HONG KONG (AFP) - Tens of thousands of people were expected to take to the streets of Hong Kong for an annual pro-democracy march, as the city marked the 12th anniversary of its return to China.

Organisers hope that turnout could rival the 500,000 seen in 2003, thanks to a combination of dissatisfaction with the government's response to the economic slowdown, surging unemployment and delayed moves towards universal suffrage.

"The issues this year mirror those in 2003," Lee Cheuk-yan, a march organiser and leading trade unionist, told AFP.

"People are frustrated with a government which is unable to lead them through economic hardship and political crisis, although not to a point where they want the chief executive to step down."

The 2003 march was galvanised by an economic downturn, unpopular chief executive Tung Chee-hwa and controversy over the introduction of a proposed national security bill.

The show of people power saw the security legislation shelved and was a key factor in Tung's decision to resign the following year.

Opposition to the government, which is mainly driven by pro-democratic political parties, has grown as the latest global economic crisis has hit the financial and export hub hard.

The city fell into recession in the third quarter of 2008 and the government expects the economy to contract 5.5-6.5 percent in 2009.

Democracy supporters were further buoyed by the record turnout of 150,000 at the candlelight vigil last month to mark the 20th anniversary of the bloody crackdown on protests in Beijing's Tiananmen Square.

Albert Ho, chairman of the Democratic Party, said he expected to see more young faces at the annual march -- which organisers say attracted 47,000 people last year -- as unemployment remains a major concern.

"Many university graduates have nothing to do because they cannot find a job. The march is a channel for them to air their frustration," Ho told AFP.

A number of civil service unions have also decided to join the march for the first time this year, to protest against the government's policy to outsource their posts and a pay freeze.

The protest coincides with celebrations for the 12th anniversary of the establishment of the Hong Kong Special Administrative Region, after the former British colony was returned to China in 1997.

A separate, smaller pro-Beijing parade took place early Wednesday amid glorious sunshine, with marchers waving China's national flag.

Chief executive Donald Tsang officiated at a flag-raising ceremony and government reception Wednesday morning.

He said he was confident Hong Kong would sail through the financial crisis and other challenges with the support of China.

"With perseverance and determination, and most importantly with the all-out support of our country, I am sure we will again prove our resilience and mettle," he said at the reception.

Amid the serious politics, there were some lighter moments.

A 40-strong "Complaints Choir" took advantage of Hong Kong's freedoms -- the city has a different legal system from mainland China, including the right to protest -- to perform a five-minute moan about various aspects of life from taxes to bad bosses.