they are, particularly in view of the practical value of Hong Kong to them. Hong Kong is a valuable direct
source of convertible currency (estimated at
approximately 30% of total Chinese earnings of foreign
exchange) mostly earned from foodstuffs, invisibles and
remittances to relations in China. It is also, as
China's only deep water port, an important entrepôt.
3. In 1982, the Chinese Government began to focus more
closely on the question of the future of Hong Kong.
They publicly stated that they intended to 'recover'
sovereignty over the whole of Hong Kong, but that they wished to maintain its prosperity and stability.
Useful contacts between the British and Chinese
Governments had taken place when Lord Carrington visited China in April 1981, and during the Lord Privy Seal's visit in January 1982. The process of consultation was stepped up during the Prime Minister's
visit to China in September 1982, when it was anounced
that the two Governments would hold talks through
diplomatic channels with the common aim of maintaining the stability and prosperity of Hong Kong.
4.
Meetings in Peking to follow up the Prime
Minister's visit through diplomatic channels began soon afterwards and are continuing. On 1 July the following statement was issued in Peking, London and Hong Kong:
"Following the discussions between the leaders of the
two countries in September 1982 and subsequent useful exchanges, it has been agreed that a second phase of the talks on the future of Hong Kong will begin in
Peking on 12 July 1983."
5. As part of the second phase, talks were held in
Peking on 12/13 July, 25/26 July, 2/3 August and 22/23
September. The following statement was issued there on
23 September.