Donald Tsang's appointment to a two-year term as chief executive, replacing Tung Chee-hwa who quit in March citing failing health, was announced in a brief report by the official Xinhua News Agency.

In Beijing [Images], Chinese Premier Wen Jiabao said, "I believe that Mr. Donald Tsang and Hong Kong's government will definitely be able to lead all of Hong Kong's people in overcoming all difficulties. He'll advance Hong Kong's prosperity and stability."

Many believe that Beijing dumped the unpopular Tung -- a former shipping tycoon with little political experience -- because he was unable to improve his dismal public approval ratings.

Tsang -- Tung's former deputy -- was widely believed to be favored by China because he has spent 38 years in public service and is better liked by the public. Last week, Tsang, 60, won the overwhelming support of an 800-member election committee partial to Beijing that picks Hong Kong's leaders.

Hong Kongers were never allowed to directly elect their leaders when the city was a British colony. The undemocratic tradition continued when the territory returned to Chinese rule in 1997 under a "one country, two systems" formula.

The arrangement promises to give Hong Kong a wide-degree of autonomy.

The acting chief executive, Finance Minister Henry Tang, told reporters that Tsang's swearing-in ceremony would be on Friday in Beijing.

"He has outstanding leadership as well as extensive experience in the governance of Hong Kong," Tang said. "I trust he will do his best in the forthcoming two years," he added.

Tsang will likely be under political probation in the next two years as Beijing tries to determine whether he's loyal and trustworthy enough to serve another term.

Tsang, who has a reputation for following orders, was not expected to push for broad democratic reforms, though he has said direct elections should be Hong Kong's long-term goal.