Thousands of people marched through the streets of Hong Kong to protest Chinese rule on the 15th anniversary of the Asian city's return to Beijing's control and on the same day the territory's new leader was sworn in.

Organizers pegged the number of protesters at 400,000 while police estimated there were 63,000 at the procession's peak.

The outpouring of discontent underscored rising tensions between the Communist mainland and the vibrant city of 7 million that was returned to China in 1997 after more than a century of British colonial rule.

In the ceremony, self-made millionaire Leung Chun-ying, 57, became Hong Kong's third chief executive after Donald Tsang and Tung Chee-hwa. He has promised to address Hong Kongers' economic needs, including skyrocketing housing prices, which many blame on deep-pocketed mainland apartment buyers.

Hong Kong's new Chief Executive Leung Chun-ying and his wife Regina Leung wave to to the crowds on July 1. (Tyrone Siu/Reuters)

A demonstrator who tried to interrupt Hu as he began his address was bundled away by security officials. The man, one of the guests invited to the inauguration, waved a small flag and yelled slogans calling for China's leaders to condemn the brutal June 4, 1989, crackdown on protesters in Beijing's Tiananmen Square. He also called for an end to one-party rule in China.

Hu took no notice and continued to read his speech, but the incident marred what was supposed to be a carefully orchestrated visit emphasizing strengthened ties between Hong Kong and mainland China.

Leung, a police officer's son, replaces career bureaucrat Tsang, who took office in 2005 and is barred from another term. Leung was chosen as chief executive in March, winning 689 votes from a 1,200-seat committee of business elites who mostly voted according to Beijing's wishes. Hong Kong's 3.4 million registered voters, who can vote for neighbourhoodcouncillors and half of all lawmakers, had no say.

By mid-afternoon, tens of thousands of protesters began marching toward the newly built government headquarters complex on Hong Kong Island in sweltering heat, beating drums and waving British colonial flags in a gesture of nostalgia for an era during which democratic rights were limited but the rule of law was firmly in place.

'China's way of thinking is totally different'

Hu left Hong Kong before the march began.

In his speech, Hu said Hong Kong residents now have more democratic rights and freedoms than ever before - a reminder that China has largely kept the promise it made when it regained the territory from Britain to keep Hong Kong's relatively open political system in place for 50 years.

But that did little to assuage the feelings of the protesters, who see China's Communist Party rule as strongly at odds with the values that many inherited from a British-influenced education.

"China's way of thinking is totally different from ours," said builder Bono Lau, 46. "Tung Chee-hwa talked about one country, two systems but there's no more of that nowadays."

Beijing has pledged that Hong Kong can elect its own leader in 2017 and all legislators by 2020 at the earliest, but no roadmap has been laid out.

Ordinary Hong Kongers fear that the political system in place since 1997 has resulted in the city's billionaire tycoons having too much influence over senior government officials. Government data now show that income inequality has risen to its highest level in four decades.

Leung himself was implicated in an embarrassing scandal just last week when it emerged that he had made six illegal additions to his mansion in an exclusive neighbourhood on Hong Kong Island's Victoria Peak.