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Deng Xiaoping added, "When Mrs Margaret Thatcher visited China, I talked with her about three questions: (1) to hold the Hong Kong talks

on the premise that China will regain sovereignty over Hong Kong and

Kowloon in 1997; (2) to discuss the system to be adopted in Hong Kong upon reversion of sovereignty and to keep several things unchanged: the free life-style would not be changed, the status of Hong Kong as a financial

centre and free port would be maintained, the law would remain basically unchanged while the final judicial power would rest with Hong Kong's highest

court; (3) to discuss how Britian and China should co-operate during the

runup to 1997 if Hong Kong's prosperity were not to be impaired." Deng

mentioned once again that talks with Mrs Margaret Thatcher last year were

unhappy. Her emphasis on the three treaties and British sovereignty over

Hong Kong was unacceptable to China. The British had now changed their

position, no longer insisting on the treaties and sovereignty. This was a

change for the better. The Chinese and British authorities would be able to

begin further contacts and substantive talks. Meanwhile, substantive talks

between China and Britain had yet to begin. Here the question of 'face'

was involved, when to begin with, the British had to acknowledge China's

sovereignty over Hong Kong and accept it as a pre-condition to the talks.

Deng Xiaoping again expressed, "We will enable the British to back down with grace." The talks might not start with the recovery of sovereignty. The second question, i.e. what to do after 1997, could be tackled first.

Once agreement was reached on the second question, there would not be much

to be ironed out on the first question (of sovereignty). Deng Xiaoping then

inquired of Hong Kong and Macau delegates to the National People's Congress

and Chinese People's Political Consultative Conference how they viewed the

position of the British on the question of Hong Kong's future.

One of the delegates asked if the Hong Kong issue could be

resolved by way of signing a new treaty with the British or extending the

lease. Deng stated in clear-cut terms that there would neither be any new treaty nor lease extension, adding, "If I were to agree to an extension of the lease, I would be regarded as (another) Li Hongzhang." Deng Xiaoping

further said that talks between the two countries could not drag on for too

long, or people's confidence would be adversely affected.

/ Turning to who

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