Deng Xiaoping left open in 1979 the options of taking back Hong Kong in 1997 or allowing the status quo to continue after the expiry of the New Territories lease, according to Britain's declassified record of a meeting between Deng, then China's paramount leader, and Hong Kong governor Murray MacLehose 31 years ago. During the historic talks in Beijing on March 29, 1979, Deng told MacLehose that China 'might' take over Hong Kong by 1997 but it would respect the city's 'special status'. '[Deng said] they had not taken over Macau so far. There were two solutions by 1997, to take Hong Kong over, or to allow present realities to remain,' the record said. Deng's apparently flexible position on the resumption of sovereignty differed from his unequivocal declaration in 1982, during talks with then British prime minister Margaret Thatcher, that China would take over Hong Kong in 1997. The record of the earlier meeting was compiled by Britain's Foreign and Commonwealth Office and was recently declassified from the Britain's National Archives in London under the 30-year rule. MacLehose returned to Hong Kong after the trip, triumphantly bearing a message from Deng to 'ask investors in Hong Kong to put their hearts at ease' and that the Chinese leaders attached great importance to the value of the city to the mainland's modernisation programme. But the governor said in public at the time that he did not intend to reveal details of his conversation with Deng. Amid growing fears among Hongkongers over post-1997 arrangements, the landmark visit by MacLehose to Beijing, the first official visit by a Hong Kong governor, was hailed at the time as the prelude to extensive Sino-British negotiations on the future of the colony. The meeting between Deng and MacLehose was the first occasion in which the future of Hong Kong was put on the agenda in high-level talks between Britain and China. During the one-hour meeting at the Great Hall of People, Deng said: 'China has a consistent policy: sovereignty over Hong Kong belonged to China. But Hong Kong has her own special status....When the two sides [Britain and China] discuss the question, China will respect the special status of Hong Kong.' Deng was vice-premier but effectively paramount leader of the country at the time. MacLehose raised the land leases in the New Territories with Deng, saying the problem could not be overcome by generalised assurances. The land leases were due to end in 1997, when Britain's 99-year lease on the New Territories expired. The British government warned at the time that business confidence in Hong Kong would be undermined if the Hong Kong government did not issue commercial leases beyond 1997. 'The Governor said what he had in mind is replacing the leases valid to 1997 with leases valid as long as Britain administered the New Territories. This would get rid of the date,' the record of the talks said. 'Deng commented that it would be best to avoid wording which mentioned continuing British administration. It would be better to say that, since the Chinese Government has expressed its political view, all would be well for investment.' MacLehose reassured Deng that what he proposed would not affect the Chinese government's position on Hong Kong. A report by the Foreign and Commonwealth Office described Deng's reaction to MacLehose's proposal as 'non-committal but not negative' while the governor believed Deng's comments had been favourable. Bill Quantrill, a Foreign and Commonwealth Office official, believed it was possible that Deng wanted the reference to British administration removed because he thought the leases should be phrased so that they could continue in force in a scenario he envisaged in which 'Hong Kong would pass nominally under Chinese sovereignty, while continuing to be run on its present basis'. According to Lu Ping , former director of the State Council's Hong Kong and Macau Affairs Office, Deng told MacLehose that the lease issue was not a subject for discussion because Hong Kong's sovereignty belonged to China. But the British files do not mention that remark. In July 1979, Britain's ambassador to China, Percy Cradock, explained the proposed solution to China's Ministry of Foreign Affairs. Beijing told Cradock two months later that the proposal was 'unnecessary and inappropriate' and Britain then stopped pursuing it. While reiterating China's long-standing position that the sovereignty of Hong Kong belonged to China, Deng spelled out his preliminary idea of 'one country, two systems' during the meeting with MacLehose, three years before he outlined his full-fledged blueprint for resolving the future of Hong Kong. 'In this century and in the beginning of the next century, Hong Kong will be continuing with a capitalist system, while China is continuing with a socialist system,' Deng said. He added that there were two solutions by 1997, to take Hong Kong over or to allow present realities to remain. In a telegram to the Foreign Office in April 1979, Cradock, who joined MacLehose for the meeting with Deng, wrote that the essence of what Deng said was that sovereignty certainly belonged to China but that the time when sovereignty might be exercised was uncertain. 'On this he kept his options open ... It is the essence of our position that we are in fact paving the way for a continuation of the political situation beyond 1997,' Cradock wrote. David Wilson, then political adviser to the governor, who also attended the meeting, noted in a telegram to the Foreign Office that the special status Deng envisaged for Hong Kong was the continuation of the existing economic and social system. Wilson served as governor of Hong Kong from 1987 to 1992. Deng's flexible stance may be attributable to the fact that Beijing had not formed a firm view by the late 1970s on the timing of resumption of Hong Kong's sovereignty. The State Council's Hong Kong and Macau Affairs Office was set up in 1978 to plot strategy on the Hong Kong question. From the founding of the People's Republic of China in 1949, Beijing had maintained the position that Hong Kong was part of China and the Hong Kong question would be resolved 'when the time was ripe'. During a talk with Thatcher in Beijing in September 1982, Deng said unequivocally that Beijing would take back Hong Kong in 1997 and rejected her formula of exchanging the sovereignty of Hong Kong for continued British administration after the lease on the New Territories expired. During the meeting with MacLehose, Deng suggested improving living standards in Guangdong to curb the massive flow of mainland immigrants into Hong Kong in the late 1970s. More than 100,000 people came to Hong Kong from the mainland legally and illegally in 1978, putting pressure on public services. The Hong Kong government estimated that nearly 100,000 illegal immigrants slipped into Hong Kong in 1979.