CONFIDENTIAL
VISIT OF LORD FERRERS TO HONG KONG: 3-8 JANUARY 1992
POLITICAL BACKGROUND BRIEF
Relations with China
1.
Tiananmen (June 1989) did not alter Hong Kong's
geographical or historical facts of life but it was a severe
blow to confidence in the territory's future and greatly
complicated our dealings with China for the smooth
implementation of the Joint Declaration and the transition
to Chinese sovereignty in 1997. Meetings in the Sino-British Joint Liaison Group (JLG) resumed in September 1989, but the relationship was strained and little or no
progress was made on substantive issues. Much time was taken up with Chinese complaints about Hong Kong serving as a base for subverting the Central People's Government and
Chinese attacks on the measures we had taken to help restore confidence in Hong Kong (especially the Bill of Rights and the Nationality package). Particular problems developed over Hong Kong's plans to construct a new airport. Investors wanted assurances that Peking supported the project, particularly regarding commitments going beyond
1997. The Chinese sought to exploit this leverage to obtain
assurances about Hong Kong's financial reserves in 1997 and a voice in major Hong Kong decisions before then. After
prolonged and difficult negotiations, including during the visit to Peking by the Foreign Secretary in April this year, a compromise was reached during the summer and a
Sino-British Memorandum of Understanding was initialled.
POPALB/1
CONFIDENTIAL