CONFIDENTIAL #2

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to discuss HK's constitutional developments with SDA and

the financial and economic development with STI. HE then

went on to emphasize that Hong Kong's system was a

delicate thing to be handled with great care. It needed

to grow, but gradually and deliberately in response to

physical and social changes. Ten years ago most of the

population lived in the urban areas, now the people living

in the new towns in the New Territories were approaching

the two million mark. That shift in population had led

to the creation of the Regional Council. We also saw in

recent years the emergence of a new professional class,

comprising lawyers, engineers and bankers etc. well

educated, articulate and anxious to participate in the

running of HK.

12.

Similarly, the legal system which had

undergone a transformation from a largely parochial system

of fifty years ago to today's highly complex system which

embraced international financial and mercantile law.

Mr. SHAO should therefore discuss with the AG thoroughly.

13.

Mr. SHAO said that the delegation had visited

the Supreme Court, sat through a court hearing and

visited the Supreme Court Library. The Governor reminded

him that there were three key elements in HK's legal

system : first the Courts which interpreted the law,

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CONFIDENTIAL * 32

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