The Chinese government refrained on Monday from saying much about the results of Sunday's elections in Hong Kong, but the country's Communist leaders had reason to be pleased.

Defying expectations, their allies, who support Beijing's hard line against democratic aspirations in this former British colony, maintained a firm grip on the legislature. Pro-democracy candidates, who form the only opposition bloc on Chinese soil, were limited to minor gains. And the threat of a potentially disastrous showdown over political reform in the territory has subsided.

But now comes another crossroads for the Chinese leadership. Will it take its success at the polls as a mandate to continue stonewalling popular demands for greater democracy in Hong Kong? Or will it reach out while the opposition is weak and open talks about limited reform with the confidence that its own candidates can prevail in elections?

"I think Beijing will feel more relaxed now," said Ivan Choy, a political scientist at Chinese University. "It may make them less hostile to democracy, and perhaps more willing to start a discussion."

This is the argument that the territory's largest pro-Beijing party, the Democratic Alliance for the Betterment of Hong Kong, has always used: If you want to persuade the Chinese government to expand elections, don't march in the streets or support government critics. Instead, vote for candidates loyal to the government in Beijing and show the Communist leadership that democracy in Hong Kong is not a threat.

Now that the alliance has replaced the Democratic Party as the largest party in the Legislative Council, that proposition might be put to the test.

The problem for the Chinese government is that the strong showing by pro-Beijing candidates in the election -- they won 35 of the council's 60 seats -- can be attributed almost entirely to the skewed electoral system that the public wants the government to revamp.

For example, 23 of the new pro-Beijing legislators won election in the 30 council seats that are filled by special constituencies of businesses, industry groups and professionals, most of which are staunchly pro-government.

The democrats want to eliminate these constituencies, some of which are made of just a few dozen corporations. Others have suggested enlarging them. But if Chinese leaders took even that small step, it would probably benefit the pro-democracy camp, which managed to win in the largest constituencies, including the 77,000 teachers and the 17,500 accountants. In fact, although democrats picked up only seven of the 30 seats, they won about half of all votes cast in the special constituencies.

Pro-Beijing candidates also fared well because of the tortuous voting rules used to allocate the 30 council seats filled by direct elections. Sunday's biggest upset occurred in one district where pro-democracy candidates were expected to win four of six seats. But Martin Lee, a founding father of the territory's democracy movement, won 50,000 more votes than he needed, drawing support from a fellow democracy advocate and allowing a pro-Beijing rival to prevail.

Lee had campaigned aggressively in the final days before the election, afraid he might be ousted after 18 years in the council, and on Monday, he appeared on the verge of tears that his efforts had cost a colleague, Cyd Ho, her seat by about 800 votes. "I have not won a constituency so unhappily," he said.

Ho was gracious in defeat, but noted that democrats had won more than 200,000 votes in the district to the 140,000 won by the pro-Beijing camp, yet the six seats were divided evenly between them. "This is one more good reason for us to strive for 100 percent democracy for all the seats," she said.

The Chinese leadership will be reluctant to tinker with an electoral system that so clearly favors its allies. It also remains worried about what impact democratic reforms in Hong Kong might have on the mainland, where forming an opposition party is illegal and elections are generally shams.

But Christine Loh, a former legislator and political analyst, said a decision by the Chinese leadership to stand fast and block political reform in the territory could backfire. "The more people understand the unfairness of the current system, a system designed to repress the public will, the more the system becomes a cause for potential instability," she said. "Election results like this only highlight the problem."

In April, China ruled out direct elections to choose all the territory's lawmakers and a successor to its unpopular chief executive, Tung Chee-hwa, who was appointed by officials in Beijing. As many as a half-million people marched on July 1 to protest the decision.

But in the short term, the Chinese government is unlikely to face a governance crisis in Hong Kong. With 25 seats in the legislature, the pro-democracy opposition may be able to make life difficult for Tung but it will not be able to block bills.

As a result, the opposition faces a tough decision about whether to stick to demands for universal suffrage to choose Tung's successor in 2007 and the entire legislature in 2008, or to try to engage the government in discussions about more limited reforms.

Yeung Sum, chairman of the Democratic Party, noted that a large majority of voters cast ballots for pro-democracy candidates, demonstrating that public support for universal suffrage remained high. But the democrats managed to win barely 60 percent of the vote, about the same share they won in 1998 and slightly less than they picked up in 2000.

Loh said the inability of the opposition to expand its support further suggests it needs to develop a platform of economic and social policies to supplement its campaign for greater democracy. "They have to persuade people that they have policies, that they could really govern if given the chance," she said. But she said the task is difficult because the coalition is united primarily by its pro-democracy position and split on other issues.

One sign of rising public frustration is the surprise victory by veteran street activist Leung Kwok-hung, also known as "Long Hair" for his flowing, dark locks. Leung, who built a reputation by disrupting public meetings and shouting at Tung, won more than 60,000 votes, three times the number he garnered four years ago.

His uncompromising views on China's violent 1989 crackdown on student protests in Tiananmen Square and other subjects could exacerbate tensions between Hong Kong and Beijing. Hong Kong politicians often play down or refrain from criticism of Beijing's policies on the mainland, and try to distance the territory's democracy movement from the efforts of dissidents and others in China the government considers subversive.

But almost immediately after winning election, Leung paid tribute to "those who sacrifice their time, their lives for the cause of democracy in China and Hong Kong," mentioning one exiled dissident and friend who he said had been tortured.

Martin Lee, a founder of Hong Kong's Democratic Party, second from left, talks to reporters with fellow candidates Yeung Sum, third from left, and Albert Ho, fourth from left.