BEIJING/HONG KONG, April 6: China asserted its authority on Hong Kong on Tuesday by ruling that it alone will determine the shape and timing of elections.

The widely expected ruling came as a blow to activists in Hong Kong ahead of legislative assembly elections in September. But some analysts in the city said Beijing's move could backfire, triggering a protest vote in favour of pro-democracy groups in the September poll.

Financial markets were, however, unruffled and there was little sign of tension in the former British colony returned to Beijing in 1997. A top committee of China's parliament on Tuesday passed a review of Hong Kong's "Basic Law", or constitution, giving Beijing full control over the territory's political reform.

Tsang Hin-chi, a Hong Kong member of the top-level Standing Committee of China's National People's Congress, said the ruling was for the good of the people. "It is very mild and very clear," he said. "People should not blindly oppose it, but put the best interests of Hong Kong people first.

Hong Kong's constitution says the city's nearly seven million people can directly elect their leader and all their lawmakers from as early as 2007 - something they have never done before either under the British or after the handover. But that prospect is remote now that Beijing has the overriding authority to decide if electoral changes are even needed.

Hong Kong leader Tung Chee-hwa pleaded for understanding at a news conference, saying Beijing's move was necessary for better understanding of the constitution.

"No harm has been done to the "one country, two systems" principle," he told reporters, referring to the high degree of autonomy promised after the handover. Senior Chinese officials will arrive in Hong Kong on Wednesday to explain the interpretation to the city's legal experts and lawmakers, he added.

"CLEARING THE AIR": China said it was acting to promote democracy by clearing up confusion and putting an end to arguments over disputed articles of the Basic Law. It said the ultimate goal of the Basic Law was the direct election of the chief executive and lawmakers.

Some analysts say Beijing has ruled out direct elections in the near future. The leaders of China's parliament interpreted two Basic Law clauses as meaning that Beijing has the authority to decide if political changes are needed and can veto anything it does not want.

The review of the Basic Law made hardly a ripple in Hong Kong's financial markets. Investors in China shares ignored the news entirely. "We have more democracy than most other Asian countries," said David O'Rear, chief economist at the Hong Kong Chamber of Commerce. "Plus many overseas companies are very active throughout the region."-Reuters

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