When chief Chinese negotiator Yao Guang briefed reporters yesterday on the latest round of Hong Kong talks, he came dressed in a snappy Western business suit.

By shedding the customary Mao uniform that represents communist severity to many Hong Kong residents, he appeared to be going out of his way to calm jitters in the capitalist enclave that has been a British colony since the 19th century.

Diplomats said the two days of talks here between British and Chinese officials produced no early breakthroughs on how Hong Kong will be run after the British lease expires in 1997.

But the talks were considered symbolically important for adopting a new pragmatic tone that diplomats said should reassure the territory's 5.2 million people that their future is being mapped out in a serious fashion.

Talks had been suspended for nine months while Peking and London verbally jousted over the question of sovereignty. Britain has acknowledged that it loses control over 90 percent of the territory when its lease expires, but insisted that the rest, including the island of Hong Kong, was ceded in perpetuity.

Peking claims the entire colony was illegally seized by gunboat diplomacy and must be given back, although Hong Kong will be able to retain its capitalist system.

In the background of this public sparring, Peking has privately issued an ominous threat that it will impose its own solution if the two sides cannot reach an agreement on the colony's future by the end of next year.

With the resumption of talks this week, diplomats believe Peking and London have agreed to shift from the contentious issue of sovereignty to the search for a workable solution that could revive Hong Kong's battered confidence.

The talks are said to have centered on technical details of administering the territory after 1997, including the role Britain might play.

Chinese leaders have said they will regain sovereignty at an "opportune time" and run Hong Kong as a "special administrative region," leaving its social, economic and legal systems unchanged.

London reportedly has proposed an "interim" solution in which local Chinese in Hong Kong and British civil servants would run the place for a certain period of time under Chinese rule.

While London and Peking hash out the colony's future, its ethnic Chinese population--most of them fled the mainland after the communist takeover of 1949--have no direct input in the final solution.

The talks are to resume here July 25.