UPDATE 3-Barricades up, shutters down as Hong Kong marks Communist China's birthday

Hong Kong was in lockdown on Tuesday, with barricades in the city centre, shuttered stores and a heavy riot police presence, as authorities scrambled to ensure protests do not overshadow China's National Day festivities in Beijing.

The former British colony has been wracked by nearly four months of street clashes and demonstrations, posing the gravest popular challenge to Chinese President Xi Jinping since he came to power. Protesters have vowed to seize on the 70th anniversary of the founding of the People's Republic of China on Tuesday to propel their calls for greater democracy onto the international stage, hijacking an occasion Beijing sees as an opportunity to showcase China's economic and military progress.

Authorities have denied permission for a planned protest march, but demonstrations are expected across the city regardless. Police said on Monday they expected a "very serious violent attack" in the city, but gave no details. Hundreds of officials and the pro-establishment elite began the day with a flag-raising ceremony and National Day reception at the Convention and Exhibition Centre, held early and moved behind closed doors. Roads leading to the centre were closed and tightly policed.

Hong Kong has benefited from China's support under the 'one country, two systems' policy, Acting Chief Executive Matthew Cheung told the assembly, referring to guarantees of political freedoms for the territory after its handover from British to Chinese rule in 1997. However, he said the "escalating violence of some radical protesters, including unlawful assemblies and blockage of roads, petrol bomb hurling, arson and attacks on other citizens, has not only disrupted social order but also posed a severe challenge to the rule of law, affecting the safety and normal lives of citizens".

The protests had "further hit the local economy, which is already facing downward pressure," he added. The protests have taken a heavy toll on shopping malls that house some of the world's best-known luxury brands, with many closing early in recent weeks amid escalating violence.

The IFC mall, close to the centre of the city, was entirely closed on Tuesday. One of Hong Kong's largest upscale shopping centers, IFC houses an Apple Inc store, jewelers Tiffany & Co and Chow Sang Sang, cosmetics maker L'Occitane and Gucci, which is owned by French group Kering. The closure of IFC and several other malls means retailers will miss out on what would normally be a busy shopping week when mainland tour groups traditionally flood the territory for the annual Golden Week holiday.

Latest data showed visitor arrivals plunged 39% in August from a year earlier, with the number of mainland tourists to Hong Kong dropping 42.3% over the period.

EARLY SCUFFLE

Cheung called a first "open dialogue" held last week with citizens an important step and said more would follow. A group of protesters outside the venue shouted "No national day celebrations, only national day mourning," and called for those arrested during recent clashes to be released. Police fired pepper spray during a scuffle outside a nearby train station.

Rail operator MTR Corp closed some flash-point metro stations, and several large shopping malls said they would close to avoid damage in any clashes. The government of embattled leader Carrie Lam has already canceled the annual Oct. 1 fireworks display over the city's Victoria Harbour, citing public safety concerns.

Lam, who was trapped in an indoor stadium for hours last week after attending the "open dialogue," left for Beijing on Monday to celebrate China's birthday on the mainland. She will return on Tuesday night.

PROTESTS, PARADES

In contrast to events in Hong Kong, Beijing's carefully choreographed anniversary festivities included troops marching through part of Tiananmen Square with new missiles and floats celebrating the country's technological prowess. The Communist Party leadership is determined to project an image of national strength and unity in the face of challenges including Hong Kong's political unrest, slowing economic growth and a trade war with the United States.

"On our journey forward, we must uphold the principles of peaceful reunification and one country, two systems; maintain lasting prosperity and stability in Hong Kong and Macau ... and continue to strive for the motherland's complete reunification," Xi said in his nationally televised speech in Beijing. Hong Kong protesters are angry about what they see as creeping Chinese interference in the Asian financial centre, which Britain returned to China under a formula guaranteeing freedoms that are not enjoyed on the mainland.

China dismisses the accusation and has accused foreign governments, including the United States and Britain, of fanning anti-China sentiment. Last month, Beijing moved thousands of troops across the border into the restive city, a move state news agency Xinhua described as a routine "rotation".

Asian and Western envoys in Hong Kong, however, have said the absence of any evidence that troops had been withdrawn suggested it was a reinforcement, with the largest-ever regular army force now stationed in the city.

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