The years immediately following the Boxer rebellion, up to about 1912, marked the height of Britain's position in China. They also marked a growing Chinese nationalism, which was encouraged by the fall of the Manchu Dynasty in 1912 and the establishment of the republic. Britain, like the other powers, did not perhaps take Chinese nationalism seriously enough. Certainly, China's claims were ignored at the Versailles Peace Conference in 1919 and the former German concessions in China were given to the Japanese. This led to an outburst of anti-foreign feeling which did not subside for many years.

The 1920s and 1930s saw Britain gradually make some concessions to Chinese nationalsim. Britain appeared indifferent to the growing Japanese influence in China, except where their own commercial interests were directly concerned. Like the Americans, the British appeared in Chinese eyes all too willing to appease the Japanese.

The Japanese attack on Pearl Harbour in 1941 changed that. The Sino-Japanese conflict, which had been going on since 1937, was now seen as part of a wider world war. In 1943 Lord Mountbatten, the Supreme Allied Commander, Southeast Asia Command, met the Nationalist leader Chiang Kai-shek and other Allied leaders in the southwest Chinese city of Chongqing to formulate strategy against Japan. Later in 1943 Chiang Kai-shek took part in the Cairo Conference with Winston Churchill and President Roosevelt. In the same year Britain gave up extraterritoriality and the other privileges gained since the Treaty of Nanking in 1842. The only exception was the refusal to return Hong Kong to China.

The end of the second world war saw Britain's position in China much reduced. Although Britain remained economically important, in numbers and political influence the Americans now became the leading foreign power. Britain generally followed a policy of non-interference in China's civil war but the few incidental involvements which occurred (eg the Amethyst incident of 1949 in which the frigate HMS Amethyst was trapped in the Yangtze by advancing Communist forces and only escaped after several weeks and suffering heavy casualties) were seen as hostile acts by the Chinese communists. Britain was amongst the first to recognise the People's Republic of China on 6 January 1950 and Britain maintained diplomatic representation in Peking. The Chinese, while noting Britain's recognition, would not officially accept the presence of a British diplomatic mission until 1954, when an agreement was reached for the exchange of Charges d'Affaires.

After 1954, relations improved. Trade, under very different circumstances, began to develop. A Labour Party delegation visited China in 1954 and the President of the Board of Trade went there in 1964. The onset of the Cultural Revolution in China in the mid 1960s however, put an end to the developing relationship. The spillover of the Cultural Revolution into Hong Kong led in 1967 to an attack on the British diplomatic mission in Peking in which the Chancery was burned down and the Chargé d'Affaires' residence sacked.

But as China came out of the Cultural Revolution's most extreme phase, relations began once again to improve. In March 1972, after lengthy negotiations, the respective diplomatic missions were raised to Embassy level. This was followed by a visit by the Foreign and Commonwealth Secretary, Sir Alec Douglas-Home, and by a steadily increasing exchange of delegations. By the late 1970s, there were regular ministerial visits in both ways and in 1979, His Royal Highness the Duke of Kent paid the first official visit by a member of the Royal family. Mrs Thatcher visited China as leader of the opposition in 1976. She returned twice as Prime Minister: in 1982 when it was agreed that negotiations over Hong Kong should commence, and at the end of 1984 to sign the Joint Declaration on the future of Hong Kong. This provides that China will resume the exercise of sovereignty over Hong Kong from 1 July 1997. It also stipulates that Hong Kong's social and economic systems will remain unchanged and that Hong Kong will enjoy a high degree of autonomy. Britain will remain responsible for its administration until then. A Sino-British Joint Liaison Group has been set up to facilitate consultation between the two Governments on areas relating to the implementation of the Joint Declaration. The State Visit of HM The Queen in October 1986 set the seal on Sino-British relations and has opened up new opportunities.

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