The Chief Executive Mr Tung Chee Hwa has used his first major speech in the United States to reassure US business leaders and political figures about Hong Kong's continued democratic and economic development.

In a keynote address in Washington D.C. yesterday to the influential US Chamber of Commerce, Mr Tung said it was essential to deepen understanding between America and East Asia, particularly with China.

Mr Tung said he would speak up for Hong Kong, and hoped to change perceptions in America about Hong Kong's continued stability.

Mr Tung also explained the extensive guarantees contained in the Basic Law to protect Hong Kong's way of life, economy and legal system.

The Chief Executive said he knew, and appreciated, that Hong Kong's electoral arrangements had been an issue in the United States.

He said that in regards to constitutional issues there would always be debates - in Hong Kong, America or anywhere else on earth.

He told luncheon guests about the scope of democratic development over the next 10 years in the Hong Kong Special Administrative Region as outlined in the Basic Law.

"In seven years time we will have more democracy in Hong Kong than we did under 156 years of colonial rule," he said.

"Hong Kong has never had a single voice in the selection of the Governor during 156 years of colonial rule. Under the Basic Law, Hong Kong people will have an increasingly larger voice in the selection of the Chief Executive.

"I myself was selected in December last year by a committee of 400 people, all of whom reside in Hong Kong. A similar committee will select the second Chief Executive, serving from 2002 to 2007, except the committee will be enlarged to 800.

"In fact, the progress we will achieve in 10 years from 1997 in terms of democratic process will be far more comprehensive and far-reaching than what we received under 156 years of colonialism.

"There are those who believe that the pace of democratisation in Hong Kong is too slow. Others believe that it is too fast. I believe we have struck the right balance."

Mr Tung told Chamber members that democratic evolution after 2007 would depend on the wishes of Hong Kong people and the overall environment at that time, with universal suffrage being the ultimate objective.

"In the meantime, we certainly have widely consulted the community, and believe we have the support of the local community with the political situation after July 1, 1997."

Mr Tung said the Hong Kong SAR Government would continue to manage its economy with the lightest and most steady of hands, sticking firm to free markets, small government, low taxes and fiscal prudence.

"We want to remain your best partner for business in Asia, the best place to find out what is going on across Asia," he said.

Mr Tung highlighted the already strong economic links between Hong Kong and America and how increased Sino-US trade would also be good for the SAR.

"A point that everyone in Hong Kong profits from is the fact that the US and China make a good economic fit," he said. "What you produce, China needs. What China makes, you want. That makes for trade, and we in Hong Kong stand ready to service that trade."

Mr Tung said America already had a big stake in Hong Kong - more than 50,000 US citizens lived in Hong Kong; 414 US companies have regional headquarters in Hong Kong; 29 US banks and financial services groups, including eight of the top 10, manage over US$ 100 billion in loans, debt and assets.

"Around 60 per cent of US trade with China passes through Hong Kong and we have US$ 22.4 billion worth of direct trade between us," he said.

"All that is not just a stake from the past, it is a stake for the future too, because Hong Kong is going to remain important to America for the next century."

* Photo: The Chief Executive, Mr Tung Chee Hwa, makes a point during his keynote address to the US Chamber of Commerce on Tuesday (September 9, US time) in Washington D.C.