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the first direct elections to Hong Kong's Legislative Council (LegCo). The election campaign was lively. Although the turn-out could have been higher, this was a

significant step in the democratic development of Hong Kong.

Now nearly two thirds of LegCo are directly or indirectly

elected. There is a new vigour in the political life of

Hong Kong. A new relationship is evolving between the Hong

Kông Administration and the Legislature. Of course these changes have brought problems of their own. LegCo itself is

not the House of Commons, divided between Government and

opposition parties, and it will have to develop its own ways

of ordering its affairs.

The advent of a more democratic system in Hong Kong, on a

basis sustainable beyond 1997, is a welcome development.

But we should not exaggerate the changes. The Government

are determined to maintain a strong and effective administration in Hong Kong. Policy-making and the use of executive power will remain the function of the Governor and his Executive Council, with the support of the Hong Kong

Administration. We need a constructive partnership between

the Hong Kong Government and LegCo, in the interests of all

the people of Hong Kong.

At the end of 1991, Hong Kong is better placed than ever to

face the future with confidence. Its economy is growing

again, profiting from its position at the centre of one of

the fastest growing regions in the world. There are several

important and difficult problems to be tackled with China in the Joint Liaison Group, but the airport agreement shows that these can resolved in a way which protects Hong Kong's interests. As we move into the second phase of

the transition to 1997, Britain and China have committed

themselves afresh, at the highest level, to working for the

success of Hong Kong up to and beyond 1997.

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