Hu - who said Friday he hoped to "walk more" and "understand" Hong Kongers' "life and expectations" - had been expected to attend an earlier flag-raising ceremony on the city's iconic waterfront.

But his absence was noticeable as three helicopters trailed the Chinese and Hong Kong flags in a flypast over the harbour, the national emblem in front and at least four times larger, and a flotilla of boats steamed past.

The Chinese leader flew out shortly before noon, ahead of an annual rights rally expected to see tens of thousands of people take to the streets.

On Saturday police used pepper spray to push back a few dozen demonstrators who tried to get past barricades more than two metres (6.5 feet) high near Hu's hotel.

A Hong Kong reporter was also briefly detained by police after shouting a question about Tiananmen at Hu.

Anger has been heightened by the death of Li Wangyang, a leading Chinese dissident whose body was found in his hospital ward in China in June, whose family say the circumstances are suspicious.

But China's rise has helped spur impressive economic growth in Hong Kong and boost the city's status as a key financial hub, and tens of thousands of people attended a stadium gala Sunday that featured a People's Liberation Army parachute display and soldiers marching around the pitch.

"I came here to celebrate the handover," said Vincent Wong, 35, a construction worker. "As a Chinese person I am very happy."

Nonetheless tensions are growing between the seven million locals and their northern neighbours.

Hong Kongers accuse an influx of newly rich Chinese mainlanders of everything from pushing up property prices to monopolising school places and maternity beds.

A poll released by Hong Kong University last week showed mistrust towards Beijing at 37 per cent, a post-handover high, with Hong Kongers identifying themselves primarily as citizens of China plunging to a 13-year low in another survey.

Discontent against the local authorities is also intense.

Leung, 57, takes over the city at a time of complaints about a widening gap between rich and poor, and home ownership being out of reach for many. He has promised to tackle the grievances.

"If we work together, I am sure Hong Kong - the Pearl of the Orient - will sparkle again," he said in his speech.

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