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GOVERNOR ALSO SAID HIS PROPOSALS WERE IN LINE WITH THE BL AND SHOULD GIVE A THROUGH TRAIN OF DEMOCRACY RUNNING ON THE TRACKS LAID DOWN BY THE BL. HE NOTED THAT CONSULTATION WITH CHINA FOR MORE DIRECTLY ELECTED SEATS IN 1995 HAD BEEN STARTED BY THE SECRETARY OF STATE AT HIS MEETING WITH THE CHINESE FOREIGN MINISTER IN NEW YORK LAST MONTH. CHINA HAD MADE CLEAR THEIR POSITION THAT THE MOVE WOULD BE INCOMPATIBLE WITH THE BL AND THAT THE BL COULD NOT BE CHANGED. BRITAIN, HOWEVER, WOULD CONTINUE TO PURSUE THIS SUBJECT WITH VIGOUR. THE GOVERNOR SAID THE PROCESS WOULD ONLY SUCCEED IF HK'S POLITICIANS DISPLAYED GOOD SENSE AND RESTRAINT AND DEMONSTRATED THE SUBSTANTIAL CONTRIBUTION WHICH GREATER DEMOCRACY WOULD MAKE TO THE DEVELOPMENT OF HK. HIS IMPRESSION FROM CONSULTATIONS WITH THE COMMUNITY SINCE HIS ARRIVAL IN HK WAS THAT HK PEOPLE WANTED DEMOCRACY TO BE TAKEN FORWARD BUT IN A WAY WHICH WOULD BE IN LINE WITH THE BL. THAT WAS THE BALANCE HE HAD TRIED TO ACHIEVE. HE POINTED OUT THESE WERE PROPOSALS AND NOT A FINAL PROGRAMME WHICH WOULD REQUIRE HARD WORK, PLAIN TALKING AND GOODWILL IN HK, LONDON AND PEKING. 5. REPORTS NOTED (8.10) THE PRIME MINISTER HAD ISSUED A STATEMENT EXPRESSING FULL SUPPORT FOR THE GOVERNOR'S SPEECH WHICH

HE SAID REPRESENTED THE BEST WAY FORWARD FOR HK. RADIO 3 REPORTED (9.10) THAT THE SECRETARY OF STATE DEFENDED THE GOVERNOR'S PROPOSALS ON POLITICAL REFORMS AS A WAY TO MOVE DEMOCRACY IN HK WHICH COULD REASONABLY HOPE TO BE CONTINUED AFTER

1997.

6. MAJOR POLITICAL GROUPS IN HK EXPRESSED (8.10) SATISFACTION ON THE SOCIAL SERVICES BLUEPRINT BUT WERE DIVIDED ON POLITICAL DEVELOPMENT. PRO-CHINA GROUPS AND FIGURES CRITICISED THE 1995 ELECTION ARRANGEMENTS AS AGAINST THE SPIRIT OF THE BL. THE CRC, MEETING POINT AND THE ASSOCIATION FOR DEMOCRACY AND PEOPLE'S LIVELIHOOD, WELCOMED THE SPEECH. THE UDHK SAID SEPARATION OF EXCO AND LEGCO WAS A RETROGRESSIVE STEP. THE LIBERAL DEMOCRATIC FOUNDATION CRITICISED THE SPEECH FOR NEGLECTING SINO/HK RELATIONS AND PEACEFUL TRANSITION. THE SUGGESTION TO SET UP A GOVERNOR'S BUSINESS COUNCIL AND THE MONETARY AUTHORITY WERE GENERALLY WELCOMED BY THE FINANCIAL SECTOR. THE PROPOSALS ON IMPROVEMENTS IN EDUCATION AND SOCIAL WELFARE WERE ALSO GENERALLY WELL

RECEIVED.

7.

HKMAO DIRECTOR, LU PING, WAS QUOTED (8.10) TO HAVE EXPRESSED DISAPPOINTMENT THAT THE GOVERNOR HAD ANNOUNCED HIS PROPOSALS WITHOUT PRIOR CONSULTATION WITH CHINA. THE PAPERS WIDELY

REPORTED (9.10) A STATEMENT BY THE HKMAO AND REMARKS BY THE CHINESE FOREIGN MINISTRY SPOKESMAN ON THE POLICY ADDRESS. BOTH REFERRED TO THE MAJOR POLITICAL CHANGES WHICH HAD NOT BEEN

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