Deng Xiaoping and the Transformation of China (94 page)

In Beijing, meeting with various officials before taking up his new post, Xu met Liao Chengzhi, but unfortunately Liao died on June 10, just before Xu took up his post. Thereafter, Deng announced that Li Xiannian and Zhao
Ziyang would be responsible for guiding Hong Kong affairs. Managing the daily work on Hong Kong issues would be former foreign minister Ji Pengfei in Beijing and Xu Jiatun in Hong Kong.

In Hong Kong, Xu's official title was head of the Hong Kong branch of the NCNA. In public he was addressed by that title, but it was an open secret that his power came from being head of the Hong Kong–Macao branch of the Chinese Communist Party. His arrival in Hong Kong attracted great interest, for he was the highest-ranking Communist ever to be assigned there. In the past, the head of Hong Kong's NCNA had always been a local Cantonese with a Ministry of Foreign Affairs background. Xu's first language was Mandarin and his appointment showed that Hong Kong was now considered by top party leaders an issue of national importance.
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Before Xu left Beijing for Hong Kong, he was told by Nobel Prize winner Yang Zhenning, who spent winters in Hong Kong and had close contacts with intellectuals there, that he needed to upgrade China's understanding of Hong Kong. Xu responded by hiring Yang Zhenning's younger brother, Zhenhan, to head a small independent think tank in Hong Kong to help identify and explain to Chinese officials economic and intellectual trends in Hong Kong. Xu also brought scholars from the Chinese Academy of Social Sciences to Hong Kong to improve Beijing's understanding of the territory and its place in the world economy.

Xu arrived in Hong Kong just before the second round of negotiations with Great Britain was to begin, and his first order of business was to help the Chinese negotiators in Beijing understand the local situation in preparation for the next round of talks. At first, many people in Hong Kong, suspicious that Xu was trying to tighten Communist control over Hong Kong, were wary of him, but Xu's openness and genuine desire to understand Hong Kong helped win them over. His basic message was that China would resume control after 1997, but there was no need to worry, for things would remain the same.
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“What comes after 1997?” went the popular Hong Kong riddle of the time. Answer: “1998.” Xu visited schools, banks, and corporations, and spoke frequently at meetings, celebrations, sporting events, poor neighborhoods, and public institutions of all kinds. He became in effect a shadow governor (indeed, informally he was called “governor”). At his headquarters of the NCNA, Xu selected promising local people to join his staff, which grew in number from about one hundred to about four hundred. He divided them up and assigned them to become acquainted with the various departments
of the Hong Kong government and each of the district offices in the New Territories. While helping to keep Xu abreast of developments in all areas, they served, during the fifteen years before the handover, as apprentices, a veritable “government in training.”
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It was assumed that those who proved themselves would occupy important positions after 1997.

After his first three months in Hong Kong, Xu went to Beijing to report to Zhao Ziyang and Li Xiannian on the mood in Hong Kong, the local economy, and the quality of Communist officials there. His observations surprised the leadership in Beijing. The local Communists in Hong Kong, long accustomed to passing on what Beijing wanted to hear, had been repeating the mantra that the residents of Hong Kong were opposed to the imperialists and were eagerly awaiting liberation by the mainland. Even Hong Kong businesspeople, who were always eager to win Beijing's favor, would report how enthusiastic the people of Hong Kong were about the prospect of Communist leadership. Xu, however, bravely relayed the unpleasant truth: he reported that the people of Hong Kong had a deep mistrust of the Communist Party and sometimes felt doomed.
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He also described the dominant view of Chinese businesspeople in Hong Kong, which was that they respected British administration and the rule of law and doubted that Beijing would be able to provide good leadership. Moreover, many businesspeople in Hong Kong who had fled the mainland soon after 1949 felt they could never again trust the Communists. They had seen how the Communists in the 1950s had betrayed their promises to work with businesspeople who had cooperated with them, by attacking them and appropriating their businesses.
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Disturbed by Xu's reports, Li Xiannian responded by saying that Beijing's top priority should be to win over the Hong Kong public.
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Xu's report was sobering, but it did not change Deng's overall plan for the resumption of sovereignty. After an unproductive second round of talks, China published its twelve-point plan, thus reminding the British negotiators that if an agreement were not reached by September 1984, the Chinese would be ready with their unilateral plans. Deng met former prime minister Edward Heath on September 10, 1983, after the third round of negotiations that remained deadlocked. Deng told Heath that Britain's tactic would not work: he would never allow the British to continue the administration of Hong Kong in return for agreeing to Chinese sovereignty there. Deng expressed the hope that Prime Minister Thatcher and her government would act wisely and not cut off the road to cooperation, since nothing would stop
China from resuming sovereignty over Hong Kong in 1997. Deng also said he hoped that during the next round of talks Britain would change gears and work with China in making plans that would ensure a smooth handover.
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After the fourth round of talks that also made no progress, the value of the Hong Kong dollar plummeted to its lowest in history. Panic buying cleaned out supermarkets, and large amounts of capital began to flow from Hong Kong to overseas destinations; families that could afford it bought residences in Canada and elsewhere. Many observers considered it the most serious crisis in Hong Kong since World War II. Cradock, with Thatcher's permission, suggested that on a conditional basis they explore what the Chinese proposed they would do after 1997. At the fifth round of negotiations the Chinese were pleased that the British showed some flexibility, but the Chinese still suspected that the British were engaging in a tactical ploy; little progress was made.
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At the sixth round, Cradock explained that the British were genuine in their wish to explore what China would do after 1997; if satisfactory arrangements could be made, Britain would be prepared to give up administration after 1997. This proved to be the turning point in the negotiations. After the sixth round, the Communist press stopped the attacks on the British position. It was now the Chinese turn to present its plans, but at the seventh round the Chinese were not yet ready with new proposals. Beginning with the eighth round on January 25–26, 1984, the talks became more productive. The British side presented a more detailed analysis of how they governed the complex global city, and the Chinese side incorporated a large part of the analysis into their papers.
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As the discussions proceeded without any specific agreement about sovereignty, it became increasingly clear that the Chinese would take over sovereignty after 1997.

After the twelfth round of talks, Foreign Secretary Geoffrey Howe flew to Beijing, where on April 18, 1984, he had a two-hour talk with Deng. Deng pressed hard on some basic concerns, such as how to prevent British companies and the British government from taking capital out of Hong Kong and how to prevent the British government from leasing out large areas of land. Deng suggested that they set up a joint structure to monitor developments in Hong Kong before 1997, and that a liaison group among leaders in Beijing, London, and Hong Kong be established to work through any problems. Deng made it clear to Howe that although the government system would not be changed after 1997, Chinese troops would definitely be stationed in Hong
Kong.
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But he also made some procedural concessions in hopes of reaching an agreement by September, with ratification by Britain's Parliament and China's NPC to follow. On April 20, when he stopped in Hong Kong after Beijing, Howe publicly acknowledged for the first time what had already become clear to the politically savvy Hong Kong public: “It would not be realistic to think in terms of an agreement that provides for continued British administration in Hong Kong after 1997.” Although the Hong Kong reaction was solemn and some expressed surprise, the city's business community was hugely relieved that the uncertainty had been resolved.
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The details of Deng's message had apparently not been made clear to everyone, however. On May 25, 1984, when Deng met with the Hong Kong delegates to the NPC meeting, Xu Jiatun told him that some Chinese officials were giving out information that was not in line with Deng's policies. Geng Biao, former minister of defense, had told Hong Kong reporters that no Chinese troops would be stationed in Hong Kong after 1997. Deng was furious. He immediately called in the Hong Kong delegates to the NPC as well as Hong Kong reporters to clear up any possible misunderstandings. Deng exclaimed: “Geng Biao has been talking nonsense! What has been said about the question of stationing troops in Hong Kong is not the view of the party center. Troops will be stationed in Hong Kong. It is part of Chinese territory. Why shouldn't we station troops in Hong Kong?”
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Deng immediately went on TV to make his views absolutely clear. He said that after 1997 China would station troops in Hong Kong to provide security. The popular press in Hong Kong, which had seen Deng as a pragmatic moderate, became unnerved by his forceful announcement, but the issue gradually disappeared. In 1997 China did indeed send troops but they rarely left their barracks and their presence never aroused great attention.

In 1984, as Hong Kong awaited announcement of the Joint Declaration, three members of the Hong Kong Executive Council flew to Beijing to express the concerns of many Hong Kong residents about the ability of the Chinese to govern the territory. When Deng met them on June 23, 1984, he opened the meeting by telling them he warmly welcomed them as individuals and encouraged them to walk around and enjoy Beijing. Deng's implication was clear: he did not accept the Hong Kong Executive Council as having any formal authority in deciding the future of Hong Kong. Some Hong Kong and British politicians had been trying to create a “three-legged stool,” with representatives from Hong Kong as well as Britain and China, but Deng,
concerned that this might complicate and slow down the negotiations, made it clear that the negotiations were between Great Britain and Beijing.

At the meeting, when Sze-yuen Chung, head of the Hong Kong Executive Council, expressed doubts about the capacity of lower-level Communist officials to manage the complex problems of Hong Kong, Deng snapped back that this view amounted to saying that only foreigners can govern Hong Kong. Such an attitude reflects, he said, the influence of colonial mentality. Deng continued by telling the group that they should seek a better understanding of the Chinese people and of the People's Republic of China. He assured them that Hong Kong's capitalist system would be in place for fifty years, and he added that a patriot is one who respects the Chinese nation, supports China's resumption of sovereignty, and does not want to hurt prosperity and stability in Hong Kong. He said it did not matter if one believes in capitalism, feudalism, or even slavery. He noted as well that there were thirteen years left before resumption of sovereignty and that officials in Beijing were just as concerned about stability during these years as were the members of the Hong Kong Executive Council. After Deng's comments about the colonial mentality, the three representative of the Executive Council did not argue. One of them, Maria Tam, even volunteered that she, too, was a Chinese.
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To avoid the risk of Britain siphoning away Hong Kong's wealth and causing problems in its remaining years, Deng had proposed a joint committee of China, Britain, and Hong Kong to deal with problems before 1997. British officials, concerned about their ability to govern effectively during their last years, rejected such a dispersal of power. In July 1984 Vice Foreign Minister Zhou Nan proposed to Cradock and Anthony Galsworthy an alternative: a joint Sino-British Liaison Committee, without power, to promote communication. Both sides agreed, and the two sides moved on to draft the final document. The Sino-British Joint Declaration on the Question of Hong Kong was reached after twenty-two rounds of negotiations held from July 12, 1983, until September 6, 1984.

When Deng met Foreign Secretary Geoffrey Howe on July 31, 1984, a formal agreement on the Joint Declaration was in sight. Deng, who had just returned well tanned from his summer vacation at Beidaihe, was ebullient. For 140 years Chinese patriots had been trying to resume sovereignty over Hong Kong but had always failed. Deng had accomplished it peacefully with British cooperation, albeit with China making good use of its leverage. Deng even had good words to say about Thatcher; he said the agreement was “an
example to the world for settling questions between states, left over from the past. . . . General de Gaulle brought an end to French colonial rule. Now we can say that Prime Minister Margaret Thatcher will bring an end to British colonial rule.” In meetings to celebrate the Joint Declaration, Deng joked that he was impressed to be surrounded by so many knights of the realm. A British official recorded Deng's comments: “We have concluded that we can trust the British people and the British government. Please convey to your Prime Minister that we hope she will come to sign the agreement and to your Queen our hope that she will come to visit China.” The British official added that Deng was not just amicable, but even warm and courtly.
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One day later, the two sides formally agreed to establish the Liaison Group that would meet alternately in Beijing, Hong Kong, and London.