The Chinese government and ruling Communist Party may not be managing its political problems with Hong Kong in the worst possible way—but they have come close. As a result, one of the world’s leading financial centers has its central business district overrun with angry protesters whose demonstration will almost certainly come to an unhappy end, perhaps a violent one.

And it was all avoidable.

However, preventing a sad outcome and continuing discontent would require China’s state and party leaders to display a degree of tolerance, flexibility and common sense that, for the time being at least, seems clearly beyond their capabilities. Instead, these leaders, who equate compromise with weakness, are determined to gain total victory over all who object to their policies or might pose an even remote threat to their one-party rule. The supine Hong Kong government, rather than act as a useful intermediary between demands of local people and desires of the central regime, has simply gone along with whatever Beijing wishes—an attitude that feeds popular resentment and makes peaceful resolution increasingly difficult.

The immediate issues fueling the protests concern how the Hong Kong people will choose their leaders and be governed in the years just ahead. Underlying that, however, is a rising discontent—especially among educated youth—about career prospects and economic fairness in the city where they live. Many believe (and statistics confirm) that the gap between rich and poor has become one of the world’s most extreme. They sense that social mobility has decreased sharply, with the best opportunities reserved for friends and families of the already affluent—plus a layer of talented mainlanders imported by companies who hope this will bring profitable connections to influential decision makers. Hong Kong residents also complain that the forty-one million (yearly) mainland visitors drive up overall housing prices by buying costly real estate, mob shopping malls and generally make life for ordinary people more expensive and less comfortable. This fosters a sense of common grievance about their fellow Chinese from across the border, perhaps more emotional than rational.

In particular, these resentments have driven many university students—the backbone of this week’s demonstrations—to favor political activism not usually seen in Hong Kong.

The declared cause of the protests is a recent Beijing decision to let the next Chief Executive (head of the Hong Kong government) be chosen by universal suffrage in the next election; this was promised decades ago as an “eventual” goal when terms of the 1997 handover of sovereignty from Great Britain to China were negotiated, though Beijing has stalled ever since. If adopted for the scheduled 2017 ballot, it would mark the first time Hong Kong voters could choose any senior government official (though half of the seventy-person legislature is now elected by popular vote); British colonialists did little to advance democratic politics during their 150-year tenure.

But Beijing added provisos that have riled pro-democrats in Hong Kong. It said only “two or three” candidates could be on the ballot and, more crucially, all must be approved in advance by a 1200-member Election Committee dominated by local worthies who reliably vote the Communist Party line. These restrictions on commonly accepted democratic procedures, in the context of growing unhappiness about both mainland influence and local conditions, have brought tens of thousands of protesters into the streets—causing many bank branches, businesses and schools to close their doors as university students boycott classes.

Yet the demonstrations have no overall leadership and so far have few uniformly accepted or at least achievable objectives. One student federation has listed four goals, including the resignation of current and extremely unpopular Chief Executive CY Leung and certain other officials, plus a Beijing retraction of its decision about the 2017 election so non-vetted candidates also could run. But no coordinating committee exists to formally adopt any list and just where the protests go from here remains uncertain, though the demand that Leung must go is gaining traction. The street action so far has been mostly peaceful—occasionally festive—with police now showing restraint after one long night of using pepper spray and tear gas against demonstrators armed only with colorful umbrellas and goggles to ward off their effects.

It all began last week when several hundred agitated students gathered near the government’s new headquarters to demand a more democratic voting system. Some heavy-handed police tactics brought out other citizens in sympathy, eventually forcing the main pro-democratic protest organization—called Occupy Central with Love and Peace—to move up its own schedule and join the fray. This gives the whole affair an ad hoc quality; the police have retreated and shed their riot gear, while most demonstrators have ignored official appeals that they disperse.

This leaves Beijing in a quandary. It could activate the seldom-seen army garrison based in Hong Kong but that would be the worst possible solution, reviving memories worldwide of its brutal 1989 crushing of the Tiananmen protests and flattening a Hong Kong economy still important to the mainland. Yet Chinese leaders clearly fear that political concessions would be seen as weakness, perhaps encouraging similar mainland protests spurred by widespread cynicism about corrupt and self-serving officials. This already has prompted President Xi Jinping to crack down on dissent and all forms of media to keep things from getting worse.

Yet there still could be a way out if Beijing can find some flexibility. Hong Kong’s de facto constitution, called the Basic Law, states specifically that an Election Committee must screen candidates for the Chief Executive post; chances of dropping that proviso are probably nil. But the law also says this committee should be “broadly representative”, which it is not. With enough political will, it could be revised to represent the population more accurately, while the Basic Law also permits other tinkering with election procedures. The result could be a system that would keep an Election Committee in place as Beijing insists and the law demands, however much the protesters might object. But a revised committee and other adjusted rules also could open the way for a pro-democratic candidate to get on the ballot, as the demonstrators seek. In fact, Beijing could have done this long ago and avoided the entire protest campaign that it finds so repugnant.

So far that is a risk Beijing won’t take. It’s afraid that compromise in Hong Kong could encourage similar protests across China, something it won’t tolerate. Yet Hong Kong voters, who know their livelihoods require close economic links to the mainland, almost certainly would never elect anyone who favors a fractious relationship with China. Theirs is not an independence, nor a separatist movement, but one seeking the “high degree of autonomy” promised by Beijing. They clearly don’t want hostile relations with the rest of the nation.

If the Occupy Central organizers—mostly academics and professionals who want international standards of governance in place—step up their campaign, they won’t get any help from Hong Kong’s business leaders. The tycoon class benefits enormously from the special conditions that prevail in Hong Kong, but aren’t allowed on the mainland. These include an honest legal system based on British common law, a convertible currency, the free flow of information and an unimpeded right to travel, among other things. Yet its members oppose more democracy for fear it might bring in a populist government that would raise taxes or impose unwanted anti-cartel or other regulations. And they believe kowtowing to party leaders aids their substantial mainland business ventures. Communist officials appreciate this support and give protecting Hong Kong tycoons a high priority.

In fact, President Xi recently spent nearly two hours conferring with some of the most prominent billionaires and other loyalists. None of this seventy-person delegation—pleased to have their egos stroked and their pocketbooks protected—apparently objected when Xi told them his government might soon play a more active role in directing Hong Kong affairs. The group was led by former Chief Executive CH Tung, who resigned a decade ago for “health” reasons following a mass protest against his unpopular administration; he is now a vice chairman of a prestigious but powerless Chinese political body that makes him an official propagandist for Beijing, especially in the United States where he spent several years. (To be fair, many tycoons say their support reflects patriotism. Like President Xi, they consider the Chinese nation and the ruling party to be one and the same.)

Where all this leads remains uncertain. Chief  Executive Leung has said he won’t resign and warned that Beijing won’t compromise. He has told demonstrators to go home, which they insist they won’t do. Occupy Central leaders, who don’t control all the street action, have promised to step up the protests but haven’t said how. There are no signs of compromise from either side and chances of a violent conclusion remain all too possible. In the back of everyone’s mind are memories of the bloody Tiananmen showdown; none want that for Hong Kong, but the chances of a forceful ending are high unless the parties find a peaceful resolution before long. However the protests conclude, it’s not likely that the pro-democrats will get much of what they seek.