China's anger shakes HK markets

THE Hong Kong stock market yesterday suffered its biggest one- day points fall since the June 1989 Tiananmen massacre, as local investors bailed out in the expectation that the deadlock between the Governor, Chris Patten, and China over political reform in the territory could only worsen.

After the markets had closed, China duly issued its latest salvo against Mr Patten and Britain. Again demanding that Mr Patten abandon his plans for democratic reform, a Foreign Ministry spokesman in Peking added: 'The issue facing the British side is now whether the Sino-British Joint Declaration and the other agreements reached between the two sides are still needed.' The 1984 Joint Declaration is the basis for all agreements about the handover of Hong Kong in 1997.

Hong Kong government officials last night reacted cautiously with a statement that Britain 'has repeatedly made clear' its commitment to the Joint Declaration. But China's comments appeared to echo a warning from the Chinese Vice-Premier, Zhu Rongji, in London last month when he asked whether the agreement 'was gone with the wind'. This was widely interpreted as meaning that China might consider the 1984 declaration was no longer valid if Mr Patten pressed ahead and implemented his proposals. Peking later said Mr Zhu had been misrepresented by the foreign media.

Britain's chief representative at the time the Joint Declaration was negotiated, Sir Percy Cradock, warned on Tuesday that it would be 'a fatal misjudgement' to believe China would back down. Yesterday the Foreign Office said: 'Sir Percy is a distinguished former public servant. He is entitled to his views.' It emphasised, however, that it supported the Governor's view that a 'modest extension' of democracy in Hong Kong was in the colony's interest.

However, Douglas Hurd, the Foreign Secretary, softened the message with another plea to China to co-operate with Britain. 'It is a good thing if China and Britain, during the period up to 1997, can work together and we would like to do so on this occasion too,' Mr Hurd said. 'But that is not the same as saying the Chinese have the right to tell us . . . what we can or cannot do in areas that are our responsibility.'

While no one in Hong Kong seriously thinks China is planning to back away from an international agreement, such hints are part of a campaign to convince Hong Kong people that the price of supporting Mr Patten may be higher than they realised. Yesterday, as share prices plunged, passers-by in the business district gathered around share-price monitors in the windows of banks to watch Hong Kong's volatile market plummet.

By the close of trade, the Hang Seng index had dropped 433 points to 4978.2, an 8 per cent fall on the day and a 17 per cent plunge so far this week. Grim though this is for investors, the market is still more than 15 per cent up on the beginning of the year, though that is likely to be further eroded today. Half this week's decline can be seen as wiping out an unrealistic surge in the market in the weeks following Mr Patten's policy announcement, as foreign institutional investors piled in, seemingly untroubled by the impending row with China.

Yesterday's selling, on the other hand, was mainly by local, private investors, according to stockbrokers. The other Hong Kong barometer of public sentiment about 1997 - applications for emigration as a first step to qualifying for a foreign passport - may also now pick up. In the past few years, about 60,000 people have left the colony each year, though many return once they have secured their second passports.

This week's market plunge was prompted by comments by Chinese officials that long-term contracts with the Hong Kong government would not be valid beyond 1997 unless approved by the Chinese side.

Mr Patten yesterday sought to rebuild confidence and pointed the finger of blame for the share collapse at Peking. 'I have not done anything to affect what is happening in the market this week . . . What I do think it is sensible for me to say is that the underlying strength of the Hong Kong economy and the underlying strength of the firms in Hong Kong are there for everyone to see.' Peking countered: 'The responsibility for the large slump in the Hong Kong stock market does not lie with the Chinese side, and we did not want to see this.'

Mr Patten was yesterday still looking robust. He told a business symposium that people should believe that he wanted to do a good job for Hong Kong. And he added: 'I have been long enough in politics to know that any politician who judges his success or wisdom by the rose petals strewn in his path, or by the thorns periodically under his feet, is an idiot.'

(Photograph omitted)

Dragon's fury, page 21

News
people
News
Moss and Grimshaw arrive at the party
peopleKate Moss, Claudia Schiffer and Nick Grimshaw at Jonathan Ross's Halloween party
News
i100Amazing Amazon review bomb
News
people
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
food + drinkFrom Mediterranean Tomato Tart to Raw Caramel Peanut Pie
Extras
Boys to men: there’s nothing wrong with traditional ‘manly’ things, until masculinity is used to exclude people
indybest13 best grooming essentials
Arts and Entertainment
Armstrong, left, and Bain's writing credits include Peep Show, Fresh Meat, and The Old Guys
TVThe pair have presented their view of 21st-century foibles in shows such as Peep Show and Fresh Meat
News
i100
Travel
travelPurrrfect jet comes to Europe
Arts and Entertainment
Benedict Cumberbatch attends the London premiere of his new film The Imitation Game
people He's not as smart as his characters
Life and Style
healthMovember isn't about a moustache trend, it saves lives
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Mobile Developer (.NET / C# / Jason / Jquery / SOA)

£40000 - £65000 per annum + bonus + benefits + OT: Ampersand Consulting LLP: M...

Humanities Teacher - Greater Manchester

£22800 - £33600 per annum: Randstad Education Manchester Secondary: The JobAt ...

Design Technology Teacher

£22800 - £33600 per annum: Randstad Education Manchester Secondary: Calling al...

Foundation Teacher

£100 - £125 per day: Randstad Education Chelmsford: EYFS Teachers - East Essex...

Day In a Page

Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House

Bryan Adams' images of wounded soldiers

Taken over the course of four years, Adams' portraits are an astonishing document of the aftermath of war
The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities