Chinese President Hu Jintao has been greeted by a chorus of boos from hundreds of protesters as he arrived for a banquet in London's Guildhall.
Mr Hu was welcomed by Prince and Princess Michael of Kent
Mr Hu was welcomed to the dinner by Prince and Princess Michael of Kent.
In a speech following dinner the president admitted 26m people in rural China were still living in poverty.
The banquet came on the second day of Mr Hu's state visit, which has been dogged by demonstrations over Tibet, Taiwan and China's human rights record.
Some 700 guests were invited, including London Mayor Ken Livingstone and former Cabinet minister Lord Heseltine.
Protesters gathered across the road from the Guildhall, booing the arrival of dignitaries and other guests.
As the Chinese president inspected a guard of honour from the Honourable Artillery Company in the building's forecourt, the protesters made themselves heard above the playing of regimental music.
Mr Hu, who was dressed in a dark raincoat, did not appear to be troubled by the noise.
He showed no emotion as he inspected a line of troops, and smiled briefly for photographers before entering the Guildhall.
Earlier, formally-dressed dinner guests had glanced across at the demonstrators as they made their way into the building.
Protesters were heard shouting "shame on you" as Princess Michael chatted with the Lord Mayor of the City of London, Michael Savory, ahead of the arrival of Mr Hu.
The banquet was hosted by the Lord Mayor and the Corporation of London.
After dinner, the Lord Mayor made a speech in which he praised the economic reforms in China.
He also announced offices representing the City of London would be set up in Beijing and Shanghai, and said the UK and China were "indispensable to each other".
"The United Kingdom is one of the largest direct foreign investors in China and certainly the largest EU investor in China," he said.
In his after dinner speech, Mr Hu said China had chosen the path of "peaceful development".
"China's development is characterised by peace, openness and cooperation," he said.
But he also admitted that 26m people in rural China were still living in poverty and another 21m in the cities were existing on minimum allowances.
Mr Hu said it would be "a long and uphill journey before China attains the average economic level of developed countries".
He hailed the close business relationship between the UK and China and proposed a toast to the Lord Mayor and Corporation of London.