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1992 Dec 9 We
Margaret Thatcher

HL S [Hong Kong and China]

Document type:public statement
Document kind:House of Lords
Venue:House of Lords
Source:Hansard HL [541/207-12]
Journalist:-
Editorial comments:1619-40.
Importance ranking:Major
Word count:2543
Themes:Civil liberties, Trade, Foreign policy (Asia), Foreign policy (USA)

Baroness Thatcher

My Lords, it is my great privilege, on behalf of the House, to congratulate the noble Lord, Lord Wilson, on the most excellent maiden speech he has just made: a subject upon which he has so much knowledge and understanding. I seem to remember that I had something to do with his governorship of Hong Kong and, in so far as I did, I think it was an extremely good choice. He was a very distinguished governor at a most difficult time. People remember what happened in 1989, and he saw Hong Kong through that time.

I should also like to say thank you to him for the great part he played in the very tough negotiations with China in order to get the Joint Declaration that we eventually succeeded in having. May I also say that that took a long time. There were many setbacks: times when we got nowhere, times when we had to give ground and times when we gained ground. But had either side left the field at the first whiff of grapeshot there would never have been a Joint Declaration. There would have been a very much lesser future for Hong Kong than there is as a result of that persistence. I would also thank the noble Lord for choosing this occasion to speak, because it is the first time in my 33 years in Parliament that I have had the privilege of congratulating a maiden speaker; so it is in a way a double first.

My purpose in speaking in this debate is strongly to support [ Chris Patten] the Governor of Hong Kong and to commend a policy of good relations with China. Noble Lords will detect that I do not believe there need be any contradiction between these two propositions. I should like also to thank the noble Lord, Lord Geddes, for his fascinating speech in opening this debate. As a result of the sentences I have already uttered, he will realise that I do not wholly agree with him. Perhaps I may just take up one point which both he and the noble Baroness opposite made. There seems to be some idea that it was not what the Governor said but the manner in which or the occasion on which he said it that has given rise to the problems. The Governor chose to unveil his proposals to the people of Hong Kong in an address at the opening of the 1992–93 session of the Legislative Council. It would seem to me very strange for this House to choose such an occasion as one of criticism.

Secondly, the Governor is a master of the English language. His command of it is tremendous. The speech was marvellously well constructed and I have no doubt it was wonderfully delivered. Just look! I happen to have it with me in case any such criticism arose. An instinct for these criticisms has been bred in me for many years. The Governor said: 208

"Democracy is more than just a philosophical ideal. It is, for instance, an essential element in the pursuit of economic progress ... Without the rule of law buttressed by democratic institutions, investors are left unprotected. Without an independent Judiciary enforcing laws democratically enacted, businesses will be vulnerable to arbitrary political decisions taken on a whim—a sure recipe for a collapse in confidence and a powerful deterrent to investors from overseas".

It was a splendid speech, magnificently constructed, and I have no doubt that it was greeted with a great deal of admiration at the time. I still have a great deal of admiration for the way in which the Governor is conducting his very difficult task now.

Like other noble Lords, I have visited Hong Kong many times. It never ceases to amaze me. It is proof that when you allow free rein to people to exercise their talents under a rule of law, they can create a wondrous economy, even without natural resources and on just a small spit of land. In these unpromising conditions they have made tiny Hong Kong the world's tenth largest trading economy. Dean Inge remarked that

"the nations which have put mankind most in their debt have been the small states—Israel, Athens, Florence, Elizabethan England".

Hong Kong deserves a place in that pantheon. It is a superlative example of how British administration and Chinese talent can succeed in combination.

China's own economic performance in recent years has been almost as remarkable, and the noble Lord, Lord Geddes, gave us some fascinating statistics. Thanks to Mr. Deng Xiaoping's reforms, the market is being allowed to work and foreign investment is encouraged. As a result, the Chinese economy is growing at an unprecedentedly high rate and living standards are improving rapidly. Like others, I have spoken up strongly in support of those changes in China, which hold out great hope for the future. Indeed, I believe that, partly as a result of them, the economic centre of gravity in the world will steadily shift towards the Asia-Pacific region over the next 20 to 30 years.

What is happening in China is extremely encouraging for the people of Hong Kong. They see great opportunities, both now and after 1997. Indeed recognition of the opportunities is dwarfing their earlier fears about what 1997 would mean for them. They recognise that economically China has changed greatly since the signing of the Joint Declaration in 1984.

The decision to return Hong Kong to China's sovereignty was not an easy one, given the differences between their political systems and their way of life. We agonised over it, knowing that it was not the people of Britain who would suffer if it went wrong but the people of Hong Kong, who were our charge and our responsibility. But no other realistic course was open to us under the terms of the original lease, which covered 92 per cent. of Hong Kong's territory, excluding only Hong Kong Island itself, a small part of the Kowloon peninsula and Stonecutters Island.

What tipped the balance, what made it acceptable both to us and to the people of Hong Kong, was Mr. Deng 's concept of "one country two systems". It was 209embodied in the Joint Declaration which Mr. Deng and I agreed in 1984. It promises that, and I quote from the declaration:

"the basic policies of the People's Republic of China regarding Hong Kong ... will remain unchanged for 50 years".

This guarantees that Hong Kong will keep its way of life and its freedom for at least 50 years after 1997. I asked Mr. Deng at the time why he had chosen 50 years. He told me that this was the time it would take for China's standard of living to come close to Hong Kong's. In the light of the way China's economy has grown since 1984, that may well be achieved considerably ahead of Mr. Deng 's original assessment.

Democracy has not historically been the first concern of Hong Kong's people. Their priority has been sound administration and a rule of law with an independent judiciary, under which they could concentrate on creating prosperity from their trade and industry. But more recently they have clearly wanted to play a greater role in their own affairs. It is true that historically in the world an enterprise economy has usually preceded a political democracy, but the latter usually follows from the establishment of the former. Progressively the people of Hong Kong have been able to play a greater role in their own affairs.

Some would say that the steps taken so far to extend democracy have not been sufficient. In fact, I believe that supply and demand have been kept in balance, taking account of Hong Kong's special position. Most important, to my mind, has been the agreement with China, which steadily increases the number of directly elected seats in Hong Kong's Legislative Council up to and after 1997. This is a crucial point. Provision for the steady expansion of democracy in Hong Kong has already been agreed with China. Indeed, China's Basic Law for Hong Kong, which will in effect be the constitution after 1997, says in Article 68:

"The ultimate aim is the election of all members of the Legislative Council by universal suffrage".

It is already agreed that half the members of the Legislative Council will be directly elected in the year 2003. That means that there could be universal suffrage by 2007, 10 years after the end of Britain's responsibility. It is not perfect perhaps, but it is a provision for steady and orderly progress towards full democratic elections.

That is the background against which our new, imaginative and competent [ Chris Patten] Governor had to reach decisions about the governance of Hong Kong in the remaining years of British rule. In particular, he had to settle the arrangements for the elections to be held in 1995, which would take Hong Kong through to Chinese sovereignty in 1997. The Governor has not invented the need to come forward with proposals. Legislation has to be in place to enable the 1995 elections to be held. The Governor had to take account, first, of the views of the people of Hong Kong. There was considerable demand in Hong Kong for more directly elected seats in 1995, going beyond the 20 already agreed with China.

The Government have said on several occasions that they would seek to persuade China to increase the 210number, and I understand that my right honourable friend [ Douglas Hurd] the Foreign Secretary raised the subject when he met the Chinese Foreign Minister at the United Nations on 25th September this year. China made clear at that meeting that it was not prepared to move beyond the figure of 20 seats to which it had already agreed. At the same meeting on 25th September, nearly a fortnight before the Governor presented his proposals on 7th October, the Foreign Secretary told his opposite number the proposals which the Governor had in mind. Details were, of course, sent to the professional civil servant in Beijing who deals with the Hong Kong desk.

In the light of that it seems to me that [ Chris Patten] the Governor has acted with great sensitivity and skill. He had to find a way to respond to the wishes of the people of Hong Kong for a broader franchise for 1995. But he also had to take account of China's strongly expressed opposition to more directly elected seats. In short, he had to strike a balance and put forward suggestions which would go some way to enlarge the franchise for 1995 but without infringing either the Joint Declaration or the Basic Law. He constantly stressed that in his speech on 7th October.

The proposals in his speech of 7th October succeed in striking that balance. They establish an Election Committee and set the franchise for nine additional functional constituencies. Those have to be created in 1995 to conform with the Basic Law after 1997.

The proposals also enlarge the franchise for the 21 existing functional constituencies. I should point out that only the working population are eligible to vote in those constituencies.

As the Government have already pointed out, the Governor has not proposed anything which conflicts with the Joint Declaration. In the Government's view and the Governor's view the proposals are within the Basic Law.

There is a second and no less important point. The Governor has said that his proposals are not intended as the last word but only as a basis for discussion, as the noble Lord, Lord Wilson, pointed out. Others are invited to comment on them and give their own ideas. That is clearly stated in his speech of 7th October. The Governor also said:

"the proposals I am putting forward this afternoon will require serious discussion with Peking".

It is a great disappointment that the Chinese Government have so far declined to do so.

I hope that alternative suggestions will nonetheless be forthcoming from different sources in Hong Kong itself which can be considered alongside those put forward by the Governor. The essence of democracy and indeed of good government is indeed choice.

China objects to the Governor's proposals and appears to see them as an attempt to internationalise the Hong Kong issue and—as I have seen it put in some reports—as part of a scheme to "encircle" China. To back up its objections China has launched a campaign to bring pressure on public opinion in Hong Kong and has called into question contracts which extend beyond 1997. That reaction is regrettable and I believe that it is unjustified. 211

In fact, the Governor's proposals are characterised by their modesty and by their recognition of China's view that there should be no more directly elected seats in 1995. I hope, therefore, that China will not go forward with its threat to interfere with contracts; indeed, that would harm its own reputation and affect the confidence of foreign investors in China itself, quite apart from conflicting fundamentally with the rule of law. We should reassure the Chinese that the Governor's proposals are not in any sense hostile to China and there is no intention to internationalise the issues.

The best outcome would be to go forward in agreement with China, as we have been able to do in the past by being patient and persistent. People in Hong Kong want continuity and a smooth transition in 1997, and China's agreement is desirable for that. But in the last resort, as is recognised in the Joint Declaration, it is Britain which has the responsibility for governing Hong Kong up to 1997. We must discharge that responsibility in accordance with our agreements and also with our principles and the wishes of Hong Kong's people.

I believe that these matters can be resolved. We have an excellent and most able Chinese Ambassador here in London. We have the example of the good relations built up between us and China in the years following the Joint Declaration up to 1989. Above all, we can draw confidence from the remarkable economic changes that have taken place in China and the promise they hold for the future.

Moreover, Hong Kong's interests and those of China run increasingly closely together. Nowhere is this more so than in questions of trade. Both have a very strong interest in open trade and in preserving most favoured nation status for China in the United States. I have personally spoken up strongly for that in the Asian-Pacific region, in both Taiwan and South Korea, and I have also spoken up for it in the United States.

The question of human rights does indeed have to be pursued, and I know that my noble and learned friend Lord Howe has just returned from a mission to China. We pursue our concern for human rights vigorously in our relations with many countries. But I believe that it would be profoundly misguided for an incoming American administration to try to put pressure on China over human rights by restricting trade. That would hit hardest at precisely the wrong people: those who are building small businesses which are the heart of China's growing free enterprise. It would also hit hard at Hong Kong itself, many of whose people have come from China to live under a rule of law and a democratic system.

President Bush was absolutely right to resist the use of that blunt weapon and I hope that a similar view will be adopted by [ Bill Clinton] his successor. His task will be easier to the extent that China is not seen to be acting unreasonably over the very modest proposals which [ Chris Patten] the Governor has made.

In conclusion, there is no reason why the Governor's proposals should harm relations with China. They are modest; they are compatible with the Joint Declaration and the Basic Law; and they are 212open to discussion. They go some way to meet the wishes of the people of Hong Kong and at the same time respect China's position.

The best and most helpful stance which we in this House can take is to support the Governor, to reiterate our sincere wish to proceed by agreement with China, but to make it clear that that cannot be at the expense of what we believe to be right.