Britain’s Approach to the Negotiations over the Future of Hong Kong, 1979–1982

Abstract This paper analyses how British political actors approached the negotiations over the future of Hong Kong. It does so by drawing on declassified documents from the Prime Ministerial archives of Margaret Thatcher and Foreign and Commonwealth Office files, amongst other sources. This paper begins in 1979, when the British first proposed to extend their administration over Hong Kong beyond the 1997 expiry date of the lease which covered the majority of Hong Kong, and ends in 1982, when Thatcher met with China’s leaders, Zhao Ziyang and Deng Xiaoping. During this period, the British saw the Hong Kong issue as primarily an economic one and regarded their proposal of continued British administration as a selfless one. The position Thatcher took on the issues of sovereignty and the validity of the treaties caused offence which increased Chinese suspicions of Britain’s proposals and delayed the start of formal negotiations.


Introduction
British Prime Minister Margaret Thatcher flew with her entourage from Tokyo to Beijing on 22 September 1982. That evening, Thatcher attended a dinner held in her honour. China's Premier, Zhao Ziyang, raised a toast, cordially inviting Thatcher and her guests. But his welcome ended with a reminder that the two countries had 'problems left over from history that need to be solved.' 1 The issue to which Zhao referred was the question of Hong Kong's future.
Hong Kong had become a British colony during the nineteenth century with colonisation occurring in three steps. First, in 1842 China had ceded Hong Kong Island to Britain in perpetuity following defeat in the First Opium War. Second, in 1860 China had ceded Kowloon, which sits to the north of Hong Kong Island, to Britain in perpetuity following defeat in the Second Opium War. Third, in 1898 the New Territories were leased to Britain for ninety-nine years to end in 1997. The New Territories dwarfed the ceded portions of Hong Kong by area, making up some ninety-two per cent of the overall colony. However, as Hughes put it, this meant that the majority of Hong Kong existed on 'borrowed time' 2 with its future beyond 1997 left uncertain.
Anxious to discuss the looming 1997 expiry date of the New Territories lease, the British raised their concerns in 1979. The Governor of Hong Kong, Murray MacLehose, brought up the issue in a meeting with China's de facto leader, Deng Xiaoping, whose noncommittal reply gave the British little comfort. On 23 September 1982, Thatcher met with Zhao and the next day met with Deng to discuss Hong Kong. Formal negotiations commenced in 1983 and1984, resulting in the 1984 Sino-British Joint Declaration which determined that Hong Kong would cease to be a British colony in 1997.
The 1982 leaders' meetings and the formal negotiations that took place thereafter have been exhaustively documented in the literature. 3 For instance, Tsang recounted the positions each side took in the September 1982 meetings and argued that Deng's inflexibility on the issue of sovereignty derived from his desire to wipe away China's history of humiliation at the hands of western powers. 4 However, less attention has been paid to the years between 1979, when the British broached the Hong Kong question with Deng, and 1982, when the leaders of both nations met. 5 This leaves unanswered questions about the intervening years. How did the British position on Hong Kong develop between 1979 and? Who advised Thatcher during this period? Why did the Prime Minister adopt a strengthened version of MacLehose's 1979 argument for the leaders' meetings? What was the impact of Thatcher's approach upon the formal negotiations that came afterwards?
Recent scholarship has benefitted from the declassification of Margaret Thatcher's Prime Ministerial archives. For instance, drawing on these archives, Mark argued that the British set out to educate Deng in the workings of investor confidence and that this project was doomed to failure given that Deng's nationalist sensitivities had recently been roused. 6 This paper builds upon Tsang and Mark's analyses by arguing that Britain's project of educating Deng was indicative of an attitude, held amongst many of the key British actors involved in preparing Britain's negotiating position, that the British knew what was best for Hong Kong's future. Focusing on Thatcher as a leader, this paper shows how, against the recommendations of some of her advisors, the position she put forward in the 1982 leaders' meetings offended the Chinese which compounded their distrust of the British and contributed to the delay of formal negotiations commencing in earnest, placing greater pressure upon British negotiators during the 1983 and 1984 formal negotiations.
This paper contributes to the small but growing body of literature covering the 1979 to 1982 period by examining the formal and informal channels by which the British and Chinese sounded out each other's positions, tracing changes in the British position from 1979 to 1982, and analysing the attitudes of the actors involved. This paper focuses on Thatcher in particular and reveals the extent to which, in the words of one minister, Britain's policy on Hong Kong 'depended very much on the Prime Minister's attitude'. 7 Moreover, given that the negotiations remain controversial with debates over the extent to which the British failed Hong Kong continuing to this day, 8 this paper adds to our understanding of how the beliefs, decisions and aims of British political actors affected the overall negotiations. This paper is structured in themed sections that trace the development of the British attitude towards the Hong Kong negotiations with a focus on Thatcher as a leader. The first section argues that the British believed they knew what was best for Hong Kong: the Hong Kong question was essentialised as an economic issue and the British believed that only their own continued administration of Hong Kong could ensure the colony's continued prosperity. Second, the British believed their proposal had a benevolent character. Third, contentions over international law and history: the British downplayed their own colonial history and underestimated the impact of emotion upon the Chinese side. Britain's proposal consequently appeared offensive to the Chinese, adding to their distrust of the British and delaying the start of formal negotiations.

Britain knew best
When actors in Westminster thought of Hong Kong and China, they thought in predominantly economic terms. Largely closed to the world for much of the Maoist period, China under Deng had embarked upon a programme of economic reforms. Britain, like many other countries, was keen to 'exploit [the] commercial opportunities' these reforms represented and to 'get in on the ground floor of [China's] modernisation.' 9 Deng was particularly interested in using foreign technology and manufacturing to China's advantage, especially for modernising China's military which Deng had made an operational priority. 10 During the period 1979 to 1982, Britain and China discussed opportunities for Britain to manufacture several different types of defensive and offensive weapons and parts, and to facilitate upgrades for the Chinese military. 11 As Deng's reforms continued to open China as a market, the British hoped such projects were only the start and that there would be more opportunities in the future. 12 Hong Kong  Internal British documents focused heavily on the benefits China derived from Hong Kong's economic success. Britain claimed the credit for Hong Kong's flourishing economy and it was the 'British connection,' they believed, that was crucial in underpinning the 'stability and prosperity' of Hong Kong. 14 Such was the focus on the economic importance of Hong Kong to China that a financial 'sweetener' was discussed. 15 Sir Y. K. Pao, a Hong Kong shipping magnate, told Thatcher that during his meeting with Chinese Vice-Premier Gu Mu and Deng Xiaoping, the Chinese said that Japan had produced 'a united loan equivalent to $1 billion in value.' 16 Pao enquired as to whether Britain would consider making a similar gesture and suggested that 'people in Hong Kong might be able to help with such a loan.' 17 The question was carefully considered by the British: though preferential aid would have to be 'carefully presented', London's Ambassador to Beijing, Percy Cradock, said in a telegraph to the Foreign and Commonwealth Office (FCO), 'an indication that a large sum might be be [sic] available at preferential rates would assist the atmosphere and might assist the substance of the talks on Hong Kong.' 18 The British had seen the Hong Kong issue as primarily an economic one since at least 1979, when the British had started to press the Chinese to enter into discussions over Hong Kong's future. The Hong Kong government had been granting land leases that expired three days before the New Territories lease expired, but from the 1980s onwards any investor looking some fifteen years into the future would lack certainty over the future of their investment. 19 Time was therefore of the essence. When MacLehose met with Deng on 29 March 1979, MacLehose framed the Hong Kong issue 'as a technical and commercial matter, as a means of sustaining investment'. 20 Investors lacked the confidence to invest for the long term, MacLehose warned Deng, when the future of the leases remained uncertain; it would be better for investors if London and Beijing simply agreed to ignore the 1997 expiry date of the New Territories lease. 21 Deng flatly rejected MacLehose's proposal, telling the Governor to deliver to investors the message that they 'should put their hearts at ease'. 22 Following MacLehose and Deng's meeting, on 5 July 1979 Ambassador Cradock sent a written version of the British position and recommendations over Hong Kong, which again focused on the damage to investment that uncertainty was already doing to Hong Kong. The British received a rebuttal from the Chinese Foreign Ministry on 24 September 1979. 23 The British believed that the Chinese had failed to appreciate the economic logic of their argument. MacLehose reiterated his belief that 'market forces are on our side' 24 later that year and the British held onto their economic argument throughout this period because, as the Home Secretary, William Whitelaw, put it, 'the shere [sic] logic of what we were trying to achieve spoke for itself.' 25 The British blamed the Chinese: Lord Carrington wrote to Thatcher saying there was 'considerable evidence of ignorance and misunderstanding of the Hong Kong problem' 26 and Ambassador Cradock said similarly that 'the Chinese have clearly not fully understood the concept, or the basis, of investor confidence' and 'have not grasped the essential fact that it is continued British administration that is needed to maintain confidence.' 27 The belief held amongst the British that their continued administration was necessary for Hong Kong's continued prosperity became more deeply entrenched.
Like her colleagues, Thatcher also saw the Hong Kong issue as a predominantly economic one. Aware of the pressing need to resolve the question, Thatcher wanted to reach a solution with the Chinese within six months of her meetings with Zhao and Deng. 28 Speaking to MacLehose in July 1982, the two talked of Hong Kong like a company in need of stable management and discussed 'a kind of management contract' 29 for Hong Kong's administration. Thatcher concurred that the Chinese were incapable of handling Hong Kong's economy: 'China did not understand that the maintenance of confidence and prosperity in Hong Kong,' she said days before flying out from London, 'required the continuation of British control and administration.' 30 The British therefore took it upon themselves to 'educate' the Chinese in the hopes that if the Chinese understood the tenants of capitalism and investor confidence, they would understand the necessity of continued British administration. 31 To this end, Thatcher requested 'a draft aidememoire' which she 'may leave with the Chinese Government' and which should have 'an educational purpose'. 32 The Chinese would need to be shown how Hong Kong's economy worked, why Chinese administration would fail and thus why continued British administration was essential.
Thatcher and the British side found evidence for their belief in the incapability of the Chinese to administer Hong Kong as a successful economy in China's recent economic track record. For two consecutive years in 1979 and 1980, China recorded massive deficits in both its foreign currency transactions and budget, putting China on the edge of an economic crisis by December 1980. 33 This gave London little confidence in Beijing's ability to successfully handle economics. Furthermore, the British saw the Chinese as attempting to figure out how Hong Kong's economy worked. 'China didn't really understand the meaning of a "free port",' 34 a Chinese insider confided, and 'few Chinese leaders understood how Hong Kong worked.' 35 Beijing had welcomed over thirty delegations of businesspeople in the lead up to the September 1982 leaders' meetings, seeking to assuage trepidation amongst the business community while attempting to understand how Hong Kong's economy ticked. 36 Nonetheless, amongst these businesspeople, in MacLehose's opinion, 'no-one has had the courage to tell the Chinese explicitly that continuing British administration for the foreseeable future is essential to confidence in Hong Kong.' 37 This again supported the perception that the Chinese were in need of education.
More evidence was found in the poor performance of China's new Special Administrative Zones. Authorised in December 1978, these Zones were granted increased levels of autonomy over their own economic affairs and were allowed to interact more freely with foreign capital. The British were aware that the Chinese may suggest making Hong Kong a Special Administrative Zone or Region; the Chinese Foreign Minister, Huang Hua, had indicated via an intermediary that 'special administrative zones, [sic] would be relevant' in the discussions over Hong Kong's future. 38 Thatcher was told that the Special Administrative Zones were a failure. She read an article that had been translated and sent to her by Sir Y. K. Pao, underlining select statements including: 'the "Special Administrative Region" should not be taken as anything but another propagandistic device by communist China designed to ward off any fears about a totalitarian government.' 39 The article continued: 'the doubts felt by the public towards "Special Administrative Regions" are not without ground' and they have 'limited usefulness in allaying the fears of Hong Kong public [ … and] less effective will this device be in boosting investor confidence.' 40 Additionally, in the weeks before her trip, businesspeople from Hong Kong told Thatcher that the Special Administrative Zones were 'not successful' and described them as 'chaotic'. 41 Though the Special Administrative Zones and China's wider economic reforms were still in their infancy, they had already been written off by the British, who saw their reported failure as still further evidence that the Chinese did not understand economics sufficiently to administer Hong Kong.
During the September 1982 leaders' meetings, Thatcher continued to focus on economic issues. Thatcher assumed that Britain and China 'shared the aim of maintaining the prosperity and stability of Hong Kong.' 42 She repeated and expanded MacLehose's economic argument, widening its scope beyond land leases to encompass Hong Kong's entire economy. She warned that 'if changes in the administrative control of Hong Kong by the United Kingdom were introduced or announced now, the result would be disastrous for Hong Kong confidence.' 43 Referring to the tumultuous final years of Mao's leadership and her doubts that Deng's reforms would prove successful in the long-run, Thatcher cautioned Deng that investors would have to think about China's 'recent turbulent past, the very different political system and the fact that the modernisation programme was only just beginning' and coached that these 'factors would lead him [a potential investor] to conclude further investment was too risky.' 44 She proposed, therefore, that Britain should administer Hong Kong beyond 1997.
However, the reduction of the Hong Kong question to a purely economic one ignored other dimensions of the issue which were more vital to the Chinese. The Chinese held that resolving the problem left over from history and reinstating China's sovereignty over Hong Kong were more important aspects of the Hong Kong issue to them. Moreover, they did not concur with Thatcher that only British administration could assure Hong Kong's economic future, saying that China's prioritisation of sovereignty 'did not mean that the prosperity of Hong Kong could be maintained only under British administration.' 45 Though Deng shared Thatcher's desire to resolve the issue soon, suggesting a timeline of 'one or two years', 46 the Chinese did not share the priorities of the British and believed they could administer Hong Kong themselves. Consequently, Thatcher's threat that Hong Kong's economy would collapse upon the announcement that China intended to retake the colony proved powerless to change the Chinese position on Hong Kong. In summary, Thatcher and many of her advisors focused largely on Hong Kong's economy. Hong Kong was seen as a hub for British commercial interests in East Asia and nicknamed 'the goose that lays the golden eggs' 47 by the British, who were resolute that Chinese administration could not be permitted because 'our political and economic interests in the Far East would suffer.' 48 Frustrated that the Chinese did not agree with their proposal in 1979, British actors blamed the Chinese, whom the British resolved must have misunderstood economics, and set out to teach the Chinese 'the crucial value of British administration if prosperity is to be maintained.' 49 The perceived failure of China's Special Administrative Zones, having existed for only a few years, and the apparent eagerness of China's leaders to learn from Hong Kong businesspeople added to the perception within the British camp that the Chinese were economically illiterate. However, by seeing the Hong Kong issue as an economic one and interpreting signals received from the Chinese side through a frame already limited in its focus, the British did not consider how Hong Kong was seen from the Chinese perspective. The British failed to question whether Hong Kong's economy was a priority shared by the Chinese and, having based their position upon the issue of most importance to them, the British argument to Zhao and Deng failed to address the issues that were most important to China.

'Benevolent autocracy' 50
In addition to the economic imperative of continued British administration, the British also claimed their proposal was economically selflessness. Conservative former Prime Minister Edward Heath met Deng in April 1982 to gauge Deng's reaction to the British proposal ahead of Thatcher's visit that September. During this meeting, Heath stressed that 'Britain received nothing from Hong Kong' and suggested to Deng that 'Britain managed Hong Kong for the benefit of China and of mankind.' 51 Commenting on Heath's report, Ambassador Cradock said that amongst the Chinese side there was a 'delusion that the UK treasury receives taxation revenue from Hong Kong' and that 'we must correct Chinese misconceptions.' 52 The British, therefore, again diagnosed resistance to Britain's proposals as being due to Chinese misunderstandings.
The British linked this claim of economic selflessness to a sense of duty to represent the wants and wishes of the Hong Kong people, asserting that their proposals, which were grounded in economics, had a moral dimension to them. British actors stated their commitment to 'fully represent the views and interests of the people of Hong Kong' both privately 53 and in public statements to the press. 54 They stressed that any agreement between Britain and China on Hong Kong's future would have to take into account the wants, wishes, views and interests of the Hong Kong people. 55 However, exactly how the British could be sure of Hong Kong public opinion remained uncertain.
British actors deliberated over the difficulty of gauging Hong Kong public opinion. In a letter to Thatcher's Private Secretary for Foreign and Defence Affairs, an FCO official reported that 'there has been nothing approaching a major opinion poll'. 56 The British thought that surveying Hong Kong public opinion themselves was highly unlikely: MacLehose told Cradock and the British Foreign Minister, Francis Pym, that 'a plebiscite was not practicable.' 57 Nonetheless, British advisors told Thatcher that most people in Hong Kong would support continued British administration. It was generally agreed within Westminster that the people of Hong Kong had 'no wish to be ruled by Chinese communists' and would 'welcome British administration' 58 in its current form, which Cradock later described as a 'benevolent autocracy' 59 in an echo of the moral dimension that British actors attached to their administration. MacLehose advised Thatcher during a July 1982 meeting that 'if we could ensure the prolongation of present conditions' then the people of Hong Kong 'would be perfectly satisfied.' 60 There was also disagreement within the FCO as to whether any of the Unofficial Members of the Executive and Legislative Councils (UMELCO)councils which had been established to keep the Governor abreast of Hong Kong public sentimentshould be invited to Downing Street before the leaders' meetings. UMELCO members had started to pressure Edward Youde, who had taken over from MacLehose as Governor of Hong Kong in May 1982, for a greater degree of involvement at least as early as July 1982. 61 But some in the FCO demurred: 'I myself have some misgiving [sic] about inviting to this country representatives of Hong Kong opinion,' the Assistant Under-Secretary of State for Asia wrote. 62 He listed two reasons for his hesitancy: firstly, that if 'we encourage "consultation" of this kind there would be an expectation among Unofficials and others in Hong Kong that we would involve them at every stage' and, secondly, because 'there are far too many people in Hong Kong whose thinking about the future is extremely woolly.' 63 Ultimately, however, a small delegation of five Unofficial members was permitted an audience with Thatcher.
On 8 September 1982, Thatcher welcomed the UMELCO delegation to Downing Street. Head of the delegation, Sir S. Y. Chung, told the Prime Minister that it would be 'extremely difficult, if not totally impossible, to make the ceded part economically viable without the leased part'. 64 The economic desirability of continued British administration over the whole of Hong Kong was echoed by popular opinion: 'two major independent surveys', Chung told Thatcher, had concluded 'that over 90% of the Hong Kong people would like Hong Kong to remain status quo beyond 1997 for as long as possible.' 65 In the discussion that followed, all members of the delegation unanimously concurred with this position. Thatcher  As well as providing Thatcher with an opportunity to hear views from Hong Kong, press coverage of the UMELCO delegation's visit also helped to show outwardly that Hong Kong people were being represented at the highest political level. In a statement, Downing Street said that Thatcher had wanted 'to hear at first hand their views on the climate of opinion in Hong Kong and of the wishes of the people there.' 68 Meanwhile, the Unofficial Members were delighted that Thatcher appeared to accept and endorse their position. Sir S. Y. Chung told a reporter that the UMELCO delegation had given Thatcher a comprehensive account of all the views and wishes that we have seen in the newspapers in Hong Kongthe press, the mediathrough correspondence written to us, petitions made to UMELCO and statements made by a large number of organisations in Hong Kong, and of course a number of major opinion surveys carried out in Hong Kong recently. We were able to reflect all the views and were given a very good opportunity to do that. 69 This allowed the British to claim they had consulted Hong Kong prior to the September 1982 leaders' meetings, though by this date the British were already steadfast in their opinion of what the Hong Kong public wanted.
During the September 1982 leaders' meetings, Thatcher tied the economic necessity of continued British administration to the public acceptability of continued British colonialism in Hong Kong. Thatcher said she 'wanted to emphasise' to Deng that the British government 'derived no revenue from Hong Kong,' 70 framing the British proposal as economically selfless. Moreover, she said it was not the potential for the British government to gain financially that motivated her position but rather a sense of 'duty, which she felt deeply, which was to reach a result acceptable to the people of Hong Kong.' 71 Thatcher told Deng, 'every survey showed that the people of Hong Kong wished the British system of administration to be maintained,' 72 echoing Sir S. Y. Chung's statement to Thatcher earlier that month.
However, Thatcher's claim of economic selflessness is questionable. While the British government may not have derived revenue directly from Hong Kong, Thatcher would have known from the many letters she received from British businesspeople that the proposal was not entirely selfless. Thatcher knew that British businesses stood to benefit from the confidence that continued administration of Hong Kong would bring and the reputational benefit Britain stood to maintain from keeping Hong Kong prosperous under British administration. For instance, the President of the Confederation of British Industry, Sir Campbell Fraser, wrote to Thatcher before her visit to China, saying that 'British business interests in Hong Kong are so considerable that there cannot be any of them who are not concerned.' 73 Chairman of Matheson & Co., Henry Keswick, pointed out that 'Hong Kong's success is a good advertisement for British governed administration.' 74 While the British government may not have derived revenue from Hong Kong, the British knew that some British businesses stood to benefit. Furthermore, the advice Thatcher was given by British and Hong Kong advisors was itself largely rooted in the reduction of the Hong Kong issue to an economic issue. When MacLehose advised Thatcher that Hong Kong people would be content with a continuation of the status quo, his assertion was based on the economic significance of the New Territories and the inability of Hong Kong to function as separate parts. Similarly, members of the UMELCO delegation had agreed that Hong Kong could not be split into parts because it would not be economically viable to do so.
There were also morally dubious aspects of the British approach to the Hong Kong issue. Actors in Whitehall were concerned that a loss of confidence in Hong Kong may trigger a refugee crisis for Britain. Lord Carrington said that maintaining confidence in Hong Kong was necessary to avoid Britain being 'faced with demands from Hong Kong people for guarantees of protection' and 'for the right of admission of fairly large numbers to this country.' 75 The year before the leaders' meetings, the Nationality Act of 1981 had gained royal assent. Under the Act, Britain's colonies were to be renamed British Dependant Territories and most Hong Kong people excluded from British citizenship by definition. Home Secretary William Whitelaw affirmed during a meeting with the Prime Minister that 'a principal feature' of the Nationality Act of 1981 'was to ensure that the bulk of the Hong Kong population had no automatic right of abode in the United Kingdom.' 76 The British were as concerned with keeping Hong Kong in the Commonwealth as they were with keeping Hong Kong people from demanding British citizenship.
When Thatcher met Deng in September 1982, Deng condemned Britain's administration of Hong Kong as colonialist and, in contrast to Heath's suggestion that continued British administration stood to benefit mankind, told Thatcher that it would instead 'benefit' Britain to return Hong Kong to China because this would mean that 'the period of colonialism would have ended in Britain.' 77 Thatcher protested that her 'attitude was not that of a colonial power' and that 'Britain was not a colonialist country: we had moved beyond that.' 78 Yet, armed with the opinions of the UMELCO delegation, Thatcher had entered the 1982 leaders' meetings in the intention of retaining Hong Kong as a colony.

International law and history
Under Mao Zedong, who had led China before Deng, China had tolerated British administration of Hong Kong. China had benefitted from using Hong Kong as a window to the world and as a means of gaining foreign exchange. 79 Though Mao expected the next generation of Chinese leaders to pursue Hong Kong reunification, he did not seriously pursue reunification during his own lifetime. 80 Nonetheless, China had never recognised the treaties or the lease as valid. China placed the two treaties and the lease amongst agreements which China believed had been aggressively forced upon it during the nineteenth and early twentieth centuries and which it was within China's exclusive purview to resolve when the time was right. 81 In 1972, China reiterated its position on the treaties in a letter to the United Nations, saying that the question of Hong Kong resulted 'from a series of unequal treaties which the imperialists imposed on China' and restated that the Hong Kong question was exclusively within China's own jurisdiction. 82 Prior to the September 1982 leaders' meetings and via informal channels, Chinese officials expressed that they wanted to hear Britain's proposals for solving the Hong Kong problem 83 but repeated their position on the treaties as a red line. During Heath's meeting with Deng in April 1982, Deng said that China and Britain must reach an agreement that 'would involve abrogating the past unequal treaties.' 84 China's claim over Hong Kong extended to all areas of Hong Kong, not only the leased New Territories area. When Deng spoke of Hong Kong, he was explicit that he was 'referring to sovereignty over the whole area of Hong Kong and not just the New Territories.' 85 Following this meeting, Heath had told Pym during a debriefing that 'no-one should suggest to the Chinese [ … ] that Hong Kong Island would be administered on its own' and warned that 'any such move would be fatal.' 86 The FCO concurred: 'the Chinese will take it very badly if [ … ] sovereignty over the whole of Hong Kong cannot even be discussed.' 87 This advice was passed on to Thatcher: 'all Chinese statements show they regard [Hong Kong] as a whole,' read a letter to Thatcher's Private Secretary, 'and would not agree to separation.' 88 Ambassador Cradock was even more blunt: 'if we clung to sovereignty,' he cautioned, the British risked 'a confrontation with China.' 89 British actors knew that the treaties were of the utmost sensitivity to the Chinese, who regarded Hong Kong as a whole.
The same message was communicated to Thatcher directly. During a dinner in July 1982, the Chinese Ambassador to London told Thatcher that 'sovereignty over Hong Kong must pass to China' to which she asked whether the Ambassador was 'referring to Hong Kong [Island] and Kowloon or to the New Territories.' 90 The Ambassador replied that 'sovereignty over the whole area must be transferred.' 91 Similarly, Sir S. Y. Chung told Thatcher during the UMELCO delegation's visit that it would be extremely difficult to separate the ceded from the leased parts of Hong Kong. 92 Ambassador Cradock cautioned Thatcher that if the British proposal, which treated the New Territories separately from the rest of Hong Kong, was perceived as leaving the two sides without common ground, then the British would 'risk a complete failure of the visit.' 93 It would be better, Ambassador Cradock coached, to show Britain's eagerness to enter talks 'without prejudice or pre-conditions'. 94 Thatcher, however, went against this advice, believing that both treaties would remain valid after 1997 and that the ceded and leased parts of Hong Kong could be considered separately. 'Our sovereignty over Hong Kong and Kowloon was clear,' Thatcher told Sir Y. K. Pao, 'the question was whether we should retain the New Territories.' 95 She reiterated during a ministerial meeting that 'she would make it plain that she was not prepared to discuss title to Hong Kong [Island] and Kowloon unless we were sure of British control and administration.' 96 At the same time, Thatcher distrusted the Chinese, saying to MacLehose, 'Communist governments could not be relied upon to respect agreements.' 97 She therefore questioned the dependability of their signature should an agreement eventually be reached, asking the UMELCO delegation whether Britain could 'depend on future [Chinese] Governments not to regard any treaty negotiated now as unequal?' 98 Despite warnings from her own advisors, Thatcher was resolute that the New Territories lease was to be her focus and adopted a stronger position than Ambassador Cradock had advised during the September 1982 leaders' meetings. During her meeting with Zhao, Thatcher stated her view that, while the New Territories lease would indeed expire in 1997, the two treaties would remain valid in international law. 99 She emphasised the complications introduced by the treaties, claiming that 'abrogation would have to be achieved through a law passed by the British Parliament' which she could only consider if Britain and China could replace the treaties and lease with a new, bilateral treaty. 100 Lastly, perhaps revealing her distrust of the Chinese, Thatcher warned that if China ignored the validity of the treaties by unilaterally abrogating them, then other countries would come to doubt the trustworthiness of China's signature other agreements. 101 Having overruled advice from her own side, Thatcher's legalistic approach failed to appreciate how her interlocutors viewed the treaties. The treaties were inexorably intertwined with a collective memory of China's humiliations at the hands of foreigners, which had begun with the First Opium War after which Hong Kong Island had become a British colony. This history had left the Chinese deeply suspicious of Britain's intentions. 102 Furthermore, Deng had elevated reunification to amongst the highest goals for his government to achieve 103 and intended to use Hong Kong as a case study for Taiwan reunification. 104 Moreover, achieving abrogation of the treaties underlined Deng's very position as de facto leader at a time when Party in-fighting and factionalism was rife. 105 Hong Kong's continued colonial status was an unavoidable reminder to Deng and his colleagues of China's past humiliations and ensuring the abrogation of the treaties had become a task held amongst the highest priorities for Deng's government.
The interlink between a sense of history and emotion, which was a key aspect of the Hong Kong issue to the Chinese, had apparently not been relayed to Thatcher. Papers presented to Thatcher rarely noted emotion and tended to describe Britain's history of conquest in China in euphemisms. For instance, a document titled A Hasty Guide to the History of China gave some brief historical notes about Hong Kong but brushed over the acquisition of Hong Kong Island, which were central to the 1982 leaders' meetings. It said that 'the opium trade to Canton became of importance' to the British and that this 'led to the eventual establishment of the British at Hong Kong in 1842.' 106 Such euphemisms neglected the core motivations of the Chinese side.
Consequently, Thatcher entered the leaders' meetings without an understanding of how those with whom she was negotiating saw Hong Kong. For instance, in Thatcher's opening statement to Zhao, she characterised colonial Hong Kong as 'a unique example of successful Sino/British co-operation' 107 before recommending that Britain and China replace the nineteenth century treaties with a new one. The Chinese, seeing Hong Kong in a wider historical context, viewed Thatcher's proposal as undiplomatic. Autobiographical accounts later characterised Thatcher's attitude as one of 'arrogance' and recalled that she used a 'threatening tone'. 108 In contrast, some British accounts hold that Thatcher spoke with 'eloquence and charm'. 109 But no matter how eloquently it was delivered, Thatcher's approach to the Hong Kong question and her proposal of continued British administration offended the Chinese side.
Offense was compounded a few days after the leaders' meetings when, at a press conference in Hong Kong, Thatcher said she regarded the treaties as valid in international law 110 and announced, 'We stick by our treaties'. 111 The Chinese responded angrily in a People's Daily article, objecting to Thatcher's remarks and reiterating the Chinese position that the treaties were invalid. 112 This tussle of words fought in press conferences and newspapers shrouded Hong Kong in 'nervousness', Ambassador Cradock was told, and British actors began attempting to improve the situation by seeking positive publicity. 113 However, the damage had already been done.

Conclusion
By approaching the Hong Kong issue as fundamentally an economic one, the British essentialised the issue at the expense of understanding how the longer history of Hong Kong framed the issue for the Chinese side. This left Thatcher unprepared for the leaders' meetings and unaware of the offense her remarks would cause. The British believed that only they knew what was best for Hong Kong, that the Chinese were incapable of administering Hong Kong as a successful economy and that the Chinese needed tutoring by the British. Moreover, in trying to convince the Chinese that Britain's brand of colonialism was benevolent and selfless, Thatcher exhibited the same belief in the moral imperative of colonialism that had excused British imperialism throughout history. 114 In the case of Hong Kong, this belief was based on accepting the advice of actors in Westminster, which was given credence by the UMELCO delegation only after her policy on Hong Kong had already been decided.
Yet Thatcher also ignored her own advisors and overrode sub-ministerial actors on key aspects of the Hong Kong issue, pushing forward her own beliefs about Hong Kong. Thatcher's visit has been credited with achieving the opening of negotiations. 115 However, the visit instead added to Chinese suspicions of the British and delayed the start of negotiations. Although a joint communiqu e issued after the leaders' meetings implied that Britain and China had enjoyed friendly talks on Hong Kong, the announcement covered up disagreement. 116 Having held steadfast to her position on sovereignty, separability and the validity of the treaties, Thatcher had offended the Chinese side and heightened the suspicions that the Chinese already held over Britain's intentions. 117 In response, the Chinese insisted that the agenda for formal negotiations must first address the issue of sovereignty. 118 Far from her aim of reaching an agreement within six months of the leaders' meetings, it was not until March 1983 when Thatcher conceded to a more moderate position than the one she had pursued in the 1982 leaders' meetings that this deadlock was broken and formal negotiations could begin in July 1983