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China's cautious approach to the neighboring territory of Macao seemed
to underline Beijing's reluctance to interfere strongly in Hong Kong. After
the military coup in Portugal and Lisbon's withdrawal from overseas holdings,
Macao was the only Portuguese territory to retain its governor in office
this was because China refused to discuss the future of Macao with Portugal
and independence for the territory did not appear to be a viable option.
When Portugal and China established diplomatic relations in 1979, the PRC
made clear that it regarded Macao as Chinese territory under Portuguese
administration. In Western legal terms, Macao remains a territory and
Portugal is sovereign.
In both interpretations, Macao has no international
personality itself and its relations are subject to the de jure approval
of the President of Portugal and the de facto tolerance of China, which
continues to exert extensive influence in the territory's policies through
a network of pro-PRC Chinese leaders there.
Prime Minister Thatcher's Visit, 1982
When the impending end of the lease governing the New Territories began
to disrupt mortgages (often made for 15 years) and other financial and
real estate arrangements in Hong Kong during 1982, Hong Kong leaders brought
the matter to the attention of the British authorities at the time of British
Prime Minister Thatcher's visit to China in September 1982. The visit produced
agreement between China and Britain to "enter into talks through diplomatic
channels with the common aim of maintaining the stability and prosperity of
Hong Kong. But the visit was also marked by pointed differences over the
current legal status of the territory. In particular, the British prime minister
emphasized at a press conference in Hong Kong following her China stay that
the 19th century treaties governing the status of the colony remain the basis
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