26.

At the end of the third round, the Chinese side dropped their precondition about an agreement on principles, and

accepted that the talks should move to matters of substance.

c) Second Phase: May-June (Rounds 4-7)

27. The second phase of the talks was taken up largely with the Chinese side moving slowly (in response to pressure from the British side) to set out their views on the main issues. The British side also pressed for a response to their simple proposal for objective criteria on the through train, and on the other three issues listed in para 33 above.

28. The Chinese position on the main issues is set out in

more detail in Part III. In summary, their position was:

1

On District Boards and Municipal Councils, the principle of appointed membership should be retained. The provisions in existing Hong Kong law disqualifying members of Legislatures outside Hong

Kong from serving on the District Boards, Municipal

Councils or Legislative Council should be amended so

that representatives from Hong Kong on China's National People's Congress and Provincial Peoples'

Congresses could become members of these bodies.

On the Functional Constituencies, that there should

be no change of any kind in the composition and voting method of the existing 21 constituencies, and

that the nine new constituencies should be formed in

the same way as the existing 21. The principle of corporate voting should be retained.

On the Election Committee, that the composition and

ratio should follow precisely the model set out in

statememt26.8/BRIEFS/NJH

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