By the early 1900s, signs of discord were beginning to show within the community. More Macanese continued to arrive in Hong Kong for a second chance in life, only to find in the British colony a pre-existing community of Macanese who were different in identity and class status. According to the census taken in 1897, fifty-five percent of Hong Kong's 2,263 ‘Portuguese’ population were local-born, while forty-one percent were from Macau. The growth of an alternative middle-class, pro-British Macanese community not only put a strain on Macanese solidarity, but it also invited old and new settlers to compete for the authority to speak for the colony's Portuguese community. This segregation is traceable in Hong Kong's geographical terrain. A considerable portion of older settlers who were more Anglicized huddled on Hong Kong Island while newcomers formed an alternative social circle across the Victoria Harbor in the Kowloon Peninsula, which only came under British control in 1860 and remained underdeveloped until the turn of the century. With more and more Macanese residents settling in the Peninsula, Kowloon emerged as a breeding ground for a succession of organizations that sought to foster a Macanese consciousness based on being less British and more Portuguese. This identity would flourish through to the interwar period and evolve into a diasporic nationalism built on anti-Anglicization and a call to unite the Macanese of Macau, Hong Kong, Shanghai and Kobe under the Salazar regime.

The pro-Portuguese Macanese cluster openly engaged in debate that helped solidify the rift.