Deng Xiaoping and the Transformation of China (93 page)

Over the next months, Deng joined in many discussions on Hong Kong, including meetings with some twelve different individuals and groups, among them Y. K. Pao and Henry Fok, another businessman long friendly with mainland China.
⁵¹
In talks with British officials, Deng vowed that political power after 1997 would be in the hands of the people of Hong Kong. Always focused on training successors, Deng requested that during the remaining fifteen years, Hong Kong leaders in business, education, and culture suggest the names of promising “patriotic” Hong Kong young people who could begin immediately preparing for responsible positions in various fields after 1997, thereby ensuring a smooth handover and continued stability and prosperity.
⁵²
One of Deng's key visitors from Hong Kong was Rayson Huang, vice chancellor (in effect the president) of Hong Kong's leading institution of higher learning, Hong Kong University, which would play a role in preparing future officials.

When Deng welcomed former prime minister Edward Heath to Beijing
on April 6, 1982, Deng, drawing on a twelve-point plan presented at the January meeting, was very specific: Hong Kong would remain a free port and a global financial center. It would be ruled by Hong Kong people, including the British and others. It would be led by the bourgeoisie and would include people from all social classes. It would be called “Hong Kong, China,” but there would be no change in business practices. As Deng explained to Heath, “In our Chinese constitution, there is a provision that we can establish special administrative regions with rules separate from the rest of the country.”
⁵³

Prime Minister Thatcher Visits China

Prime Minister Margaret Thatcher arrived in Beijing on September 22, 1982, shortly after her decisive June victory in the Falklands War. The victory had buoyed her confidence, leading her to intimidate Edward Youde and other advisers who did not forcefully explain how impossible it was to hope that Deng might allow the British to retain sovereignty over Hong Kong after 1997. Two leading China specialists in the Foreign Office, Percy Cradock and Alan Donald, did try to make clear Deng's determination and avoid a confrontation.
⁵⁴
But the confident “iron lady” mistakenly considered the Chinese refusal to consider British sovereignty after 1997 as merely a negotiating position.
⁵⁵
Thatcher's first meeting in Beijing was with Premier Zhao Ziyang. But even before he met her, Zhao told Hong Kong reporters that of course China would resume sovereignty, and that the handover would not affect Hong Kong's prosperity and stability. By going first to the press with the basic message that he would later present to Thatcher, Zhao was signaling that those views were non-negotiable. When Deng met Prime Minister Thatcher, he conveyed the same message.
⁵⁶

On the morning of September 24, Deng Xiaoping, the “steel factory,” met Thatcher, the “iron lady,” in a two-and-a-half-hour session. Thatcher later described the session as abrasive, but British officials who attended the session testify that Thatcher's reports of a confrontation with Deng were greatly exaggerated and that a sense of confrontation derived only from her press presentations after the meeting and the Chinese reaction. British participants in the session reported that Thatcher delivered her comments with eloquence and charm, but said that in spite of herself, she was impressed with Deng's almost limitless authority.
⁵⁷
In his opening statement, Deng declared that China would resume sovereignty in 1997, that it would maintain Hong
Kong's prosperity, and that China hoped to have Britain's cooperation.
⁵⁸
Thatcher, however, countered that from Britain's perspective, Hong Kong was British by virtue of three agreements, all of which were valid according to international law and could be altered only by mutual agreement. She said that over the 150 years the British had learned how to administer Hong Kong and did it well. Moreover, she asserted, only after arrangements had been made to preserve Hong Kong's stability and prosperity could the issue of sovereignty be addressed, and only a British administration could guarantee such stability and prosperity: without such an assurance from the British, businesspeople would be no longer willing to invest. Yet Thatcher did make one concession—if satisfactory arrangements could be made regarding Hong Kong's administration, she would consider making recommendations to Parliament on the issue of sovereignty. They should, therefore, begin discussions in diplomatic channels to see if a satisfactory agreement could be reached.

Deng categorically rejected her proposal.
⁵⁹
He said there were three major issues: sovereignty, how China would administer Hong Kong to preserve prosperity after 1997, and how the Chinese and British governments together could avoid major disturbances before 1997. Deng said: “On the questions of sovereignty, China has no room to maneuver. To be frank, the question is not open to discussion.” He said he would not be like Li Hongzhang, who had infamously signed the unequal treaties. Sovereignty meant full sovereignty. To preserve Hong Kong's prosperity after 1997, the current political system and most of Hong Kong's laws would remain in effect. In addition, China would consult extensively with people in Hong Kong and devise policies that would benefit investors, including British investors. But there was a limit to how far he would bend to please the British government or business community. If the British were to put up serious resistance or remove significant funds from Hong Kong before the 1997 handover, Deng warned, China would “reconsider the timing and manner of recovery.” He did indicate that he wanted to work with Britain and agreed that the two sides should immediately begin consultations through diplomatic channels.
⁶⁰
But, he added, if they did not reach satisfactory agreements for the transition within two years, China would announce its policy unilaterally.
⁶¹
Among foreign diplomats in Beijing, it was widely known that Deng Xiaoping often used a spittoon to emphasize a point; observers noted that during his meeting with Thatcher, he used one frequently.
⁶²

After her meeting with Deng, as she descended the outside steps, Prime Minister Thatcher, distracted by a correspondent's question, slipped and fell
to her knees. The scene was caught by television cameras, shown on the Hong Kong evening news, and replayed many times thereafter on Hong Kong television. The pictures conveyed the impression that Thatcher, shaken by Deng's tough stance, was kowtowing and was only saved from a bad fall by Cradock, who happened to be standing next to her.
⁶³

Later, when Thatcher spoke of Deng, she remained positive in her view of him. He had been blunt but not rude. At the farewell banquet Thatcher hosted in Beijing, Premier Zhao was the guest of honor; Deng had chosen instead to attend a banquet for Kim Il Sung. In her speech at the banquet with Zhao, Thatcher was more conciliatory, saying that the conversations had given her clearer insight into Chinese affairs. “Seeing for one's self,” she said, using the Chinese maxim, “is a hundred times better than hearing from others.”
⁶⁴

The bland communiqué on the Thatcher-Deng meeting, drafted by representatives of the two sides, stated, “The leaders of the two countries held far-reaching talks in a friendly atmosphere on the future of Hong Kong. Both leaders made clear their respective positions on the subject. They agreed to enter talks through diplomatic channels following the visit with the common aim of maintaining the stability and prosperity of Hong Kong.”
⁶⁵
Unlike Deng, Thatcher took pride in Britain's historical role in Hong Kong and believed in the legitimacy of the treaties. In a BBC interview before leaving China, she said, “If one party to a treaty or a contract says, ‘I cannot agree to it, I am going to break it,’ you cannot really have a great deal of confidence that any new treaty they make will be honored.” China specialists in the British Foreign Office cringed when she repeated these comments at a press conference in Hong Kong, for they knew that these words would dampen the goodwill with China that they had been working to build. As they expected, China complained, strongly. In the week after the Thatcher visit, the Hong Kong stock market fell 25 percent, and by the end of October, the Hang Seng Stock Index, which had registered 1,300 in June, had fallen to 772.
⁶⁶

After the Thatcher visit, negotiations were delayed because the Chinese insisted that a negotiated settlement be concluded on the assumption of full Chinese sovereignty after 1997—a condition that Thatcher would not accept. Then came the Chinese warning: in late February 1983, the British were told that the Chinese had nearly completed a draft of their unilateral plan for Hong Kong after 1997. In effect, if there were no negotiations, the Chinese would announce their own plan for Hong Kong's future by September 1984.
⁶⁷
Ambassador Cradock in Beijing and Governor Youde in Hong
Kong became so worried that the Chinese would present their unilateral plan for action to the NPC in June 1983 that they flew back to London to talk with Thatcher in early March. The Hong Kong stock market had dropped to a new low, and even Thatcher by then had become convinced that the Chinese would not yield on sovereignty. To break the deadlock, Cradock suggested that Thatcher write a letter to Premier Zhao in which she would repeat a statement that she had made in Beijing, but using slightly different language: if arrangements satisfactory to the people of Hong Kong were made, she “would be prepared to recommend to Parliament the transfer of sovereignty.” Thatcher concurred, and the letter was sent on March 9, 1983. But because the letter did not meet the Chinese demand for an agreement about sovereignty before any discussions would begin, China did not immediately respond. Only after two months did China agree to proceed with negotiations. As Deng later explained to Hong Kong delegates to the NPC meeting, he had relented on the order of the agenda items so as to let the British out of an embarrassing situation. The agreed agenda for further negotiations was: first, arrangements for stability and prosperity after 1997; next, plans for the period before 1997; and finally, sovereignty. The first meeting was held on July 12, some ten months after Thatcher's visit.
⁶⁸

To prepare for the negotiations, to form liaisons with prominent Hong Kong people, and to train officials to take over Hong Kong after 1997, Deng concluded that Beijing needed to send to Hong Kong higher-level party officials than those who were currently serving there. The top official sent to Hong Kong should be given considerable freedom to engage in open discussions with influential people in Hong Kong and report directly to the highest levels in Beijing. Deng needed someone who had an insider's understanding of Beijing, who could meet Hong Kong leaders as an equal, and who had the confidence to report fully and frankly to the mainland's top leaders. One candidate he had in mind was Xu Jiatun.

While Deng and his family were spending the 1983 Spring Festival in Shanghai, he paid a visit to nearby Jiangsu, where provincial party secretary Xu Jiatun showed him around. Before the visit, Deng had not known Xu well, although in 1975 when Deng was carrying out consolidation throughout the country, Xu played a key role in carrying out consolidation first in Nanjing and then in all of Jiangsu. When Deng met Xu during Spring Festival 1983, they were scheduled for a twenty-minute session in which Xu was to report on developments in his province. In fact, Deng and Xu talked for
two hours. Under Xu's leadership, Jiangsu had doubled its GNP over the previous six years; at the time of their meeting it was enjoying the highest combined output of industrial-agricultural production in the country. As a coastal province next to Shanghai, Jiangsu carried on international trade, and Xu was on the forefront in allowing markets to develop, causing some cautious economic planners in Jiangsu to complain about Xu to Chen Yun. In fact, Chen Yun had urged that Xu Jiatun be removed from Jiangsu—but Deng, who could see that he was a bold reformer, had kept him on.

Within a few weeks after Deng's Spring Festival meeting with Xu, Hu Yaobang, who was responsible for appointing high-level officials and who knew of Deng's high regard for Xu, proposed to Deng that Xu be assigned to the new position in Hong Kong. Deng agreed and in April 1983 Hu notified Xu that he would be transferred to Hong Kong and given overall responsibility for China's relations with Hong Kong in preparation for the transition in 1997.
⁶⁹
On June 30, 1983, just after the first round of Sino-British talks, Xu Jiatun was officially named party secretary of the Hong Kong–Macao Work Committee of the Chinese Communist Party and assigned to Hong Kong. One of Xu's major responsibilities was to select influential Hong Kong people to be invited to Beijing where they would have an opportunity to meet Deng.
⁷⁰

Xu, in preparation for taking up his new position, visited the leaders in Beijing with whom he would be dealing on the Hong Kong issue—Li Xiannian, Zhao Ziyang, Hu Yaobang, Yang Shangkun, Wan Li, Ji Pengfei, and Hu Qili, as well as Deng. He found them all acutely aware that the Hong Kong Communist organization would need dramatic changes in order to lead Hong Kong's transition. The organization was composed largely of Cantonese locals who were accustomed to repeating leftist slogans and had been criticizing Hong Kong business and government leaders for decades. Members of the group had little ability to think imaginatively about Hong Kong's future. Even so, Xu would eventually ceatively transform the Hong Kong Communist Party into a group that nurtured imaginative, pro-Beijing apprentices who would be ready by 1997 to supervise their native Hong Kong. Although these leaders-in-training were not necessarily party members, they were ready to cooperate with the new Communist elite.