Mr Tsang delivered few surprises

Mr Tsang promised measures to help job creation and improve trade, and he also said he would expand his cabinet and promote better governance.

But he put off giving details of how the territory would move towards democracy.

He said the issue would be covered in a separate report later in the year.

Mr Tsang repeatedly called for "harmony" in his 90-minute speech, a term often used by Beijing.

DONALD TSANG Knighted for work during British colonial rule before 1997 Mostly held financial posts, and became first Chinese to be Financial Secretary Popular with public but loyal to Beijing Test of style or substance Profile: Donald Tsang

"Pursuing excellence in governance is the most pressing public demand on the government today," Mr Tsang told lawmakers in the Legislative Council chamber.

"We need a strong government to promote social harmony and enhance economic growth. Strong government is a prerequisite for economic development."

Hong Kong's Hang Seng index slumped 323.75 points, which analysts said was due to disappointment over a lack of concrete proposals on the economy.

Mr Tsang also skirted the sensitive issue of democracy for the territory, saying a package of proposals would be "published later".

But in comments to reporters later, he acknowledged that Hong Kong's current political system was "far from perfect".

"This is an interim step. We realise it and we have a destination of universal suffrage," he said.

"That is a national policy. We are marching toward that final policy. The important thing is that we're always on the move."