They agreed to enter talks through diplomatic channels following the visit with the common aim of maintaining the stability and prosperity of Hong Kong."
The Course of the Negotiations
9. The Prime Minister's visit was followed by the first phase of negotiations cor lucted by Her Majesty's Ambassador in Peking and the Chinese Foreign Ministry. These consisted of exchanges between the two sides on the basis on which the negotiations would be conducted, and on the agenda. On 1 July 1983 it was announced that the second phase of the talks would begin in Peking on 12 July. The pattern of negotiation in the second phase, which was continued until the end of the negotiations, was for formal rounds of talks to be held between delegations led by Her Majesty's Ambassador in Peking and a Vice or Assistant Minister of the Chinese Foreign Ministry, supplemented as necessary by informal contacts between the two delegations. The Governor of Hong Kong took part in every round of formal talks as a member of the British delegation.
10. In the course of the negotiations Her Majesty's Government explained in detail the systems which prevail in Hong Kong and the importance for these systems of the British administrative rôle and link. Following extensive discussion, however, it became clear that the continua- tion of British administration after 1997 would not be acceptable to China in any form. After full consultation with the Governor and the Executive Council of Hong Kong, Her Majesty's Government therefore proposed that the two sides discuss on a conditional basis what effective measures other than continued British administration might be devised to maintain the stability and prosperity of Hong Kong and explore further the Chinese ideas about the future which had at that stage been explained to them, in order to see whether on this basis arrangements which would ensure lasting stability and prosperity for Hong Kong could be constructed. The Chinese Government was told that, if this process was successful, Her Majesty's Government would consider recommending to Parliament a bilateral agree- ment enshrining the arrangements. Her Majesty's Government also under- took in this event to assist in the implementation of such arrangements. Following this, Her Majesty's Government sought to explore with the Chinese Government the implications of the Chinese Government's concept of Hong Kong as a Special Administrative Region of the People's Republic of China. In response, the Chinese side further elaborated its policies and ideas.
11. In April 1984 the two sides completed initial discussion of these matters. There were a number of outstanding unresolved points, but it was by then clear that an acceptable basis for an agreement might be possible. At the invitation of the Chinese Government the Secretary of State for Foreign and Commonwealth Affairs visited Peking from 15 to 18 April. During his meetings with Chinese leaders the two sides reviewed the course of the talks on the future of Hong Kong, and further progress was made. In Hong Kong on 20 April Sir Geoffrey Howe made a statement on the approach of Her Majesty's Government to the negotiations. He said that
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