BEIJING/HONG KONG (Reuters) - China said on Friday that the joint declaration with Britain over Hong Kong, which laid the blueprint over how the city would be ruled after its return to China in 1997, was a historical document that no longer had any practical significance.

The stark announcement from the Foreign Ministry, that is sure to raise questions over Beijing's commitment to Hong Kong's core freedoms, came the same day Chinese President Xi Jinping said in Hong Kong the "one country, two systems" formula was recognised "by the whole world".

It wasn't immediately clear if Foreign Ministry spokesman Lu Kang was attacking just the idea of continued British involvement in Hong Kong, or the principles in the document.

The Sino-British Joint Declaration, signed in 1984 by then British Prime Minister Margaret Thatcher and Chinese Premier Zhao Ziyang, laid out how Britain would end its century-and-a-half long rule over Hong Kong. It also guarantees the city's rights and freedoms under the "two systems" formula.

Under Hong Kong's mini-constitution, the Basic Law, Hong Kong was guaranteed its freedoms for "at least 50 years" after its return to China on July 1, 1997.

Lu told reporters during a regular briefing on Friday that the document no longer binds China. Lu was responding to British Foreign Secretary Boris Johnson's comments the day before that Hong Kong's continued success will depend on the rights and freedoms protected by the Sino-British Joint Declaration, as well as US State Department spokeswoman Heather Nauert's comment that "the United States remains concerned about any infringement of civil liberties in
Hong Kong", reported Xinhua news agency.

Stressing that Hong Kong's affairs are China's internal affairs, Lu said: "Now Hong Kong has returned to the motherland's embrace for 20 years, the Sino-British Joint Declaration, as a historical document, no longer has any practical significance, and it is not at all binding for the central government's management over Hong Kong.

"The UK has no sovereignty, no power to rule and no power to supervise Hong Kong after the handover," Lu added.

Britain said in response the joint declaration remained in force.

"The Sino-British Joint Declaration remains as valid today as it did when it was signed over thirty years ago," a British Foreign Office spokeswoman said. "It is a legally binding treaty, registered with the UN and continues to be in force. As a co-signatory, the UK government is committed to monitoring its implementation closely."

'New challenges'

In Hong Kong, President Xi said on Friday (June 30) the city's "one country, two systems" formula faces "new challenges".

Xi, who is visiting Hong Kong for the 20th anniversary of its return to Chinese rule, comes amid heightened tension between China and the former British colony, where many are concerned at increasing interference by Beijing in the city's affairs, despite the promise of wide-ranging autonomy under the "two systems" agreement.

The battle for full democracy, vividly illustrated by 79 days of "Occupy" street protests in 2014, has been a defining issue for the city of 7.3 million. It has sown distrust, polarised politics and hampered governance.

"In the 20 years since Hong Kong was returned to the motherland, the success of 'one country, two systems' is recognized by the whole world," Xi said in a speech. "Of course, during the implementation, we've met some new situations, new issues and new challenges. On these issues, they need to be regarded correctly and analysed rationally... Issues are not scary. The key is to think of ways to solve these issues."

Without giving specifics, Xi said these needed to be corrected and not handled with an "emotional attitude".

Hong Kong returned to Chinese rule on July 1, 1997.

A huge security operation has shut down large parts of Hong Kong, with thousands of police deployed to keep away demonstrators angry at Beijing's tightening grip on the freedoms of nearly eight million people.

A planned pro-independence rally was cancelled after police banned it from taking place and cordoned off the harbourfront area where defiant protesters had said they would gather. An official protest zone near the harbourfront convention centre where Xi was guest of honour at an anniversary banquet and variety show was also heavily patrolled as dozens of demonstrators gathered chanting: "End one-party dictatorship!"

Tensions had flared Friday afternoon as democracy campaigners and pro-China supporters swore and shouted at each other near the convention centre, with police separating the two sides.

At a banquet attended by lawmakers and business figures including property tycoon Li Ka Shing later on Friday, Xi praised Hong Kong for its role in China's economic development, and told Hong Kongers to believe in themselves and China.

"Hong Kong has developed from a small unknown fishing village into a large international metropolis, forged by the hard work of generations of Hong Kongers," he said. "When the country does well, Hong Kong will do even better," he added, before raising a glass of red wine for a toast.

Xi had earlier met business leaders including Li, with whom he shared a lengthy handshake.

LOW-KEY PRESENCE OF PLA

On Friday morning Xi had inspected more than 3,000 People's Liberation Army troops on the second day of his first trip as president to the financial hub ahead of Saturday's anniversary. The PLA said it was the largest military parade in the city since the 1997 handover.

Some analysts said the show of force was meant to address growing calls among some radical young activists for greater self-determination, or even independence from China, a red line for Communist Party rulers in Beijing.

Xi praised the Hong Kong government under Beijing-backed leader Leung Chun Ying, saying it had "effectively tackled Hong Kong independence forces and maintained social stability".

The presence of the PLA in the city has long been one of the most sensitive parts of the city's reversion to Chinese rule, but the garrison, thought to number between 8,000 and 10,000, has kept a noticeably low-key presence.

Hong Kong's large and well-equipped police force - dominated by Hong Kong recruits - remains responsible for routine domestic security and was protecting the streets surrounding the base on Friday. Security has been tight ahead of the July 1 anniversary, with some 9,000 police reportedly deployed to maintain order.

Protesters have been kept well away from Xi and his entourage, his hotel, and the venue for Saturday's ceremony. Banners critical of China have been largely absent from the streets, though a rally on Saturday could draw tens of thousands of people in an annual demand for full democracy.

Few expect anywhere near this scale of protest during Xi's visit, but activists and civil society groups are planning a number of demonstrations. These include a pro-independence rally claiming that Hong Kong had now in effect become a repressed Chinese colony.

Other protests will demand the release of Chinese Nobel Peace laureate Liu Xiaobo and justice for victims of the Tiananmen crackdown in Beijing in 1989, that could draw thousands.

Hong Kong authorities released 26 pro-democracy protesters on Friday who were arrested before Xi's arrival. "Democracy Now! Now!," they shouted on being released, including young Occupy protest leader Joshua Wong.