At midnight, June 30, 1997, the Chinese and British governments held a power transferring ceremony in Hong Kong at which the Chinese government formally resumed the exercise of sovereignty over Hong Kong. An introduction to the event is as follows:

The Hong Kong issue was left over from history. Hong Kong(including the Hong Kong Island, Kowloon and the New Territories) has been a part of China's territory since the ancient times.

Britain Launched the Opium War against China in 1840 and compelled the Qing government to sign the Treaty of Nanking, permanently ceding the Hong Kong Island to it. Britain and France launched the Second Opium War in 1856. In 1860, Britain forced the Qing government to sign the Convention of Peking, permanently ceding to it the southern tip of the Kowloon Island. In 1898, exploiting the establishment of sphere of influence in China by imperialist powers, Britain again forced the Qing government to sign the Kowloon Extension Agreement, "leasing" large area of land north of the Boundary Street of the Kowloon Island and over 200 islets nearby(later called the New Territories) for a term of 99 years until June 30, 1997. The Chinese people have always been opposed to these three unequal treaties.

After the founding of the People's Republic of China in 1949, the Chinese government took a consistent position over Hong Kong: Hong Kong is a part of China's territory. China does not recognize the three unequal treaties imposed on it by imperialism. The Hong Kong issue should be resolved through negotiation when conditions permit, and the existing status of Hong Kong should be maintained pending a solution.

After the Third Plenary Session of the 11th Central Committee of the Communist Party of China held in 1978, the Chinese people endeavored to turn China into a modern socialist country, bring about the country's reunification and oppose hegemonism. Deng Xiaoping put forward the concept of "one country, two systems" for resolving the issues of Taiwan, Hong Kong and Macao. With the approaching of 1997, Britain was anxious to learn about China's position on resolving the Hong Kong issue. It thus became possible to settle the Hong Kong issue.

The negotiations on resolving the Hong Kong issue between the Chinese and British governments proceeded in two phases. During the first phase, from September, 1982 when British Prime Minister Mrs. Thatcher visited China to June, 1983, the two sides discussed the guiding principles and procedures for conducting negotiation. During the second phase, from July, 1983 to September, 1984, the government delegations of the two countries held 22 rounds of talks on substantive issues concerning Hong Kong.

Deng Xiaoping met Mrs. Thatcher on September 24, 1982, after the Chinese premier held talks with her. The Chinese leaders officially informed Britain that the Chinese government had decided to recover the whole area of Hong Kong in 1997 and stated that China would adopt special policies on Hong Kong after it is recovered. The Hong Kong Special Administrative Region would be set up. Hong Kong would be governed by the people of Hong Kong. The existing social and economic systems in Hong Kong and its way of life would remain unchanged. Mrs. Thatcher, on her part, insisted that the three unequal treaties should remain in force. She said that if China agrees to continued British administration of Hong Kong after 1997, Britain may consider China 's demand for sovereignty over Hong Kong. In response to her views, Deng Xiaoping made important remarks when meeting Mrs. Thatcher. Deng said: "Our stand on Hong Kong is explicit. Three issues are involved here. First is the issue of sovereignty. The second is that in what way China will administer Hong Kong after 1997 to ensure its prosperity. The third is that the Chinese and British governments should have consultations to ensure that no major disturbances occur in Hong Kong in the 15 years leading to 1997." Deng pointed out that "sovereignty is not negotiable." He said that " the political and economic systems and even the majority of the laws currently in force in Hong Kong may continue." "Capitalism will continue to be practiced in Hong Kong." He suggested that " an agreement be reached by two sides to begin consultation on the issue of Hong Kong. The premise is that China will recover Hong Kong in 1997. On this basis, consultation can be conducted on how to ensure the smooth transition in the next 15 years and on how Hong Kong will function after the 15 year transitional period." During the meeting, the two sides agreed to enter into consultation on resolving the Hong Kong issue through diplomatic channels. In the following six months, however, no progress was made in the consultation as Britain stuck to its position on the sovereignty of Hong Kong. In March, 1983, Mrs. Thacther wrote to the Chinese premier, promising that she was prepared to propose to the British Parliament during a certain stage that the sovereignty of the whole of Hong Kong be reverted to China . The Chinese premier wrote back in April, informing her that the Chinese government agreed to hold formal talks on this issue at an early date.

The first round of talks were held between the Chinese and British government delegations between July12-13, 1983. No progress was made in the ensuing three rounds of talks as Britain insisted that it should continue to administer Hong Kong after 1997. In September, 1983, Deng Xiaoping told the visiting former British prime minister Heath that Britain's proposal of exchanging sovereignty for power of administration was not acceptable. He urged Britain to change its position lest China had to make public unilaterally in September, 1984 its policies on resolving the Hong Kong issue. The British prime minister wrote a letter to the Chinese side in October, agreeing that both sides may discuss ways for long-term arrangements for Hong Kong on the basis of China 's proposal. During the fifth and sixth rounds of talks, Britain affirmed that it would no insist on British administration of Hong Kong, nor would it seek any form of joint administration. It accepted China 's plan based on the premise that both the sovereignty and power of administration of Hong Kong should be returned to China after 1997. Thus, a major obstacle standing in the way of Sino-British talks was removed.

Starting from the 7th round of talks, the negotiations proceeded on the basis of the basic policies of the Chinese government for settling the Hong Kong issue. In accordance with the basic polices of the Chinese government on the Hong Kong issue, the future Hong Kong Special Administrative Region will be directly under the Central People's Government of the People's Republic of China. With the exception of foreign affairs and defense, which are the responsibilities of the Central People's Government, the future Hong Kong Special Administrative Region will enjoy a high degree of autonomy. The Central People's Government will station troops in the Hong Kong Special Administrative Region to conduct defense. The government of the Hong Kong Special Administrative Region will be composed of local inhabitants. British and other foreign nationals may be employed to serve as advisors or hold positions up to deputy department directors in the government. Although Britain made the explicit commitment that it would not raise any proposal that contravenes the principle of China 's sovereignty over Hong Kong, it still raised many issues that violated its commitment. For instance, Britain tried repeatedly to use the concept of "maximum autonomy" to alter the concept of "high degree of autonomy" raised by the Chinese side in an attempt to obstruct placing the government of the Hong Kong Special Administrative Region under the direct jurisdiction of the central government. Britain also repeatedly asked the Chinese side not to station troops in Hong Kong so as to limit China 's exercise of sovereignty over Hong Kong. It asked to set up the office of "British Commissioner" who is different from the counsels general of other countries in Hong Kong, hoping to turn the future Hong Kong Special Administrative Region into a member or associated member of the Commonwealth. Britain asked that foreign nationals holding Hong Kong passports may serve the highest level officials in Hong Kong's civil services and that China take over without any change the structure the existing Hong Kong government and accept changes Britain may make in the Hong Kong government during the transitional period. In essence, by raising the above demands, Britain wanted to turn the future Hong Kong into an independent or semi-independent political entity under its influence. As they directly contravened China's sovereignty, these demands were naturally rejected by China .

Starting from the 12th round of talks in April, 1984, the negotiation shifted onto arrangements in Hong Kong during the transitional period and matters relating to the transfer of power .

Through negotiation, China and Britain agreed that China would recover Hong Kong and resume the exercise of sovereignty over it, and there should be explicit reference in this regard in the agreement between the two sides. Britain, however, did not accept China 's formulation of its resumption of exercise of sovereignty over Hong Kong. The several drafts it put forward all had the implication that the three unequal treaties were valid, which were not acceptable to the Chinese side. Finally, both sides agreed to use the following formulations in the form of a Joint Declaration: The Chinese government declared that "the Government of the People's Republic of China has decided to resume the exercise of sovereignty over Hong Kong with effect from 1 July 1997." The British government declared that "the Government of the United Kingdom will restore Hong Kong to the People's Republic of China with effect from 1 July 1997."

During the ensuing three rounds of talks, the delegations of the two sides discussed complex technical issues on nationality, aviation and land and the wording of the agreement. The two sides reached agreement on all the issues on September 18, 1984 and initialed the Sino-British Joint Declaration and its three annexes. This brought the two-year old Sino-British negotiation on Hong Kong to a successful conclusion. On December 19, 1984, the heads of government of China and Britain officially signed the Joint Declaration on the issue of Hong Kong in Beijing. On May 27, 1985, the Chinese and British governments exchanged instruments of ratification, and the Sino-British Joint Declaration formally entered into force.

Following the signing of the Joint Declaration, Hong Kong entered the transitional period. Generally, the Chinese and British governments had good cooperation during the transitional period and resolved many important issues. The British side, however, in a bid to accomplish its "honorary retreat" from Hong Kong, sought to change the political system in Hong Kong under the name of expanding democracy and attempted to impose it on the Chinese side. With this in mind, Patten, the last governor of Hong Kong, introduced a plan of political reform. The Chinese government rejected the plan with a firm and yet measured response, ensuring the smooth transition of Hong Kong and the transfer of its power.

At midnight, June 30, 1997, the Chinese and British governments held a power transferring ceremony in Hong Kong at which the Chinese government formally resumed the exercise of sovereignty over Hong Kong. Hong Kong's return to China marks the success of applying Deng Xiaoping's concept of "one country, two systems" to resolve the Hong Kong issue and an important step forward in the cause of China's reunification. It also contributed to world peace and stability.

In his speech delivered at the power transferring ceremony, President Jiang Zemin emphasized that after Hong Kong is returned to China, the Chinese government will firmly pursue the basic policy of "one country, two systems", "Hong Kong people governing Hong Kong" and ensuring a high degree of autonomy for Hong Kong. The existing social and economic systems in Hong Kong and its way of life will remain unchanged. He expressed the confidence that with the strong backing of the entire Chinese people, the Hong Kong Special Administrative Region and the people in Hong Kong can certainly run Hong Kong well, ensure its long-term prosperity and stability and create a bright future for Hong Kong.