As a groundbreaking initiative, "one country, two systems" is a major issue of governance to the central leadership, and marks a major historical turning point for Hong Kong and Hong Kong people as well. While comprehensive progress has been made on all fronts in the HKSAR, the practice of "one country, two systems" has come to face new circumstances and new problems. Some people in Hong Kong have yet felt comfortable with the changes. Still some are even confused or lopsided in their understanding of "one country, two systems" and the Basic Law. Many wrong views that are currently rife in Hong Kong concerning its economy, society and development of its political structure are attributable to this. The continued practice of "one country, two systems" in Hong Kong requires that we proceed from the fundamental objectives of maintaining China's sovereignty, security and development interests and maintaining the long-term stability and prosperity of Hong Kong to fully and accurately understand and implement the policy of "one country, two systems," and holistically combine upholding the principle of "one country" with respecting the difference of "two systems," maintaining the power of the central government with ensuring the high degree of autonomy of the HKSAR, and letting the mainland play its role as a strong supporter of the HKSAR with improving the competitive edge of Hong Kong. In no circumstance should we do one thing and neglect the other.

1. Fully and Accurately Understanding the Meaning of "One Country, Two Systems"

"One country, two systems" is a holistic concept. The "one country" means that within the PRC, HKSAR is an inseparable part and a local administrative region directly under China's Central People's Government. As a unitary state, China's central government has comprehensive jurisdiction over all local administrative regions, including the HKSAR. The high degree of autonomy of HKSAR is not an inherent power, but one that comes solely from the authorization by the central leadership. The high degree of autonomy of the HKSAR is not full autonomy, nor a decentralized power. It is the power to run local affairs as authorized by the central leadership. The high degree of autonomy of HKSAR is subject to the level of the central leadership's authorization. There is no such thing called "residual power." With China's Constitution stipulating in clear-cut terms that the country follows a fundamental system of socialism, the basic system, core leadership and guiding thought of the "one country" have been explicitly provided for. The most important thing to do in upholding the "one country" principle is to maintain China's sovereignty, security and development interests, and respect the country's fundamental system and other systems and principles.

The "two systems" means that, within the "one country" the main body of the country practices socialism, while Hong Kong and some other regions practice capitalism. The "one country" is the premise and basis of the "two systems," and the "two systems" is subordinate to and derived from "one country." But the "two systems" under the "one country" are not on a par with each other. The fact that the mainland, the main body of the country, embraces socialism will not change. With that as the premise, and taking into account the history of Hong Kong and some other regions, capitalism is allowed to stay on a long-term basis. Therefore, a socialist system by the mainland is the prerequisite and guarantee for Hong Kong's practicing capitalism and maintaining its stability and prosperity. For Hong Kong to retain its capitalist system and enjoy a high degree of autonomy with "Hong Kong people governing Hong Kong" according to the Basic Law, it must fully respect the socialist system practiced on the mainland in keeping with the "one country" principle and, in particular, the political system and other systems and principles in practice. The mainland should respect and tolerate the capitalism embraced by Hong Kong while upholding its socialist system, and draw on the successful experience of Hong Kong in economic development and social management. Only by respecting and learning from each other can the "two systems" in the "one country" coexist harmoniously and achieve common development.

2. Resolutely Safeguarding the Authority of the Constitution of the PRC and the Basic Law of Hong Kong

The Constitution of the PRC and the Basic Law together constitute the constitutional basis of the HKSAR. As the fundamental law of the country, the Constitution, with supreme legal status and the highest legal authority, is applicable throughout the territory of the People's Republic of China, including the HKSAR. The Basic Law, which was formulated in accordance with the Constitution, provides for the system of the HKSAR and enjoys the legal status as its constitutional law. The systems and policies of the HKSAR are all based on the provisions of the Basic Law; no law enacted by the legislature of the HKSAR shall contravene the Basic Law. All the executive, legislative and judicial practices in the HKSAR must conform to the Basic Law. And all individuals, groups and organizations of the HKSAR shall obey the Basic Law. As a national law, the Basic Law is applicable throughout the country.

We should have a full understanding of the provisions of the Basic Law. All the provisions of the Basic Law underlie the HKSAR system. They are not isolated from but interrelated with each other. Each of these provisions must be understood in the context of the Basic Law and the HKSAR system as a whole. The implementation of the Basic Law shows that if we comprehend individual provisions of the Basic Law in an isolated way without taking into account the Basic Law as a whole, stressing one aspect while ignoring others, ambiguity or even contentious interpretation will occur, which will severely hamper the implementation of the Basic Law. Only by comprehensively understanding all the provisions of the Basic Law can we find that the HKSAR system, along with all its components, is an integrated whole complementary to each other and that this system plays the role of protecting the fundamental rights and freedoms of Hong Kong residents, and ensures the prosperity and stability of Hong Kong.

We should respect and uphold the power of interpretation and amendment of the Basic Law vested in the NPC and its Standing Committee. The Basic Law provides that the power of interpretation of the Basic Law shall be vested in the NPC Standing Committee, and the power of amendment shall be vested in the NPC. The Basic Law also provides that the courts of the HKSAR, in the process of adjudication, may give their own interpretation of the provisions in the Basic Law that are within the limits of the autonomy of the HKSAR and other provisions. This power of interpretation comes from the authorization of the NPC Standing Committee. However, if the courts of the HKSAR, in the process of adjudicating cases, need to interpret the provisions of the Basic Law concerning affairs which are the responsibility of the central government, or concerning the relationship between the central authorities and the HKSAR, and if such interpretation will affect the judgments on the cases, the courts of the HKSAR shall, before making their final judgments which are not appealable, seek an interpretation of the relevant provisions from the NPC Standing Committee through the Court of Final Appeal of the HKSAR. When the NPC Standing Committee makes an interpretation of the provisions concerned, the courts of the HKSAR, in applying those provisions, shall follow the interpretation of the NPC Standing Committee, which enjoys the same status with HKSAR laws. The fact that the Standing Committee of the NPC exercises the power of interpretation of the Basic Law in accordance with the law is aimed at maintaining the rule of law in Hong Kong, as it oversees HKSAR's implementation of the Basic Law and protects the high degree of autonomy of the region.

We should improve the systems and mechanisms related to implementing the Basic Law, which will help enhance its authority. Since the Basic Law came into force, a series of systems and mechanisms related to its implementation have been put in place. For example, in amending the method for selection of the chief executive of the HKSAR and method for the formation of the Legislative Council of the HKSAR, a "five-step" legal procedure has been established and the five steps are: the chief executive makes a report to the NPC Standing Committee; the NPC Standing Committee makes a corresponding decision; the Legislative Council endorses the decision; and the chief executive gives his consent; and the NPC Standing Committee approves or puts it on the record. Regarding the interpretation of the Basic Law, the relevant procedures and working mechanisms that have been established include: the NPC Standing Committee interprets the Law on its own initiative; the chief executive makes a report to the State Council, which then submits it to the NPC Standing Committee and asks it to give an interpretation; or the Court of Final Appeal of the HKSAR seeks an interpretation of the relevant provisions from the NPC Standing Committee. Regarding legislation in the HKSAR, the working procedure for the NPC Standing Committee to put on the record of laws enacted by the HKSAR has been established; in terms of judicial aid between the mainland and HKSAR, arrangements have been made in mutual service of judicial documents, reciprocal recognition and enforcement of arbitration awards of civil and commercial cases as well as judgments of certain civil and commercial cases. Regarding accountability the chief executive holds to the central government, a system is in place for the chief executive to make reports to the central government on his/her own work. As the practice of "one country, two systems" continues and the Basic Law is further implemented, it is imperative to further improve the systems and mechanisms in relation to the implementation of the Basic Law. In particular, it is necessary to, with an eye to the lasting peace and order in Hong Kong, exercise well the power invested in the central government as prescribed in the Basic Law and see to it that the relationship between the central government and HKSAR is indeed brought onto a legal and institutionalized orbit.

3. The Hong Kong People Who Govern Hong Kong Should Above All Be Patriotic

There are lines and criteria to be observed in implementing "Hong Kong people governing Hong Kong," that is what Deng Xiaoping stressed, Hong Kong must be governed by the Hong Kong people with patriots as the mainstay, as loyalty to one's country is the minimum political ethic for political figures. Under the policy of "one country, two systems," all those who administrate Hong Kong, including the chief executive, principal officials, members of the Executive Council and Legislative Council, judges of the courts at different levels and other judicial personnel, have on their shoulders the responsibility of correctly understanding and implementing the Basic Law, of safeguarding the country's sovereignty, security and development interests, and of ensuring the long-term prosperity and stability of Hong Kong. In a word, loving the country is the basic political requirement for Hong Kong's administrators. If they are not consisted of by patriots as the mainstay or they cannot be loyal to the country and the HKSAR, the practice of "one country, two systems" in the HKSAR will deviate from its right direction, making it difficult to uphold the country's sovereignty, security and development interests, and putting Hong Kong's stability and prosperity and the wellbeing of its people in serious jeopardy.

The fact that Hong Kong must be governed by patriots is well grounded in laws. Both the Constitution and the Basic Law provide for the establishment of the HKSAR, which works for China's national unification, territorial integrity and maintaining Hong Kong's long-term stability and prosperity. In that context, the Basic Law requires that the chief executive, principal officials, members of the Executive Council, president and over 80 percent of the members of the Legislative Council, chief justice of the Court of Final Appeal and chief judge of the High Court shall be Chinese citizens who are permanent residents of Hong Kong with no right of abode in any foreign country; that, when assuming office, the chief executive, principal officials, members of the Executive Council and Legislative Council, judges of the courts at all levels and other members of the judiciary in the HKSAR must, in accordance with the law, swear to uphold the Basic Law and swear allegiance to the HKSAR of the PRC; and that the chief executive be accountable to the central government and the HKSAR with respect to implementing the Basic Law. All this is necessary for displaying sovereignty, ensuring loyalty to the country by the mainstay of Hong Kong administrators and helping them to subject to oversight by the central government and Hong Kong society, while taking their responsibility for the country, the HKSAR and Hong Kong's residents.

4. Firmly Supporting Chief Executive and the HKSAR Government in Governing Hong Kong in Accordance with the Law

The chief executive, as head of both the HKSAR and its government, is the prime responsible person for implementing the policy of "one country, two systems" and the Basic Law in Hong Kong. The central government has always firmly supported the chief executive and the HKSAR government in governing Hong Kong in accordance with the law, in rallying the broad sections of the Hong Kong society for economic development, in taking effective steps to improve people's livelihood, and in advancing democracy in a gradual and orderly way to promote inclusiveness, mutual support and harmony.

Developing the economy and improving the people's livelihood are common aspirations of the Hong Kong people. They serve as an important basis for solving social problems and ensuring overall stability in the HKSAR, and also the main task before the chief executive and the HKSAR government in governing Hong Kong in accordance with the law. At present, Hong Kong is at a critical juncture of development, with both opportunities and challenges. It should seize the opportunities and vigorously address the salient problems in its economic and social development, so as to bolster and enhance its own competitive edge, maintain a steady economic and social development, and upgrade the texture of people's life. The mainland has always been a powerful backing for Hong Kong.

The central government continues its support for the HKSAR in developing a system of democratic governance that suits the actual conditions in Hong Kong in a gradual and orderly manner as provided for in the provisions of the Basic Law. The ultimate aim of selection of the chief executive will be one by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures and the election of all the members of the Legislative Council by universal suffrage. This solemn commitment of the central government has been incorporated in the Basic Law and the relevant resolutions by the NPC Standing Committee. The central government is sincerely in favor of moving Hong Kong's democratic governance forward. The system of universal suffrage for selecting the chief executive and forming the Legislative Council must serve the country's sovereignty, security and development interests, tally with Hong Kong's actual conditions, take into consideration the interests of all social strata, give expression to the principle of equal participation, and be conducive to the development of capitalism in Hong Kong. In particular, the systems must conform to HKSAR's legal status as a local administrative region directly under the central government and accord with the Basic Law and relevant resolutions adopted by the NPC Standing Committee. Furthermore, the chief executive to be elected by universal suffrage must be a person who loves the country and Hong Kong. As long as all sectors of the Hong Kong society hold pragmatic discussions and build a consensus based on the above principles, these two ultimate goals are sure to be reached.

Hong Kong is a free, open and pluralistic society. It is also an international commercial metropolis where Chinese and non-Chinese cultures converge and mingle. Maintaining social harmony and stability serves the interests of all strata and all sectors of the Hong Kong society as well as those of outside investors. It is a prerequisite for retaining Hong Kong's status as an international financial, trade and shipping center. The central government will continue to encourage the people of Hong Kong to carry forward their fine traditions of inclusiveness, mutual support and respect for the rule of law and order. It calls on the Hong Kong people to seek common ground while reserving differences, be tolerant and help each other in the fundamental interests of the nation and the general and long-term interests of Hong Kong, achieve the broadest unity under the banner of loving the country and Hong Kong with strengthened social harmony and stability through compromise and mutual assistance.

5. Continuously Promoting Exchanges and Cooperation Between the Mainland and Hong Kong

Increasingly frequent exchanges and closer cooperation between Hong Kong and the mainland have expanded channels for common development by leveraging complementary advantages. Hong Kong has gained access to enormous space and momentum for development by taking advantage of the broad market and abundant factor resources of the mainland and opportunities of China's rapid development. By consolidating and enhancing its existing advantages, Hong Kong can better play its role in introducing external investment and talents, in absorbing internationally advanced technologies and managerial expertise, in serving as a bridge for implementing China's "go global" strategy, and in helping quicken the shift of the growth mode on the mainland. In addition, Hong Kong's experience can be of reference for the mainland to pursue innovative ways in social and economic management.

As contacts between the mainland and the HKSAR become closer and mutual understanding between the people deepens, the Hong Kong compatriots are getting a stronger sense of national identity and commitment. They pay closer attention to the development of the country and take an active part in the country's modernization drive as well as public welfare activities, such as poverty alleviation, education and protection of the rights of women and children. When the mainland suffered major natural disasters, the Hong Kong compatriots extended generous and active support for the rescue and relief work and post-disaster reconstruction. These fully demonstrate the strong ties of blood and affection between the people on the mainland and the Hong Kong compatriots.

The central government will continue to support the HKSAR government in forming a closer working relationship with relevant government departments at both the central and local levels, support the Hong Kong compatriots in having more exchanges with people on the mainland, and support Hong Kong in playing its unique role in the country's endeavor of comprehensive reform and opening up. The central government encourages Hong Kong to carry out broader and deeper exchanges and cooperation with the mainland, and make concerted efforts with the mainland to build the common home of the Chinese nation.