Chinese President Hu Jintao hailed the success of the "one-country, two systems" policy in Macau Monday, as he led 5th anniversary celebrations of the former Portuguese enclave's return to China. But the Chinese leader expressed dissatisfaction with the leadership of Hong Kong.

On his first visit to Macau as China's president, Hu Jintao praised the territory's record in the five years since its return to Chinese sovereignty.

The territory, administered by Portugal for more than 400 years, is enjoying an unprecedented economic boom, fueled by foreign investments in its recently liberalized gambling industry.

Mr. Hu says time has proven that the "one country, two systems" formula is, in his words, "entirely correct".

China's late leader, Deng Xiaoping, crafted the concept of "one country, two systems" to deal with the then impending return of Macau and the British colony of Hong Kong in the late 1990s. The policy provided for a high degree of political autonomy for the two territories and preserved their capitalist systems, despite China's communist system.

The model was also meant to entice Taiwan, which has been self-governed since 1949, to return to Beijing's rule.

But while Macau has experienced stability and growth, Hong Kong has been beset by economic and political troubles since Britain handed it back to China in 1997. The outbreak of Severe Acute Respiratory Syndrome last year and demands for greater democracy have been among the many challenges the local administration has faced.

Beijing has refused to allow universal suffrage in Hong Kong in 2007 and 2008, when the next elections for the territory's legislature and chief executive are scheduled - prompting mass protests earlier this year.

On Sunday, Hong Kong's government suffered another embarrassment, when a court challenge forced it to scrap a $3 billion privatization of the commercial assets of its public housing estates.

At the Macau celebrations Monday, President Hu publicly berated Hong Kong's leaders, including Chief Executive Tung Chee-hwa, who stood by looking uncomfortable as Mr. Hu spoke.

Mr. Hu told officials to reflect on what Hong Kong has gone through since returning to China, examine its shortcomings, and improve its capabilities.

President Hu has not visited Hong Kong since becoming China's president and Communist party leader last year.