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China's cautious approach to the neighboring Portuguese 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 diplo-
matic 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.
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 toler-
ance of China, which continues to exert extensive influence in the territory's
2/ policies through a network of pro-PRC Chinese leaders there.
Prime Minister Thatcher's Visit, 1982
In both interpretations,
The impending end of the lease governing the New Territories began to
affect individual property leases, mortgages (often made for 15 years), and
other financial and real estate arrangements in Hong Kong during 1982, and
prompted British authorities to raise the issue again in discussions with
Chinese leaders 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
2/ For background on Macao situation see Far Eastern Economic Review, May 5, 1983.
P. 142.
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