HONG KONG, July 1, 2022 (BSS/AFP) - President Xi Jinping hailed China's rule over Hong Kong on Friday as he led 25th anniversary celebrations of the city's handover from Britain, insisting that democracy was flourishing despite a years-long political crackdown that has silenced dissent.

At a tightly choreographed ceremony, which included the inauguration of Hong Kong's new government, Xi showcased the Chinese Communist Party's hold after unleashing a sweeping crackdown against the city's democracy supporters.

Since Beijing imposed a national security law on Hong Kong in 2020, opposition has been quashed and most leading democracy figures have fled the country, been disqualified from office or jailed.

But during his speech, Xi said Beijing had always acted "for the good of Hong Kong".

"After reuniting with the motherland, Hong Kong's people became the masters of their own city," he said. "Hong Kong's true democracy started from here."

The trip is Xi's first out of mainland China since the beginning of the Covid-19 pandemic and his first to Hong Kong since massive protests overwhelmed the city in 2019.

Friday's celebrations began with a flag-raising ceremony at the city's Victoria Harbour, complete with a military flypast and a flotilla spraying plumes of water.

Xi was not present -- local media reported he had spent the night in the neighbouring mainland city of Shenzhen and travelled back into the city on Friday morning.

- 'Erosion of autonomy' -

Friday also marks the halfway point of the 50-year governance model agreed by Britain and China under which the city would keep some autonomy and freedoms, known as One Country, Two Systems.

The anniversary used to be a prime example of those freedoms in action.

For decades after the handover, in parallel to the official celebrations, every July 1 hundreds of thousands of residents would take part in a march to voice political and social grievances.

But that march, like all mass gatherings in Hong Kong, has been banned by police for the last two years, under a mixture of coronavirus restrictions and a security crackdown.

Critics say that crackdown, strengthened under the national security law, has betrayed the promise that Hong Kong would retain its way of life after the handover.

"We made a promise to the territory and its people and we intend to keep it, doing all we can to hold China to its commitments," British Prime Minister Boris Johnson said Thursday.

In the United States, Secretary of State Antony Blinken lamented an "erosion of autonomy" in the city, saying: "We stand in solidarity with people in Hong Kong and reinforce their calls for their promised freedoms to be reinstated."

Australia on Friday echoed the US language, saying it was "deeply concerned by the continuing erosion of Hong Kong's rights, freedoms and autonomy".

But Xi insisted Friday that One Country Two Systems was "a good system".

It "has no reason at all to change and it must be upheld in the long run," he said, arguing it safeguarded "the country's sovereignty, security and development interests".

- Closed loop -

Xi's visit has taken place under a tightly monitored closed loop system.

Those coming into the president's orbit -- from the schoolchildren who welcomed him at the train station to the highest-ranking government officials -- were made to limit their social contacts, take daily PCR tests and spend days in a quarantine hotel.

Parts of the city have been closed off, and media coverage has been tightly restricted.

Authorities have also moved to eliminate any potential source of embarrassment during Xi's time in the city, with national security police making at least nine arrests over the past week.

More than 10 members and volunteers of the League of Social Democrats (LSD) -- one of Hong Kong's few remaining opposition groups -- were told by police not to protest. Six party members also said their homes were searched.

- 'Safe, stable' -

Authorities have sought to portray an image of public support for the celebrations, with signs proclaiming a new era of "stability, prosperity, opportunity" ubiquitous throughout the city.

In the city's Victoria Park, the football pitches which used to be the gathering point for July 1 march-goers are being used for a display celebrating the anniversary.

The centrepiece is a huge Chinese national flag sided with a slightly smaller Hong Kong flag, each occupying half of a soccer pitch.

On Friday the city's main newspapers ran all-red full front pages celebrating the anniversary, and pro-Beijing publications ran bumper editions full of advertisements, with the longest running to 188 pages.

Xi's visit dominated Chinese state media on Friday too, with photos of the leader's arrival in Hong Kong splashed across front pages.

"It's clear that the hands of interference of those anti-China forces who scheme to destabilise Hong Kong have been cut off by the national security law for Hong Kong," said an editorial in the state-run tabloid Global Times.