Reassessing Thatcher’s foreign policy: The Sino-British Declaration 1984

Abstract

This article presents a ‘primacy of domestic politics’ interpretation of the Thatcher government’s main objectives in the negotiations of the early 1980s, which secured the return of Hong Kong to China in 1997. In the immediate aftermath of the Falklands conflict, sovereignty issues were uppermost in public discourse and the government’s decision to cede sovereignty over Hong Kong seems inconsistent with other elements of Thatcher’s foreign policy. However, when placed in the context of domestic economic objectives it is clear that the liberalisation and deregulation agenda would be undermined by a lack of investor confidence in sterling overseas should business confidence be disrupted in Hong Kong with a potentially disastrous diversification out of sterling. The 1984 Joint Declaration secured special status for Hong Kong enshrining the independence of the currency and the Hong Kong banking system thereby averting a sterling crisis which would have had major implications for the City of London and Thatcher’s domestic policies.