The Standing Committee of China's National People's Congress made the decision in the face of mounting calls in Hong Kong for more voting rights and a growing frustration with the former British colony's China-backed administration.
The committee said that "universal suffrage shall not apply" to the selection of a successor for Hong Kong's current leader, Tung Chee-hwa, in 2007 or members of the Legislative Council in 2008.
Tung, a former shipping tycoon, was chosen for his position by an 800-member committee that tends to side with Beijing. In September Hong Kong residents will directly elect 30 of 60 Legislative Council members, up from 24 the last time those elections were held. The remaining 30 council members will be chosen by elite voters from special interest groups -- such as business leaders, doctors and bankers -- who tend to side with Beijing.
The territory will be allowed to change its electoral methods, but only "in the principle of gradual and orderly progress," China's official news agency Xinhua quoted the committee as saying.
The ruling angered many members of the international community and those in Hong Kong who have been pushing for swift democratic reforms.
The U.S. consul-general in Hong Kong, James Keith, voiced disappointment at Beijing's move. "[It] is an erosion of the high degree of autonomy" that had been guaranteed to Hong Kong, he told Reuters.
The BBC reported British Foreign Office Minister Bill Rammell was expressing his concerns about the move in an urgent meeting with the Chinese ambassador.
Lee Cheuk-yan, a prominent pro-democracy lawmaker and workers' rights champion, said "this has killed the 'one country, two systems' principle and our high degree of autonomy," according to a Reuters report. "We have to tell the world that we don't accept Beijing running Hong Kong," he continued.
When Hong Kong reverted from British administration to Chinese rule in 1997, Mainland China promised a "one country, two systems" governance that would protect the territory's autonomy.
Hong Kong's mini-constitution, the Basic Law, holds out the possibility that ordinary residents can elect their next leader in 2007 and all lawmakers by 2008. Earlier this month, the Standing Committee decided Beijing would have to give advance approval for any political changes.
A large pro-democracy protest is planned for July 1, the anniversary of a march by 500,000 people that forced Tung to withdraw an anti-subversion bill that was widely seen here as a threat to freedom.
"We will not give up the fight for democracy," Yeung Sum, the leader of Hong Kong's opposition Democratic Party, said at a news conference.
Tung told reporters he was aware that Beijing's decision would upset many of Hong Kong's 6.8 million residents, but urged them to "be calm and rational and strive for consensus on the constitutional development of Hong Kong."
Tung insisted that full democracy remains Hong Kong's constitutional goal, but he would not offer any timetable.
Beijing sent three senior officials to Hong Kong to defend its decision.
"The result of drastic reform is bound to be violent confrontation. Then there would be no stability, and society would be unable to bear the cost of this political experiment," senior Chinese parliamentarian Qiao Xiaoyang said in Hong Kong, according to a Reuters report.
Noting local calls for direct democracy, Qiao said no responsible government should be dictated to by public opinion.
Pro-democracy lawyers and legislators boycotted Qiao's forums.
"Fight for universal suffrage! Never give up!" lawmakers chanted after walking out of a seminar he held at government headquarters. Other demonstrators burned copies of the city's Basic Law.