China (search) said Sunday that its top legislative panel will settle a constitutional dispute over how many years Hong Kong's (search) next leader will serve — a decision pro-democracy lawmakers in Hong Kong say will degrade the former British colony's legal system.

Hong Kongers are highly sensitive about Beijing getting involved in their affairs because the territory was supposed to enjoy a high-degree of autonomy under a "one country, two systems" formula since returning to Chinese rule in 1997.

But the Hong Kong government last week asked Beijing to settle the term-limit dispute, and China's official Xinhua News Agency said Sunday that the State Council, or China's Cabinet, will seek an interpretation. The job will go to the top legislative panel, the Standing Committee of the National People's Congress (search).

The brief Xinhua report didn't say when a decision would come.

The dispute began last month when Tung Chee-hwa announced that he was quitting as Hong Kong's chief executive because of failing health.

Hong Kong legal experts and pro-democracy lawmakers have argued that the Basic Law, the territory's mini constitution, says that Tung's successor should serve a full five-year term. But the government and mainland legal experts insist that the next leader should finish the remaining two years in Tung's term.

Many believe that Beijing favors the two-year option because it wants to put Hong Kong's next chief executive on political probation to make sure he's loyal enough to get another five years.

But Hong Kong's acting chief executive, Donald Tsang, has argued that the intention of the Basic Law's drafters was to have a by-election winner serve out his successor's term. Tsang has denied any political conspiracies, and has said that it was necessary to consult with Beijing to avert a constitutional crisis that could delay the July 10 vote for the next leader.

An 800-member election committee chooses the leader, and many believe that the panel — dominated by pro-Beijing figures — will elect Tsang.

Pro-democracy lawmaker Emily Lau criticized the government's decision to seek Beijing's interpretation. She said that Hong Kong's courts should have handled the matter.

"It is a vote of no confidence in the judicial system and a tactic to deny Hong Kong people of their right to challenge government decisions in court," she said on government-owned radio RTHK. It undermines the judicial process and is a fresh blow to the rule of law," she said.