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Following is the transcript of the press conference given by the Chief Executive, Mr Tung Chee Hwa, at the Central Government Offices New Annex Conference Hall after delivering his Policy Address this (January 7) afternoon:

Reporter: I'm just wondering...you mentioned people-based governance a great deal in your policy speech. It seems that any final decision on the direction of political reform in Hong Kong would be down to some un-elected officials and the Central Government. Those two .....do they fit together ?

Chief Executive : I think Hong Kong is what Hong Kong is. There is the Basic Law. And in all the things we do, we follow the Basic Law. And insofar as if you are referring to the 2007, 2008 constitutional development, we are following the Basic Law. And in the Basic Law, it is very clear that the Central Government has an important role to play. So this is the way we are going to move forward. And I think it is the right way to move forward.

Reporter: Two questions. First, you've mentioned in your Policy Address just now concerns by President Hu Jintao about constitutional development. Can you elaborate on what are his concerns? Is he opposed to universal suffrage here? And second, you spoke about the Basic Law. The Basic Law provision is a little unclear in saying the Chief Executive after 2007 may be chosen by more democratic means. Since the next Chief Executive in 2007 will serve until 2012, you could argue that includes the 2007 selection. Are you considering changes to the 2007 selection for Chief Executive or is that off the table from the beginning for the task force?

Chief Executive: I think on both issues, on all these very technical and legalistic issues, these need to be clarified. The purpose of having a group of three to look at these things and then listen to the views here in Hong Kong on these issues that relate to the Basic Law, it's very important to listen to the views of the experts here in Hong Kong, and the Central Government departments, it's very, very important. So that once we are clear of all these legalistic issues we can then move forward. Now insofar as the first point you raised, when I went to Beijing on December 3, I met the President. He did say to me that there is obviously keen interest and serious concern about how the constitutional review will be made in the coming months. We have now come to the conclusion that the best way is for us to communicate very, very openly and talk through all these issues both in Hong Kong, and in Beijing so that we can then be better prepared to move forward.

Reporter: (on constitutional reform)

Chief Executive: I think as regards your first point, I think our focus now is trying to sort out the fundamentals of this issue first. And once we have sorted out the fundamental issues, we can then move forward. So this is what we are now doing. And I think it is important that we sort out all these issues. Secondly, you asked what are we doing. Are we doing this or that? I think you are being very presumptuous. Because whatever it is, we need to move forward in such a way that as a government, we need to take in the views of the people so that our governance can improve. We need to understand how people react to different issues so we can really do better.

Reporter: ....... my question was presumptuous...are you developing people-based governance ...... because lacking democratic methods and procedures, you have to do something ......

Chief Executive: They are two different issues, as I said. We will develop this anyway.

(Please also refer to the Chinese portion of the transcript.)

Ends/Wednesday, January 7, 2004

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( Floor / Cantonese / Putonghua / English )