Chinese President Xi Jinping on Friday oversaw tightly choreographed celebrations to mark the 25th anniversary of the former British colony's handover to Beijing amid a massive security presence.
"After reuniting with the motherland, Hong Kong's people became the masters of their own city," Xi said at the inauguration of the city's new government. "Hong Kong's true democracy started from here."
Incoming chief executive John Lee, who is sanctioned by the US over his role in implementing a national security law there, was sworn in as part of the festivities.
Celebrations kicked off with a flag-raising event at Hong Kong's Victoria Harbor.
Xi arrived in Hong Kong a day earlier by high-speed train, but spent the night in the neighboring mainland city of Shenzhen. This was his first trip out of mainland China since the beginning of the Covid pandemic and the first to Hong Kong since 2017, when he last took part in the July 1 celebrations.
The Chinese leader defended Hong Kong's "one country, two systems" formula of governance, saying it was successful under China's "comprehensive jurisdiction."
"For this kind of good system, there is no reason at all to change it. It must be maintained over the long term," he said.
Meanwhile, Taiwan Premier Su Tseng-chang said said freedom in Hong Kong has "vanished" and China has failed to live up to its promises of 50 years without change.
Most people in Chinese-claimed Taiwan have shown no interest in being run by Beijing, and the government has repeatedly rejected China's offer of "one country, two systems" to rule the island, as with Hong Kong and Macau.
Speaking to reporters in Taipei, Su said promises that life would go on as normal for Hong Kong after the handover had not been kept.
"It's only been 25 years, and in the past the promise was 50 years of no change. The 'dancing will go on and horses still run' has disappeared, and even freedom and democracy have vanished," Su added, using a Hong Kong expression about how life would not change under Chinese rule.
"We also know that we must hold fast to Taiwan's sovereignty, freedom and democracy," Su added. "China's so-called 'one country, two systems' has simply not stood up to the test."
Britain returned Hong Kong to Chinese rule on July 1, 1997, under a "one country, two systems" formula which guarantees wide-ranging autonomy and judicial independence not seen in mainland China.
Critics of the government, including Western nations, accuse authorities of trampling on those freedoms, which Beijing and Hong Kong reject.
China has been stepping up its military and political pressure to get Taiwan to accept Chinese sovereignty. Taiwan's government says only the island's people can decide their future.