YOUR editorial of March 1 ('Demand unseemly'), should have been more appropriately headlined, 'Demand unlawful'. Chinese 'demands for a say in the drafting of the 1996/97 budget' not only 'appear to break new ground in Beijing's attempt to assume control before 1997', but are in clear contradiction to international legal obligations undertaken by the PRC in an internationally binding agreement. Apart from a general pledge to allow the current economic system (including the non-intervention of the sovereign power in the drafting of budgets) to remain unchanged (Sino-British Joint Declaration, Art. 3 (5)), the Hong Kong Special Administrative Region (SAR) - as part of its promised 'high degree of autonomy' - is empowered to 'deal on its own with financial matters, including disposing of its financial resources and drawing up its budgets and its final accounts' (Joint Declaration, Annex I, Art V). The local government is merely obliged to 'report (not consult) its budget and final accounts to the Central People's Government for the record'. Should the Central People's Government consider that the HKSAR government has not followed the 'principle of keeping expenditure within the limits of revenues in drawing its budget' or has not 'strive[d] to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product' (as stipulated in Art 107 of the Basic Law) - a claim founded on the relevant article in the Basic Law may be raised. It is difficult to reconcile the present Chinese posture regarding this matter, and the reaction of the Hong Kong Government thereto, with the international legal framework established a decade earlier. Perhaps the relevant parties could find a way to recapture the magnanimous spirit of those happier days! Dr RODA MUSHKAT Reader-in-Law Faculty of Law The University of Hong Kong