China's Xi Jinping cannot make any serious concessions to Hong Kong's democracy movement. The Umbrella Revolution spreading from the affluent Island to the poorer quarters of Kowloon is an existential threat to the Chinese Communist Party.

"If he were to give way, it would set off contagion across the mainland," said George Walden, a veteran British diplomat who survived the Cultural Revolution inside China and later negotiated Hong Kong's future with Deng Xiaoping. Beijing has already blocked all images of the protests in the Chinese media as a political quarantine measure.

"Xi Jinping has a horror of what happened to the Communist Party in the Soviet Union. If things get seriously out of hand, he may mobilise 'patriotic compatriots' (Beijing-controlled agitators) on the streets. In the end he will bring out the troops, if he has to," he said.

President Xi will surely play for time, hoping the protests will fizzle as Hong Kong's business elites try to rein in their unruly children, or try to buy them off quietly. But he cannot yield. "The authorities see this as a matter of life and death, a fuse that can take down their world," said Zhao Chu, a Chinese columnist and star on Weibo - China's Twitter.

Whether it escalates to full coercion depends on whether Hong Kong's poor join the students in serious numbers. We know from the "Tiananmen Papers" that Deng Xiaoping was willing to let the democracy protests run for a while in 1989, until workers threatened a general strike and set up their own blockades. The real massacre was at Beijing's Gongzhufen and Muxidi crossroads, three miles west of Tiananmen Square, where the students were gathered.

"The next few days are key. It will determine which way the silent majority goes," said Jonathan Fenby, a former editor of the South China Morning Post, now at Trusted Sources. "Most of Hong Kong's 7m people prize stability. They may think these militant youths are trouble-makers, but they don't like being pushed around by Beijing either."

David Fuller's view

Here is a PDF of Ambrose Evans-Pritchard's article.

It was easy to misread Xi Jinping’s temperament when he first emerged as China’s new leader in November 2012.  A quiet, frequently smiling and slightly plump man, he seemed less totalitarian and far more affable than any ruler since Deng Xiaoping.  However, this early profile by Malcolm Moore of The Telegraph was insightful.  

I would not second guess George Walden’s assessment of Xi above.  Assuming he is correct, Hong Kong may have little to gain, at least at this time, by extending the protests.  A bloody dispute would have tragic consequences.  It would also weaken Hong Kong’s economy far more than we have seen recently.  Hong Kong will be in a better long-term bargaining position if its economy prospers.  

Hong Kong and China’s mainland stock markets reopen next week, and will be revealing.  Meanwhile, their valuations remain low on both a relative and absolute basis.