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4. HONG KONG IS A MATURING SOCIETY. IT HAS A YOUNG, INTELLIGENT

AND WELL EDUCATED POPULATION. THEY ARE NATURALLY INTERESTED IN

LOCAL AFFAIRS AND DEMAND A GREATER DEGREE OF PARTICIPATION IN

THEM. NO GOVERNMENT CAN FAIL TO RESPOND TO THE CURRENT TREND.

BUT THE RESPONSE MUST BE PRAGMATIC.

5. IN PRACTICE THE TERRITORY IS ALREADY IN MANY RESPECTS

ADMINISTERED BY HONG KONG PEOPLE. THE CIVIL SERVICE IS MORE

THAN 98 PER CENT LOCALISED: THIS PROCESS IS SPREADING STEADILY

INTO THE UPPER REACHES OF THE ADMINISTRATION: THE PRINCIPLE OF

PROMOTION ON THE BASIS OF ABILITY IS APPLIED.

6. WE BELIEVE THAT A RADICAL RESTRUCTURING OF THE EXECUTIVE,

LEGISLATIVE AND ADMINISTRATIVE SYSTEM IN HONG KONG WOULD BE

PROFOUNDLY DESTABILISING. IT IS FOR THIS REASON THAT WE ARE SEEKING

TO REFORM THE STRUCTURE STEP BY STEP AND WE STRONGLY URGE THE

CHINESE TO RECOGNISE THE DESIRABILITY OF OUR FOLLOWING THIS

PROCEDURE.

7. WE KNOW THEIR PREFERENCE FOR A CONSULTATIVE SYSTEM'' BUT

THAT WILL NOT CARRY CONVICTION IN HONG KONG. IT WILL BE SEEN AS A

CONTINUATION OF THE APPOINTIVE SYSTEM WITH THE POWER OF APPOINTMENT

MOVING TO PEKING. THERE MUST BE SOME ARRANGEMENT WHICH, WHILE RECOGNISING THE NEED FOR A SYSTEM ACCEPTABLE TO PEKING, ALLOWS THE

PEOPLE OF HONG KONG TO CHOOSE THEIR OWN REPRESENTATIVES TO SIT IN

THE LEGISLATURE AND SERVE ON THE EXECUTIVE. THE GOVERNMENT IN

HONG KONG WILL BE OPERATING A VERY DIFFERENT SYSTEM FROM THAT IN

FORCE IN THE MAINLAND. YOU CANNOT RUN A CAPITALIST SYSTEM BASED

ON THE COMMON LAW LEGAL SYSTEM WITH INSTITUTIONS DESIGNED TO MEET

THE NEEDS OF A SOCIALIST SYSTEM AS OPERATED ON THE MAINLAND.

8. AS WILL HAVE BEEN EVIDENT WE ARE MOVING VERY CIRCUMSPECTLY.

WE ARE WELL AWARE OF CHINESE NERVOUSNESS ABOUT DIRECT ELECTIONS.

WE HAVE NO PLAN TO MOVE TO A FULLY ELECTED LEGISLATURE IN 1988

ALTHOUGH IT WILL BE FOR CONSIDERATION WHETHER PART OF THE

LEGISLATURE SHOULD BE DIRECTLY ELECTED AT THAT TIME. OUR OBJECTIVE

IS TO ALLOW THE CONSTITUTIONAL STRUCTURE TO DEVELOP STAGE BY STAGE, ALWAYS WITHIN THE PARAMETERS SET BY THE JOINT DECLARATION AND ALWAYS WITH DUE REGARD FOR CHINESE CONCERN.

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