On September 26, 1984, the British and Chinese delegations initialled the Sino-British Joint Declaration in Beijing, after two years of negotiation and 22 rounds of talks. It was formally signed on December 19 by Margaret Thatcher and Zhao Ziyang, ratified and exchanged on May 27, 1985, and registered at the United Nations. It provided that the People's Republic of China would resume the exercise of sovereignty over Hong Kong on July 1, 1997.
The question was unavoidable. Hong Kong Island had been ceded to Britain in 1842 after the First Opium War, . Kowloon followed in 1860. Those treaties, the Chinese government holds, were unequal and void. The New Territories, which is 90 per cent of the land area, was held under a 99-year lease taken in 1898 and due to expire on June 30, 1997. Nobody would invest in a territory whose land ran out in 1997, and by the late 1970s the mortgage market was refusing to lend beyond the early 1980s.
The negotiations were hard because the two sides started from incompatible positions. Britain wanted to exchange sovereignty for continued administration, and Thatcher said after her 1982 visit that the treaties were valid under international law. China's position was that it would resume sovereignty over the whole of Hong Kong, that the treaties were unequal and therefore void, and that it would decide the arrangements itself if there was no agreement. Deng Xiaoping's formula, one country two systems, was the way out.
Its provisions were specific. Hong Kong would become a Special Administrative Region with a high degree of autonomy, its own laws, courts and finances, its own currency, its own customs territory and its own immigration control. The capitalist system and the way of life were to stay unchanged for 50 years, until 2047. China would be responsible for defence and foreign affairs. The Basic Law was to be drafted by China and enacted by the National People's Congress in 1990.
British officials wanted more guarantees than they got, and several rounds were spent on the composition of the legislature, the franchise and a human rights clause, none of which was obtained in the form London wanted. About 40 per cent of Hong Kong people, and most of the territory's business leadership, would have preferred continued British rule.
The handover took place on July 1, 1997, and about 3 million British National (Overseas) passport holders were created by it. The declaration is still the reference point for what Hong Kong was supposed to be, and it is still registered at the United Nations.