Sino-British Joint Declaration

The Joint Declaration states the basic policies of the People's Republic of China (PRC) regarding Hong Kong after the handover on July 1, 1997.

In accordance with the "One Country, Two Systems" agreed between the UK and the PRC, the PRC's domestic brand of socialism shall not be practised in the Hong Kong Special Administrative Region (HKSAR) (the new name for the former colony), and Hong Kong's capitalist system and its quasi-democratic institutions shall remain intact for a period of 50 years. The Joint Declaration provides that these basic policies shall be stipulated in the Hong Kong Basic Law.

The timing of the Declaration was influenced by the fact that mortgages for property in Hong Kong are typically 15 years. There was the fear that without security of property, the Hong Kong property markets would collapse causing a collapse of the general economy in Hong Kong (which, in any event, has occurred since 1997).

The execution of the declaration by the Conservative Party government of Margaret Thatcher was a cause of controversy in Britain at the time: some considered bizarre that the staunchly right wing Prime Minister would agree to such an arrangement with the xenophobic and insular Communist government represented by Deng Xiaoping.

However, others have pointed out that Britain was in an extremely weak negotiating position. Hong Kong is not militarily defensible and receives most of its water from Guangdong province in mainland China. Without an agreement, there would be nothing to keep the Chinese government from retaking the New Territories in 1997 (upon the expiration of the 99 year lease of the New Territories negotiated with the Emperor of China after the Second Opium War), and the prospect of this occurring would have destroyed the Hong Kong economy long before 1997.