An election committee of 1,200 Hong Kong notables picked Beijing-loyalist Leung Chun-ying as the city's next leader on Sunday following an election campaign marred by scandals and a tide of public discontent at a high degree of perceived interference from Beijing over the "small circle" poll.

Hong Kong, a former British colony that returned to Chinese rule in 1997, is a freewheeling capitalist hub enjoying a high degree of autonomy and freedom, but Beijing's Communist Party leaders have resisted public pressure for full democracy Reuters reported.

Hong Kong's seven million people have no say in who becomes their chief executive.

Instead, an election committee filled with business professionals, tycoons and Beijing loyalists, selected Leung with xxx votes as successor to the bow tie-wearing Donald Tsang, who cannot stand again.

"Refuse to vote. We want universal suffrage," shouted marching members of the Hong Kong Federation of Students, as over a thousand protesters, some who camped out overnight, gathered outside the election venue at a harbour-front convention centre to show their anger at being denied a voice.

Unlike other leadership transitions since 1997, scandals and mud-slinging between the two main candidates, Leung and Henry Tang, have shaken the city and exposed some of its long-standing struggles under Chinese control, including what many decry as extensive influence over its political affairs and leaders.

"If Leung is successful, we can see this is not Hong Kong's choice. We cannot speak out anymore. Hong Kong will be controlled by the Chinese government," said Francisco Wong, amid raucous scenes as demonstrators yelled slogans and waved colorful banners whilst closely watched by police.

Leung, a self-made Hong Kong-born surveyor with deep China connections and a reputation as a tough political operator, beat main rival Tang, the affluent scion of an industrialist and a former civil service chief.

The candidate widely seen as the Beijing-backed early front-runner, Tang, had his image dented by revelations of a love affair and a scandal over illegal construction at his villa, triggering a switch of Beijing's allegiance to Leung.

"Somehow Tang has managed to blow a fixed election," said a Western diplomat in Hong Kong.

Many dismayed residents have demanded a fresh election with new candidates.

A mock civil "referendum" poll run by the University of Hong Kong's respected Public Opinion Programme found that over 100,000 Hong Kong people, or 54.6 percent would cast blank ballots if given the chance to vote, as a sign of unhappiness with the candidates and unrepresentative process.

"It isn't as if there aren't capable people, there are plenty of capable, committed people," said Anson Chan, Hong Kong's respected former civil service chief dubbed the city's "conscience".

"As long as central government continues to place more emphasis on control ... on somebody in their own camp, I don't think we're going to see the right leader emerging."

"We can't possibly support any of the candidates. That feeling of the people is very clear," said Miriam Lau, an election committee member with the Liberal Party who cast one of xxx blank ballots on the day.

The university poll indicated how much people wanted better candidates, the Liberal Party's James Tien said. 

Hong Kong was promised a high degree of autonomy when it returned to Chinese rule in 1997 under a "one country, two systems" formula with a promise of full democracy as an "ultimate aim".

Beijing has promised to allow a direct election for the city's leader in 2017 but for the time being, China's Communist Party leaders and the city's tycoons exert a high degree of control over politics.

Nevertheless, Hong Kong remains a beacon of democratic reform and civil liberties in China, which wants to see the self-ruled island of Taiwan reunited with the mainland, perhaps under a similar formula.

Leung, 57, is a self-made Hong Kong-born surveyor with deep China connections and a reputation as a tough political operator with a more innovative policy vision.

He has also been dogged by longstanding accusations of being an underground Communist Party member, a charge he denies.

"For this election, everyone feels the influence of Beijing is very heavy … (Leung) has created an aura of being a Chinese emperor that will make it more difficult to lead politically," said political analyst Johnny Lau.

"This election has caused great divisions. (Leung's) ability to gather public support will be quite weak because these frustrations have accumulated over many years."