When the People’s Republic of China (PROC) was granted full UN status in 1971, everything was then set in motion. The successor to Chaing Kai-shek’s nationalist government in the Republic of China (ROC, or what we call today Taiwan) was originally granted as a founding member and one of five Security Council seats. UN General Assembly Resolution 2758 instead recognized the PROC as the “only legitimate representative of China to the United Nations.”

From there, the PROC would gain UN removal of Hong Kong from the list of “non-self-governing” territories. It was for the Communist Chinese an important step, for states and cities on that list were often worked diplomatically toward full and complete independence.

The British Empire had been ceded Hong Kong and Kowloon as a result of the Opium Wars of the mid-19th century. In 1898, it further leased what became known as the New Territories, which in terms of acreage was far more than the original domain. That lease was set to expire on June 30, 1997.

With the PROC successes at the UN, there wasn’t much the British could do about Hong Kong. The Thatcher government in the late 1970’s wanted to extend British rule, or at least influence, but the end date of the New Territories lease was making things more difficult even at that time. The UK government on into the early 80’s was concerned that because there was no legal right after the lease expired, for more than the New Territories it could have deterred investment over an uncertain future that was then still more than a decade and a half distant.

The possible re-uniting of Hong Kong with China wasn’t an easy affair, for any of the British, Chinese, or people of Hong Kong who were left out of the negotiations. As such, the Hong Kong dollar (HKD) began to appreciate as “capital” flowed out of the area. If the British were worried about China in 1997, investors in Hong Kong were worried about the British especially in 1982 and 1983.