of the act. This, though, would be a nuclear option: one that America is likely to take only in extremis.

In the meantime, Congress, led by Senator Marco Rubio, is working on legislation that would, among other things, test Hong Kong’s system of export controls to make sure Chinese companies are not circumventing rules, as well as ensure that demonstrators are not penalised if they seek American visas, just because they were arrested during the protests.

If it ever happened, intervention by the Chinese army would not necessarily be in the form of tanks and blazing machine-guns. Its deployment would follow a process set out in Hong Kong’s post-colonial constitution, the Basic Law, and a piece of Chinese legislation called the Garrison Law. These allow Hong Kong to ask the central government for the PLA garrison’s help in

maintaining public order. This could, in theory, merely entail a few discreet units backing up Hong Kong’s police. It would be very unlikely to involve the random violence seen, for example, in 1989 in Tiananmen: the PLA today is far better trained, and the garrison has been drilling its men in crowd-control techniques that resemble those of the Hong Kong police. But avoiding any such eventuality, says one of Mrs Lam’s advisers, has always been the Hong Kong government’s “number one” priority. Having the PLA come in is “the last thing” anyone wants to have happen. It would show Hong Kong incapable of “keeping our house in order”.

Perhaps Mrs Lam’s administration thinks that the protests might lose steam along with popular support. At the outset, many parents marched with their children. But now, growing numbers of Hong Kong people are deeply concerned about the escalating violence on all sides; it is the chief topic of everyday office conversation. Parents with children at school or university have been withholding pocket money in the hopes that, penniless and underfed, they will come back home. Many long for the start of the new academic year in early September, hoping that young protesters will return to their studies.

But it is not only students who are critical of the government. Even groups that in the past have been staunch supporters of the administration have been having second thoughts. This week many businesses made it clear to their staff that they would not be penalised for joining the general strike. And though it strongly condemns recent violence, describing it as a threat to Hong Kong’s position as a financial centre, the Hong Kong General Chamber of Commerce, the largest business organisation, has backed protesters’ calls for an independent inquiry as a necessary step for restoring calm. By the standards of Hong Kong business, that is a bold move. A few other organisations and individual companies, risking becoming the target of online anger from the mainland, are more quietly backing the peaceful aspirations of protesters (among whom number their staff).

An emerging viewpoint, even among some pro-party types, acknowledges that many Hong Kong businesses had concerns about how the extradition bill might add to the arbitrary risks of doing business with the mainland. This viewpoint admits to sympathy for Hong Kong’s disaffected youth, who are alarmed at the rapid integration of the territory’s economy with China’s. Members of this camp may hold that the political job is now to tilt the economic playing field in favour of the young—more public housing, for instance—but they do not acknowledge a democratic dimension to the protests.

It will prove a hot and critical August. For now, the line in Beijing avoids any direct threat of intervention: stand behind Mrs Lam’s stricken authority, urge the police and courts to be tough, and be on a ruthless lookout for separatist tendencies. On August 7th Hong Kong members of two mainland bodies, the National People’s Congress and the Chinese People’s Political Consultative Conference were ordered to Shenzhen to hear the message first-hand.

Mr Xi has an urgent reason to wish that a tighter grip and a firmer message will bring order to Hong Kong. On October 1st he presides over China-wide celebrations marking the 70th anniversary of the Communist Party coming to power: the birth of a “new” China which Mr Xi can now claim is also a powerful one. To ensure the anniversary is marked without a hitch,

security across the mainland is being tightened and dissent stifled even more vigorously than usual.

However, firmness in the face of unrest has been tried before in Hong Kong, and though it succeeded in the immediate aim, it failed in the long run. The authorities wore down the umbrella protests demanding democracy in 2014 and restricted even further the scope for representative politics. That just bred a more radical generation of protesters. As for the increasing “mainlandisation” of Hong Kong politics, among ordinary Hong Kong folk it has fostered only cynicism and a sense of powerlessness. The central liaison office, once almost invisible, now owns Hong Kong’s largest publisher, provides loans to patriotic businesses, ensures China’s choice of chief executive and backs candidates favoured by the Communist Party in elections for the legislature and district councils. Now it is also pushing loyal placemen into the leadership of many professions.

A hopeful scenario does exist for Hong Kong. According to an adviser to Mrs Lam, if the streets grew calm it would be possible to imagine the government presenting once more a package of political reforms that it first offered five years ago. It would include allowing universal suffrage in choosing the chief executive. In 2015 democrats in the legislature rejected the package, partly because, in effect, only party-approved candidates would be allowed to run. This time, says Anson Chan, a former chief secretary who now backs the democratic cause, a deal could be done, so long as a timetable for universal suffrage were agreed. Mrs Lam should consider this option. After all, her crisis of legitimacy comes, at heart, from not being elected by Hong Kong. All her unelected predecessors ended their terms in failure too.

Indeed, some democrats are urging hothead protesters to rethink their tactics. Attacking police stations, they say, just plays into the hands of the authorities. A more valuable battleground is emerging: elections for the territory’s district councils in November. While ordinarily such elections have to do with matters such as rubbish collection and bus lanes, in the current climate they will be a referendum on political values. Unless democrats move from the streets to the campaign stump, says Kevin Yam, a lawyer and columnist, the pro-establishment camp, whose grass-roots organisations in housing estates and the villages of the New Territories is funded by the central liaison office, risks dominating. Should that camp win, Mr Yam argues, it will say: “you see, we [not you] are the silent majority.”

If the violence continues, avenues for peaceful advocacy and dissent will be blocked by one side or the other. At best this scenario would entail a long tearing of Hong Kong’s social fabric and a relentless decline in the territory’s economy. At worst it could mean the end of Hong Kong as it has long been imagined, as soon as the armoured anti-riot vehicles roll out of the garrison compound. ■

Correction, August 12th 2019: In our original briefing, we stated that Hong Kong's legislature rejected Chinese proposals for political reform in 2014. In fact, the rejection came in 2015.