Police forces used baton and pepper-sprayed protesters on Sunday and arrested 33 people as scuffles broke out during the demonstration in the border town of Yuen Long.
Hundreds of local residents, accusing the Chinese traders of having disrupted their daily lives, rallied through Yuen Long’s main shopping area.
The so-called Chinese parallel traders travel to Hong Kong by train and purchase commodities ranging from digital products to food, sold at low prices. The traders evade taxes by crossing the border back into China.
Sunday's demonstration was the latest in a series of protests in Hong Kong's New Territories. There have been at least two other shopping protests in Honk Kong’s suburban towns this year.
In the face of public discontent, Hong Kong’s authorities earlier this week said they were considering plans to restrict the number of border-crossing Chinese traders.
Late last year, Hong Kong was the center of protests against an election law introduced by the Chinese government under which the people of Hong Kong will have to elect their next leader from a list of Beijing-vetted candidates in 2017.
Last December, police in Hong Kong cleared the last of several protest sites in the city, ending over two months of demonstrations, which in a number of occasions turned violent.
Hong Kong is a special administrative region of China. The financial hub has enjoyed substantial political autonomy since 1997, when it returned to China after about a century of British colonial rule.