The Central business district of Hong Kong. Agence France-Presse/Getty Images

HONG KONG—Hong Kong's government on Tuesday effectively rejected a demand from activists about how residents will choose their next leader, exposing a rift inside the city's pro-democracy movement and potentially setting up a confrontation with Beijing.

Kicking off a new phase in negotiations over the city's democratic development, the Hong Kong government sent a report to Beijing summarizing a five-month public consultation process on political change, which made clear that a nominating committee, rather than voters, should choose candidates for chief executive in 2017.

Hong Kong's Battle for Democracy

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Beijing has said universal suffrage in Hong Kong will begin in 2017. But the city's government has wrestled with the question of how to introduce direct elections. The public is increasingly concerned about Beijing's approach to Hong Kong, which was promised a high degree of autonomy after its handover to mainland China.

The Hong Kong government's stance had been expected, but it also highlights the increasingly divergent opinions inside Occupy Central With Love and Peace, a group that is threatening to shut down Hong Kong's main business district if voters aren't given a "genuine choice by electors."

"There has always been a split" between students and Occupy Central's leadership, said Tommy Cheung, president of the Chinese University of Hong Kong Student Union.

A faction of students is demanding civil nomination, a system that allows voters to directly nominate candidates for chief executive—and is threatening action if that demand isn't met.

"Politicians are using civil nomination for bargaining power, but for students, it's a mission," Mr. Cheung said.

Occupy Central co-organizer Benny Tai, a law professor at the University of Hong Kong, advocates a slower approach, saying protests should take a temporary back seat as the group's leaders carry out a dialogue with the Hong Kong government. He said civil disobedience isn't a foregone conclusion.

"This was not a very satisfactory report, but it will not trigger immediate action [by Occupy Central]," Mr. Tai said. "There may be other groups that want to do something to show their dissatisfaction."

Student activists have acted unilaterally before. Hundreds of them occupied a city street overnight following a big rally on July 1, even though there was no agreement among rally organizers for the sit-in. More than 500 were taken away by police by the morning.

According to polling done by Michael DeGolyer, professor of government at Hong Kong Baptist University, young people are "pretty all or nothing" on being able to directly nominate candidates for chief executive. He said by getting the group started, Mr. Tai "might have unleashed a runaway Frankenstein-ian kind of monster here."

The split within Occupy Central dates to a sparsely attended meeting of organizers on May 6, when proposals were chosen for an informal online poll on changes to the city's election rules. Among the 15 proposals considered, attendees at the meeting chose only those that demanded the more extreme positions, all of which included civil nomination. The end result was a shift to the demands of activists, in particular the students, toward plans that would almost certainly not be approved by Beijing.

"Everybody acknowledges the result on May 6th was rather unfortunate," said Anson Chan, one of Hong Kong's most prominent democrats. "It did not give the community a wide enough choice, because all three of the [winning proposals] contained civil nomination." A more moderate proposal expanding suffrage backed by Mrs. Chan received only a handful of votes.

"There may have been some hiccups there, but even if we had more moderate proposals, we would have predicted that a proposal with civil nomination would win" the online poll, Mr. Tai said.

Ultimately, almost 800,000 people participated in the poll last month, and because of the limited choices offered, the results helped embolden activists and their demands for civil nomination.

Hong Kong is part of China but maintains its own legal and financial systems. Ultimately, the decision on how Hong Kong will choose its next leader will be made by Beijing, which has been clear that it will play a role in choosing the candidates to run for chief executive.

The Hong Kong government's report will be submitted to the Standing Committee of the National People's Congress, China's highest legislative body, which is expected to deliberate on it in August. From there, another round of consultations will occur, likely finishing around the end of the year.

Following the report's publication, student organizations posted on their Facebook pages calls for more civil disobedience and threats to "strike from school and block roads" by the end of next month. "The report ignores mainstream Hong Kong opinion, which is in support of civil nomination," the Hong Kong Federation of Students said on its Facebook page.

Joshua Wong, the 17-year-old leader of Scholarism, a student organization that successfully fought the introduction a mandatory "patriotic" school curriculum advocated by Beijing, is pushing for more aggressive action, saying that students have "exhausted all moderate avenues to express their views." On Tuesday, he planned for "more civil disobedience by late August."

Write to Chester Yung at