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12. Our aim throughout has been to establish a system of democracy which would satisfy aspirations in Hong Kong and be capable of

on this basis that we enduring and developing beyond 1997. It was decided to introduce 18 directly elected seats in 1991 and at least 20 in 1995. The Foreign Secretary announced this decision in the House of Commons on 16 February (copy of his statement attached).

13. The introduction of 18 directly elected seats in the legislature in 1991 will mark an important step forward in the

Our decision for 1991 is development of democracy in Hong Kong.

just 2 seats below the proposal put forward by OMELCO but substantially more than the 10 seats which were originally envisaged in the 1988 White Paper. In return for this small concession, we have secured from the Chinese the improvements in the draft Basic Law outlined in the Foreign Secretary's statement. provide for a continuous upward slope in the development of democracy from 13 seats in 1991 to 30 seats in 2003, with the possibility that full direct elections could be introduced in 2007.

This will

14. Although there were some protests from vocal minorities in Hong Kong (the Liberals, student groups, etc) the overall reaction in the territory was one of relief that confrontation with the Chinese had been avoided. OMELCO issued a positive and balanced statement, welcoming the removal of a major uncertainty for the territory's future and stressing the importance of making a success of the 1991 elections. We hope that once the Chinese have seen the 1991 legislature working in practice, they will in time come to accept our view that a higher proportion of directly elected seats should be introduced in 1995 (when the last elections under British Administration are due to take place) and maintained, with their

We consider that it would have been foolish and agreement, in 1997. irresponsible to have devised a system which would have resulted in a dead end in 1997.

Nationality

15.

The exodus of talent from Hong Kong is a problem which we take

On 20 December 1989 the Foreign Secretary announced very seriously. in the House of Commons a package of measures designed to give key

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