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Abstract: When the governor of the British crown colony of Hong Kong is invited to an unprecedented meeting with top leaders of the People's Republic of China, he suddenly faces a decision about a crucial and delicate matter: the status of booming capitalist Hong Kong once the British territory reverts, by treaty, to communist mainland China in 1997. Far-off though that deadline seemed, Governor Sir Murray MacLehose has been concerned with the effect of the prospect of 1997 on prospective Hong Kong business arrangements. The Chinese invitation prompts in him the idea of using a relatively narrow technical matter--the length of leases the British government will permit in Hong Kong--as a means of unthreateningly, he hopes, bringing up the 1997 issue. But the governor's inner circle of advisers is split as to the wisdom of this strategy, a split based both on different readings of China and different approaches to negotiations.
Learning Objective: This case is designed to raise a negotiations issue: is it best to bring up a potentially troublesome issue early and try to set the negotiations agenda? Or are there reasons to "muddle through" and see how the issue plays out? This case, written by Emily MacFarquhar, a longtime China watcher for the "Economist" and "US News and World Report," also provides new historic details about the British view of its negotiations with China over Hong Kong.