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It was partly to shore up a slumping level of confidence that Britain suggested to China earlier this year that it was time to discuss the colony's future. When the Prime Minister arrived in Peking, she ran into a diplomatic impasse. China's leaders insist that they do not recognize any of the earlier treaties and demand full sovereignty over the entire colony. The British, fresh from a victorious war of sovereignty in the South Atlantic, have adopted an equally hard stand. As Thatcher said in Peking: "We stick by our treaties, unless we agree on something else. At the moment, we stick by our treaties."
The most the two sides could come up with was a joint pledge to continue negotiations aimed at maintaining "the stability and prosperity of Hong Kong." That was not especially reassuring for the residents, who, perhaps unrealistically, had expected Peking's guarantee that it would preserve the colony's aggressively capitalist character. To compensate, Thatcher went out of her way last week to assure wary residents that Britain was aware of its "moral obligation to the people of Hong Kong. Our differences can be reconciled," she insisted. "We can reach a solution acceptable to China, the people of Hong Kong and Britain." Most Hong Kong residents remained unconvinced. Said Newspaper Columnist Margaret Ng: "People here are not confident that the Chinese government or the British Prime Minister will put the interests of Hong Kong people first."
China, Britain and the colony itself have little to gain if the status quo is disturbed. For China, that could mean losing its main source of foreign exchange and capitalist know-how. For Britain, a Chinese takeover could spell the loss of one of the mother country's biggest Asian trading partners. For the colony, it could mean the end of an economy that last year racked up a gross domestic product of $22 billion and ranked in the top 20 of the world's trading nations.
The latest indications from Peking are that China's idea of sovereignty includes a formula giving the People's Republic some measure of political control over the colony. In a shrill attack late last week, Xinhua, China's official news agency, declared that "unequal treaties forced upon the Chinese people provide an iron clad proof of British imperialism's plunder of Chinese territory. It is a sacred mission," the report added, "of the Chinese government and people to claim sovereignty over Hong Kong." But however mild, such control would mean an end to Hong Kong's special nature. "The Chinese have to admit," noted London's Financial Times, "that, in effect, they can not run Hong Kong because if they did, it would not be Hong Kong." Added a Chinese businessman in Hong Kong: "The problem is that there are some officials in Peking who believe they could run Hong Kong, that they could somehow have a Communist administration and a capitalist economy. They don't understand what makes this place tick."