Faced with increased openness by the government of the People`s Republic of China and economic reforms on the continent, Margaret Thatcher, then British Prime Minister, sought the agreement of the People`s Republic of China on the continuation of the British presence on the territory.  The communist press published reports that the project was a bad plan to bleed Hong Kong before handover and let the territory take on serious debt.  After three years of negotiations, Britain and the PRC finally agreed on the construction of the new airport and signed a Memorandum of Understanding.  To remove the hills and reclaim the land, it took only a few years to build the new airport. When negotiations between Britain and China on Hong Kong`s political future began in 1982, the British government`s initial proposal was to retain an administrative role in the region after 1997. Such a position outraged the nationalist sensibilities of the Chinese government and its categorical rejection caused great consternation within the territory in the face of possible unilateral measures taken by the Chinese. However, in a series of tense negotiations, the British accepted the Chinese position and, in September 1984, a sovereignty transfer agreement was signed in the form of a joint declaration. According to the statement, China should develop a fundamental law that embodies some fundamental policies. On 1 July 1997, Hong Kong was to become a Special Administrative Region (SAR) of the People`s Republic of China, with a government composed of “local residents”.
The RAD would have “a high degree of autonomy, except in foreign affairs and defence,” and its “current social and economic systems” and “lifestyles,” including civil liberties, would be the same as they are today. The SAR would retain its status as a free port, customs territory and separate monetary system and an autonomous economic relationship with other countries and with international organizations. These rules are expected to remain unchanged for fifty years. (15) On 19 December 1984, after years of negotiations, the British and Chinese leaders signed an official pact authorizing the colony`s turnover in 1997 in exchange for the formulation of a “one country, two systems” policy of the Chinese Communist government. Prime Minister Margaret Thatcher called the agreement “a milestone in the life of the territory, in anglo-Chinese relations and in the history of international diplomacy.” Hu Yaobang, the general secretary of the Communist Party of China, called the signing “a day of red letters, an occasion of great joy” for one billion people in China.