Day one and the new recruits wake to life in the great People's Republi c

Protest passes peacefully as Tung seeks to reassure

Hong Kong's first day under Chinese rule brought the chance to rally against the Peking government, applaud new commitments on social welfare, and join in a mass singalong aimed at setting a new world karaoke record. And all of this in torrential rain.

The afternoon demonstration, with a lead placard reading "Put an end to one-party dictatorship, build a democratic China", saw an estimated 3,000 people march in the first test of tolerance in the new era. It represented the first such protest on Chinese soil since the June 1989 Tiananmen Square crackdown. The protesters walked through the central business district, shouting "We want democracy, we want it now".

New legislation passed in the early hours of yesterday requires demonstrations to obtain prior permission from the police. This rally had secured an official go-ahead and, while there was a heavy police presence, it passed off peacefully.

As life attempted to get back to normal, Tung Chee-hwa, Hong Kong's new leader, outlined in a lengthy speech the priorities for the new Special Administrative Region (SAR) government. After the previous day's emphasis on patriotism, Mr Tung yesterday got down to the business of how he intended to run Hong Kong, hopeful that by addressing the issues which dominate people's daily lives, he can begin to establish his legitimacy.

"Beneath the surface of prosperity, there are insidious threats which are taxing our courage and determination," Mr Tung warned. "We have to resolve a series of social problems arising from a growing and ageing population, meet the pressing demands for more and better housing, and deal with the employment dislocation due to the restructuring of the economy."

Hong Kong's elderly "deserved respect", said Mr Tung. "We would encourage families to live with their elderly members, through adjustments to the public housing allocation policies," he added.

Mr Tung tried to balance calls for a better understanding of China with the need to reassure Hong Kong people that the territory's autonomy would be respected by Peking. "Due to our long separation, there is a general lack of understanding about China among the people of Hong Kong", and this must be addressed "to create mutual trust and respect".

On the question of Hong Kong's political development, he affirmed that "democracy is the hallmark of a new era for Hong Kong". He outlined an image of the sort of conservative Chinese society which he would like to create, while stressing that Hong Kong was a cosmopolitan society and must retain its international outlook.

"We will continue to encourage diversity in our society, but we must also reaffirm and respect the fine traditional Chinese values including filial piety, love for the family, modesty and integrity, and desire for continuous improvement. We value plurality, but discourage open confrontation. We strive for liberty, but not at the expense of the rule of law. We respect minority views, but are mindful of wider interests. We protect individual rights, but also shoulder collective responsibilities," he said.

President Jiang Zemin also adopted a less jingoistic tone than on Monday night, seeking this time to reassure Hong Kong that it would retain a distinct system from the mainland for 50 years. He spoke of an "ultimate aim" of Hong Kong having an elected chief executive and legislature - but gave no idea of the acceptable timescale. He too offered an inclusive message for Hong Kong's non-Chinese residents, promising that "everyone will be entitled to the rights and freedom as protected by law, regardless of race or colour".

As the first day under Chinese rule drew to a close last night, there was still enough energy left for another party. Up to a million people lined both sides of Victoria Harbour for a HK$100m (pounds 7.8m) extravaganza laser and firework show, which saw 20 tonnes of explosives light up the night sky. And, being Hong Kong, there was something a little different to wind up the evening. The organisers orchestrated a city-wide singalong, in pursuit of an accolade fit for the new era - a Guinness Book of Records entry for the world's largest mass karaoke.