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Hong Kong (AFP)

Rainbow flags flowed through the streets of Hong Kong Saturday during the city's annual pride parade, as LGBT activists criticised authorities for lagging behind on equal rights.

This year Hong Kong was picked as the first Asian city to host the Gay Games, while a landmark court decision granted a British lesbian the right to live and work in Hong Kong with her partner.

But authorities' reaction to the winning bid for the 2022 Gay Games was lukewarm and the city's immigration department has announced it will appeal the case.

Men in drag and lawmakers joined several thousand participants, many of whom were sporting multicoloured tattoos and holding a massive rainbow flag as they marched through the southern Chinese city.

Despite the festive atmosphere, many participants said they thought Hong Kong was not ready to accept equal rights and that it was up to the LGBT community to change attitudes.

"There are many people with traditional mindsets here, so for the LGBT community many people should... start speaking out for themselves or else there will be no freedom and we won't have our own rights," a teenage participant who identified herself as Morgan said.

"I think many people now, especially the youngsters, are starting to support this and because they're the future of our society I think we should be optimistic," the 14-year-old student added.

The parade also follows a May court decision in Taiwan that paved the way to allowing gay marriage by ruling that laws preventing same-sex unions violate the guarantee of freedom of marriage.

In October, Taiwan held its largest ever pride parade with tens of thousands marching amid a sea of rainbow flags and glitzy costumes.

IT consultant Michael Chik, who attended Saturday's parade, said Hong Kong could follow Taiwan's lead but the government was not doing anything.

"It's quite sad," the 37-year-old said, adding that the Taiwanese ruling shows gay marriage is "not against Asian values".

Rights campaigners have criticised the city's government, saying its focus on family values tends to exclude the LGBT community.

The campaign for LGBT rights in Hong Kong also continues to elicit fury from anti-gay campaigners in the city, which does not recognise gay marriage and only decriminalised homosexuality in 1991.

Last year, banking giant HSBC placed a pair of rainbow-painted lions in front of its landmark building in the heart of the city to promote support of gay rights, a move slammed as "disgusting" by opponents who rallied in protest.

© 2017 AFP