Donald Tsang: New appointee must prioritise allegiances

Mr Tsang said he would do his utmost to safeguard Hong Kong's traditional freedoms, its respect for human rights and the rule of law.

He replaces Ansun Chan, easily the most popular figure in the goverment and viewed as the staunchest defender of Hong Kong's way of life against encroachment from Beijing.

She resigned after Beijing said she should give better support to the chief executive, Tung Chee-hwa, the man China appointed to govern Hong Kong.

Mr Tsang, a career civil servant, has been promoted from financial secretary.

His replacement in that position is Anthony Leung, the current Asia-Pacific chairman of the bank JP Morgan-Chase.

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Donald Tsang's elevation was no surprise - he helped guide Hong Kong's economy through the Asian financial crisis and the subsequent recession.

Many believe his policies were successful in mitigating the impact on Hong Kong.

Mr Tsang now faces a more difficult task, balancing the demands of Beijing with the interests of the business community and of the pro-democracy opposition parties.

Ansun Chan opposed China's interference

In particular, Hong Kong faces pressure from China to restrict the activities of the Falun Gong spiritual movement, which is legal in the territory but banned on the mainland.

The new financial secretary, Anthony Leung, is only the second person to come to the job from outside the civil service.

The move involves a major reduction to his $2m a year salary.

One of his first challenges will be to reverse a decline in government revenues, perhaps by introducing new taxes.

For a newcomer to government, it will test his political skills to the extreme.