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THE SINO-BRITISH JOINT DECLARATION ON THE FUTURE OF HONG KONG

a wide cross section of the Hong Kong community. Mrs Thatcher signed on behalf of the British Government and the Chinese Prime Minister, Mr Zhao Ziyang, signed on behalf of the Government of the People's Republic of China. President Li Xiannian and the Chairman of the Central Advisory Commission of the Communist Party, Mr Deng Xiaoping, were present at the ceremony.

On 20 December Mrs Thatcher and Sir Geoffrey Howe travelled to Hong Kong. Sir Geoffrey had discussions with the Executive Council and in the evening Mrs Thatcher addressed a joint session of the Executive and Legislative Councils. Her address concluded with these words:

"The Agreement on its own cannot ensure a successful future for Hong Kong. So much lies, as it always has done, in your hands. You, the Hong Kong people, have earned the respect of the entire world for the astonishing success story which you have written. You have contributed resilience, imagination and sheer hard work. Above all you have shown the courage to adapt to changing circumstances. We have over 12 years to prepare together for the changes which lie ahead: I believe you will rise to that challenge and that the spirit, the enterprise and the prosperity of Hong Kong will flourish and endure".

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EXPLANATORY NOTE ON THE

ANNEXES TO THE JOINT DECLARATION

ANNEX A

Introduction

1. The following notes are intended to explain the material in the Annexes to the Joint Declaration and in the associated Exchange of Memoranda. They do not seek to be a comprehensive guide and do not include every point in the texts. They are designed to explain in simple terms, and to illustrate where appropriate, how the Annexes provide for the continuation of the essentials of Hong Kong's systems. Hong Kong is a highly developed industrial, commercial and financial centre and as such is a complex place.

Annex I: Elaboration by the Government of the People's Republic of China of its Basic Policies regarding Hong Kong

Section I: Constitutional Arrangements and Government Structure

2. When the People's Republic of China resumes the exercise of sovereignty over Hong Kong on 1 July 1997, Hong Kong will become a Special Administrative Region (SAR) of the People's Republic of China with a high degree of autonomy. A Basic Law to be enacted by the National People's Congress of the People's Republic of China will become the constitutional instrument for the Hong Kong SAR. The Letters Patent and the Royal Instructions, which have hitherto performed this function, will be revoked. As paragraph 3(12) of the Joint Declaration makes clear, the basic policies of the People's Republic of China as set out in the Joint Declaration and elaborated in this Annex will all be stipulated in the Basic Law.

3. This section of the Annex makes clear the important point that the Basic Law will stipulate that the socialist system and socialist policies practised in the rest of the People's