April 9 (Bloomberg) -- China praised Margaret Thatcher, the former U.K. prime minister who died yesterday, as an “outstanding statesman” for agreeing the 1997 return of Hong Kong to Chinese rule.
Thatcher was instrumental in the “peaceful resolution of the Hong Kong question,” Chinese Foreign Ministry spokesman Hong Lei said today at a press conference in Beijing. She made important contributions to the development of ties between China and Britain, he said.
Hong Kong was one question on which Thatcher, known as the “Iron Lady” for her uncompromising style, was forced to yield. At talks in Beijing, then Chinese leader Deng Xiaoping rejected her requests for Britain to continue administering the former colony, leading to the signing of the 1984 joint declaration that sealed the handover.
“That year, we all watched television every day just to see whether Thatcher smiled or not, and whether she shook hands with Chinese officials after the talks,” said Haywood Cheung, president of the Chinese Gold & Silver Exchange Society, who was a gold trader then. “She was like the center of the world for us.”
Thatcher will be remembered for starting Hong Kong’s transition to Chinese rule, city Chief Executive Leung Chun-ying said in a condolence message to U.K. Foreign Secretary William Hague, according to a statement on the government’s website.
Fresh from winning the Falklands War with Argentina, Thatcher visited Beijing for talks on Hong Kong in September 1982. Before she meet Deng, then Chinese Premier Zhao Ziyang told Hong Kong reporters that China would resume sovereignty over the city, setting the stage for a session that Thatcher would later describe as abrasive, Ezra Vogel wrote in “Deng Xiaoping and the Transformation of China.”
Thatcher made her “biggest compromise” over the return of Hong Kong to China, the Chinese Communist Party-run Global Times said in an editorial today. She “managed to understand that China is not Argentina and Hong Kong is not the Falklands,” the newspaper said.
At the meeting held on Sept. 24, 1982, Deng told Thatcher that China would unilaterally announce its policy for Hong Kong if no agreement was reached within two years, Vogel wrote. Descending the steps of the Great Hall of the People in Beijing, she slipped and stumbled, a scene that was caught on camera and replayed many times in Hong Kong.
“The pictures conveyed the impression that Thatcher, shaken by Deng’s tough stance, was kowtowing,” Vogel wrote.
Hong Kong’s benchmark Hang Seng Index tumbled 38 percent in the 10 weeks after the talks, while the city’s currency plunged 42 percent over the next 12 months until the government pegged it to the U.S. dollar. The peg remains today.
“I think it’s Thatcher’s stumble that gave birth to the Hong Kong dollar peg,” said Cheung. “The market was in fear and investors just kept selling the Hong Kong dollar. It’s a confidence crisis. It was just panic everywhere. People out there were scrambling to buy toilet papers and rice.”
Newspapers in Hong Kong marked news of Thatcher’s death with full-page reports and obituaries, with the Apple Daily devoting half of its front page to a photograph of the former British prime minster. The newspaper, known for its anti-Beijing stance, said in its report that Thatcher wasn’t strong enough in her negotiations with Deng.
“She could’ve been an Iron Lady to Deng Xiaopeng,” Emily Lau, chairwoman of the Democratic Party of Hong Kong, said of Thatcher. “She had other things on her mind, and the interests of the Hong Kong people was not an important matter.”
As a journalist in 1984, Lau challenged Thatcher at a press conference in Hong Kong, asking her whether it was defensible to hand over the colony’s population to a “Communist dictatorship.” Thatcher replied that Britain had done everything that it could.
“She didn’t have a lot of cards to play” on Hong Kong, said David Zweig, professor of social science at the Hong Kong University of Science and Technology.
Britain’s lease over the New Territories, which formed the bigger part of Hong Kong, was scheduled to expire in 1997.
Deng had articulated a policy of keeping Hong Kong separate from mainland Chinese rule called “One Country, Two Systems,” with the city retaining its own government and administration for 50 years after 1997.
“What she did was to get the Chinese government to spell out in details this policy,” said Martin Lee, founder of the city’s Democratic Party.
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