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The best and worst outcomes for the Hong Kong protesters

How does this end?

That question has been applied to many intractable scenarios, and it’s what global investors want to know as pro-democracy protests in Hong Kong continue with no end in sight. In some ways, the protests seem to be intensifying: Some demonstrators have threatened to take over government buildings if Hong Kong’s top government official doesn’t resign. The protests have disrupted many local businesses, with Hong Kong’s Hang Seng stock index down nearly 4% since the protests began a week ago.

Threats and ultimatums raise the specter of violent confrontations, recalling the 1989 Tiananmen Square massacres. But it may be far more likely that the protests lose steam and business eventually returns to normal in China’s financial capital. “If this type of disruption goes on, I think local residents are going to feel their daily life is being impeded and they will want this movement to stop,” Fred Teng, chairman of the nonprofit Hong Kong Association of New York, tells me in the video above.

Americans seeing footage of the protests on TV may feel they’re watching something novel, since China, after all, is governed by a Communist Party with little tolerance for dissent. Hong Kong, however, is different, with a stronger tradition of openness dating to its days as a British colony. “In Hong Kong, freedom of speech, freedom of assembly, is always allowed,” says Teng, who spent his childhood in Hong Kong and is now a U.S. citizen. “The only difference is every time in the past, they’ve gotten a permit with police, just like in the U.S. This time the organizers didn’t.”

Since protesters blocking traffic are technically violating the law, Hong Kong and Chinese authorities have all the pretext they need for a crackdown. But most experts believe it would be far better for Chinese authorities to show tolerance and resist heavy-handed tactics such as the recent police use of pepper spray and tear gas, which may do more to unify protesters and generate support for them than to disrupt the movement.

If Chinese authorities are clever, they may back off and let the protesters holler until they’re hoarse. That’s basically what New York City officials did during the Occupy Wall Street protests in 2011, which went on for nearly two months before police ejected demonstrators from a public park they had taken over illegally. The move brought criticism, but by then many Americans had begun to view the protests as aimless and needlessly disruptive; the outcry over the roundup of demonstrators quickly died down.

Chinese officials can do something similar if they want to. “The demonstrations can go on and on and on,” says Teng. The risk, however, is that activists elsewhere in China might begin their own protests, making the Communist government look weak in the face of a national movement. Beijing is surely eager to avoid that sort of development.

A third way for the protests to end is some kind of compromise that lets the protesters go home feeling they’ve accomplished something. It’s highly unlikely Beijing will agree to their core demand — truly democratic elections in Hong Kong, with no control by national authorities. But a proxy deal might be possible if protesters begin to feel they’ve made their point and the government is willing to give a little. If there’s no such deal and Beijing loses patience, then a crackdown becomes more likely, as do convulsions in financial markets. The quickest ending is probably the worst.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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