Hong Kong's leader said he tendered his resignation Thursday because of failing health and repeatedly denied speculation China pushed him out in a bid to tighten its grip on the former British colony and halt a movement toward greater democracy.

After ignoring 10 days of rumors that he was quitting, Tung Chee-hwa (search) called a news conference and announced he wanted to step down with two years left in his term. He said his health problems began late last year.

"If I continue as chief executive, I won't be able to handle it," he said.

Tung said he tendered his resignation with China's leadership an hour before his announcement and that he hoped China would accept it "as soon as possible."

He denied wide speculation that China pushed him out. China has "repeatedly affirmed the work that I and my colleagues and the government has done. That [a forced resignation] is not the case at all," he said.

Tung's exit triggers Hong Kong's first leadership change since it returned to Chinese rule in 1997 under a "one country, two systems" formula, designed to give the territory a wide degree of autonomy.

Many have speculated that the real reason for Tung's early departure was that his bosses in Beijing lost faith in his ability to run the global financial capital, which has become increasingly politicized.

The last two years of Tung's rule have seen the largest-ever street protests for greater democracy and less Chinese control — displays that alarmed China.

"Beijing has been tightening political freedoms to make sure Hong Kong is not in troubled waters," said James Sung, a political analyst at City University of Hong Kong (search) who believes Beijing dumped Tung. "But with Tung's political skills and judgment, he is clearly not up for the job."

The 67-year-old Tung was a shipping tycoon with little political experience when he was picked to be Hong Kong's first chief executive. Hong Kong (search) only has limited democracy, so Tung was elected by an 800-person election committee, dominated by people partial to Beijing.

He has struggled to raise his public approval ratings. Many believe that his administration bungled two major crises: the 1997 Asian financial meltdown and the 2003 outbreak of SARS, or severe acute respiratory syndrome. His critics say he's too close to big business and insensitive to the hardships of the common people.

Joseph Cheng, a political scientist at City University, also thought that China believed it was time for Tung to go.

"If China wanted him to stay, he would have stayed," Cheng said.

Tung's position would be temporarily filled by the No. 2 ranking official, Donald Tsang (search) — a popular bow tie-wearing career civil servant who was educated at Harvard and received a knighthood for his service during British colonial rule.

Tsang might be Beijing's idea of a complete package: a man known to follow orders without wavering and a battle-hardened civil servant who can run a bureaucracy.

"He has the mentality of a loyal servant. He just follows his boss. ... It's just that his bosses keep changing," said Ma Ngok, a political scientist at Hong Kong's University of Science and Technology,

The 800-member election committee would have to elect another chief executive within six months, and many believe that Tsang would get the job if he does well.

But a divisive constitutional controversy seems to be brewing over how long the next elected chief executive will serve.

Some lawmakers and legal experts have argued that the Basic Law, Hong Kong's mini constitution, clearly says that the next elected chief executive should get a new five-year term rather than serve out the two-year remainder of Tung's term.

Beijing — which favors the two-year option — might have to provide a constitutional interpretation.

It's possible that the jockeying for power that Tung struggled to control might intensify if the next elected leader only gets a two-year term. The leader's challengers in the next scheduled election in 2007 might try to undercut him and thwart any progress that would make him look good, analysts say.

"Other contenders for the chief executive post will see Tsang as a main competitor," Sung said. "We can expect peace only for a month or two until around June when the election takes place. At that time, there will also be a lot of noise in the society."