The protesters have demanded that Hong Kong authorities stop to ignore negative effects that parallel trading has on the economy of Sheung Shui, an area close to the border with mainland China, the RTHK broadcaster has reported.
The protest started out peacefully, but later erupted into scuffles and shouting, as protesters threw umbrellas and hardhats at police, who swung bats and fired pepper spray in retaliation.
Police used pepper spray and batons to disperse the crowd as fleeing protesters scrambled over each other, with some falling to the ground.
Mainland traders have always been a source of anger among those in Hong Kong who say they have fueled inflation, driven up property prices, dodged taxes and diluted the town's identity.
(AP/AAP) Protesters took part in the rally as part of continuing protests against a proposed extradition law, and to highlight the local issue of Chinese parallel importers who buy products in Sheung Shui tax-free, and sell them for a profit in mainland China.
Many shops popular with parallel traders and mainland tourists closed in Sheung Shui, fearing being targeted by protesters.
"The police also discovered that some had planned and distributed helmets, eye masks on a large scale near the Sheung Shui MTR station".
Many interviewed by the Guardian said the millions-strong anti-extradition protests during the past month became a lightning rod for them.
The extradition bill's protests are seen as a means to defend Hong Kong's eroding democracy from the powerful Chinese Communist Party (CCP) and its allies within the pro-establishment Hong Kong government.
The two dozen marchers were mostly older veteran protesters like Leung, in contrast to the students and other young people who have been at the centre of the past month's demonstrations.
Hundreds of thousands of people took to the streets over the bill, which would have allowed people to be sent to mainland China for trial. Numerous stores were shuttered because of the protest.
A small group of protesters yesterday paraded around the Hong Kong government headquarters with a mock coffin of Hong Kong Chief Executive Carrie Lam (林鄭月娥) as activists announced more protests.
"The government, Carrie Lam, some legislators in functional constituencies are not elected by the people, so there are many escalating actions in different districts to reflect different social issues", he said.
"If political problems are not solved, social well-being issues will continue to emerge endlessly". But many say Beijing has been increasingly tightening its grip, putting Hong Kong's freedoms under threat.
A week ago, some 2,000 people took to the streets in Tuen Mun, also in the New Territories, to protest against the noise and environmental nuisance created by mainland Chinese women singing and dancing in a district park.