Return of colonial territories:
(1) The idea of two systems in one country resurfaced when Beijing started talks with Britain and Portugal, who were running Hong Kong and Macau, respectively.
(2) The British had taken control of Hong Kong in 1842 after the First Opium War. In 1898, the British government and the Qing dynasty of China signed the Second Convention of Peking, which allowed the British to take control of the islands surrounding Hong Kong, known as New Territories, on lease for 99 years.
(3) London promised Peking that the islands would be retuned to China after the expiry of the lease, in 1997.
(4) Macau, on the other side, had been ruled by the Portuguese from 1557. They started withdrawing troops in the mid-1970s.
(5) In the 1980s, Deng’s China initiated talks with both Britain and Portugal for the transfer of the two territories. In talks, Beijing promised to respect the region’s autonomy under the One Country Two Systems proposal.
(6) On December 19, 1984, China and the U.K. signed the Sino-British Joint Declaration in Beijing, which set the terms for the autonomy and the legal, economic and governmental systems for Hong Kong post 1997.
(7) Similarly, on March 26, 1987, China and Portugal signed the Joint Declaration on the Question of Macau in which China made similar promises for the region of Macau after it was handed over to Beijing.
(8) Hong Kong returned to Chinese control on July 1, 1997, and Macau’s sovereignty was transferred on December 20, 1999. Both regions became Special Administrative Regions of China.
(9) The regions would have their own currencies, economic and legal systems, but defence and diplomacy would be decided by Beijing. Their mini-Constituti
Source
The Hindu