Chinese President Hu Jintao marked the 10th anniversary of the Chinese annexation of Hong Kong Sunday with a rare three-day visit to the city state. Hu presided over the swearing-in of puppet Chief Executive Donald Tsang to a second term of office, and took part in the ribbon-cutting for a new port and bridge linking Hong Kong with the Chinese city of Shenzhen.

Hu praised puppet Tsang and his team for their work and the city state for its resilience over the past decade of financial and health crises and its strong economic turnaround. Hu and Tsang both lauded the Chinese government's concept of "one country, two systems," and Hong Kong's charter, the Basic Law.

In his speech, Tsang praised the people of Hong Kong for maintaining its stability and advancing its capitalist system, but also warned of the fierce competition posed by other Asian cities as well as cities around the world. "This spirit of 'getting the job done' is an innate quality of our community. We should never underestimate this spirit," he said.

Although Hong Kong's pro-China legislative lobby and the region's elite and wealthy business sector succeeded in tackling the challenges posed by the SARS epidemic in 2003 and the Asian financial crisis in 1997, the executive branch has achieved little progress in addressing the issue of universal suffrage in electing the chief executive -- a right promised the people of Hong Kong in the Basic Law, but delayed till an unspecified future time.

Hong Kong's Hang Seng Index is currently riding high after emerging from deep doldrums a decade ago. Real estate prices are soaring, under the skillful control of a handful of powerful land developers. But also on the rise are air pollution and other environmental hazards, mostly driven by industrial activity across the border in China’s Guangdong province.

For the Hong Kong government, tackling the problems of an aging population, the elderly and the poor has played second fiddle to advancing economic development.

As for political development, Tsang promised an open government where the public would collaborate in devising policies, but was vague on democratic reforms. "We shall develop a system that is more democratic -- a green paper will be published this year, so that we can all work together to identify the most acceptable mode of universal suffrage to best serve the interests of Hong Kong," he said.

The Chinese government has sent repeated signals that Hong Kong will not be permitted to introduce universal suffrage anytime soon -- since Beijing has the final say on any such decision.

Tsang has therefore packaged promises of political transparency and protection of Hong Kong's quality of life as progress toward democracy, while avoiding the issue of voting rights. He promised to promote "a new caring culture." He also stressed Hong Kong's link with China. "We must aspire to achieve greater things for our country," he said.

The official speeches were followed by a great parade winding through the city streets, including dragon dancers, drummers, marching bands and flag-waving spectators. The mood was cheerful despite the cloudy skies and occasional cloudbursts.

Once the colorful celebrants dispersed, a second human wave took their place in the narrow streets, marching to the beat of a different drum. Hong Kong's annual demonstration for democracy drew tens of thousands to the streets with homemade banners and signs. Representatives of political parties, labor unions and other civic groups marched for universal suffrage and for other causes -- including a minimum wage and fairer pay scales.

President Hu said that democracy was growing in an orderly way in Hong Kong's dynamic economy, but stressed Beijing's stance that the economy must take priority. "Only with continued economic development could it develop a democratic system that suits its actual conditions," he said of Hong Kong. The Chinese government has remained consistently vague as to what model of democracy Hong Kong would be allowed to pursue and what conditions would indicate the city state is ready for universal suffrage.

"One country means that we must uphold the power vested with the Chinese government and China's sovereignty, unity, and security," Hu stressed. He said that "two systems" meant China's socialist system ran parallel to Hong Kong's capitalist model and that the people should protect Hong Kong's high degree of autonomy by supporting the chief executive in exercising government power mandated by law. "Without one country there will no two systems," he reminded Hong Kong.

While some political and civil rights activists viewed such a reminder as authoritarian bullying, the majority of people are disinterested in Hu's political remarks. For the most part, the mood was hardly upbeat during the anniversary celebrations.

Videos bragging about the financial strength of the territory, its potential for tourism, excellent infrastructure and unity of the people have been telecasted repeatedly in an attempt to shape a positive public image of Hong Kong, both among its citizenry and in the wider world.

The anniversary celebrations included the signing of economic partnership agreements with China, the transport of masterpieces of Chinese art from Beijing to Hong Kong, and various cultural programs to stress the "unity" between the people of Hong Kong and those across the border.

In the eyes of Chinese nationalists, economists and laissez-faire politicians, Hong Kong is standing tall and proud ten years after the annexation. In the eyes of democracy and civil rights advocates, Hong Kong has merely changed masters, from the British to the Chinese authorities, both of whom fostered economic prosperity while denying political freedoms.