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correctly judged that this would lead inevitably to the rendition of Hong Kong. At that time Hong Kong had a population of 600,000 and was little more than a trading post devastated by war. The problems of rendition at that time would have been small compared to what they are forty years later. That is history. But the consequence was that by insisting on a British return in 1945 the United Kingdom accepted an inescapable responsibility towards the population of this territory, which given the existence of the lease which expired in 1997, it could not discharge by the grant of independence.
5. That responsibility grew much larger after 1949. With the Communist Party in power in Peking, Hong Kong and China moved, politically and economically, in diametrically opposite directions. The systems of government, law, economy and everything else grew rapidly wider apart. Enlightened capitalism in Hong Kong faced Chinese socialism across the border. China went through a fundamental change of social and economic structure accompanied by political upheavals. With intervals of severe turbulence Hong Kong prospered and grew as the result of stable administration and the energy and ingenuity of its Hong Kong Chinese population. Its population was substantially increased by immigration from China. From the modest trading port it has now become a modern city of over 5 million people, with an internationally oriented economy encompassing a major light industrial centre, one of the world's foremost financial centres and the world's third most active container port.
6.
For their part the People's Republic were surprisingly acquiescent in the continued British administration of Hong Kong. In 1949 their forces swept down from the North engulfing the whole of mainland China. To the evident relief of the Hong Kong garrison they stopped at the border. A year later Chinese forces and the UK element of the United Nations forces were locked in combat in Korea and Hong Kong was instructed to observe the United Nations' embargo on trade with China. Again the Chinese failed to move against Hong Kong.
7.
In 1967, at the height of the Cultural Revolution, there was nearly a year of rioting by Red Guard supporters in Hong Kong and relations between China and the United Kingdom were worse than at any period since the Boxer Rebellion of 1900. Once again, the Chinese did not seek to recover Hong Kong: they ensured that essential supplies of water and fresh food continued to reach the colony. There was a lesson here which proved of value in the negotiations on the future. The lesson was that, subject to their political imperatives being met, Hong Kong was an asset to China which the Chinese wished to preserve.
8. These developments coincided with the steady shrinking of Britain's military presence overseas. Virtually from the time when China was strong enough to pose a threat to Hong Kong, Britain was incapable of defending it militarily. Thus, while the link with Britain was vital for the credibility of the system in Hong Kong, the durability of the system rested on the visible, if tacit, acquiescence of the Chinese Government in Hong Kong's continued existence as a separate, capitalist enclave.
9. By the end of the 1970's the steadily shortening period of the international lease of the New Territories was forcing on public attention the parallel shortening of the remaining period of individual land leases there. This led my predecessor to propose that an agreement should be sought with the Chinese on the lines that, without prejudice to the question of how long the United Kingdom would administer Hong Kong, the Hong Kong Government should issue leases in the New Territories which would be valid for the period of that administration. This idea, which would have blurred the 1997 date, was first explored with the Chinese during Lord MacLehose's visit to Peking in March 1979. The Chinese leader, Deng Xiaoping, sensing the need to do something to reassure investors, asked my predecessor to tell them to set their hearts at ease. While underlining the importance of the sovereignty question, he said that, whatever political solution was adopted,
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