Donald Tsang (search), a popular bow tie-wearing career civil servant, took over as Hong Kong's leader Saturday, facing the tough task of pleasing a public that wants more democracy while obeying Communist Chinese rulers who have opposed calls for greater freedom.
Tsang would only be Hong Kong's second leader since the former British colony returned to Chinese rule eight years ago. He replaces the much-maligned Tung Chee-hwa (search), who quit two days ago citing failing health.
Wearing one of his trademark bow ties, Tsang told a news conference that he was grateful to Tung "for his selfless leadership."
He added, "His contributions to Hong Kong deserve our recognition and thanks."
Tsang said all the Cabinet members have asked to continue serving and that he would be the acting leader until a new one is elected on July 10. Under the law, the leader is elected by an 800-member committee, dominated by people loyal to Beijing.
Tsang, who is expected to run in the election, said the elected leader would serve until the next originally scheduled election in 2007.
Tsang faces some serious challenges, including leading a Cabinet that might contain back-stabbing politicians who want his job, analysts said.
"If he can't carry out a major reshuffle in the Cabinet, can he gain other ministers' confidence and secure their loyalty to him?" said Ivan Choy, a political analyst at the Chinese University.
Tsang's policies might also be thwarted by pro-Beijing lawmakers who distrust him. Democracy groups might pressure him for more freedom, while China might demand that he show his loyalty by blocking political reforms. The economy is facing serious competition from booming cities in southern China that are trying to surpass Hong Kong as a logistics and services hub.
Ma Ngok, a politics professor at the University of Science and Technology, said Tsang will likely resign in May to run for chief executive and won't have time to make many changes.
"He will act more like a guardian of the government. There will unlikely be major policy changes," Ma told Hong Kong network Cable TV.
Tsang is an ambitious political survivor who overcame serious handicaps as he climbed to the top. He was a policeman's son without a university degree when he joined the civil service in 1967 during British rule. The government sent him to Harvard University in 1981 for a one-year master's degree in public administration.
He was promoted to financial secretary in 1995, becoming the first ethnic Chinese to hold the job in 150 years of British rule.
One month before Hong Kong was handed back to China, Tsang was named a knight of the British Empire for his work as a civil servant. On Saturday, Cable TV showed footage of Prince Charles bestowing the honor on Tsang, tapping his shoulders with a sword and placing a medal on a red lanyard around his neck.
Many thought that the knighthood marked the peak of Tsang's career because it raised serious doubts about his loyalty to the new Chinese rulers. Pro-Beijing figures called him a colonial lackey, but Tsang quickly adapted to the new political climate. He rarely mentions his "Sir Donald" title.
As finance minister during the Asian financial crisis in 1997-98, he won praise by shoring up the stock market with public funds and fending off currency speculators accused of triggering the economic woes across the region.
He's been sidelined a few times during Tung's eight years in office, but he managed to hang on and work his way back into influence. His new job might be the biggest test of his ambition and survival skills.