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In the end, warnings from Beijing about sowing chaos did not scare the people of Hong Kong. Rather, they were emboldened.

On July 1, hundreds of thousands of residents marched through the streets of the territory in one of the largest displays of defiance since the city's reversion to Chinese sovereignty in 1997. The march came days after nearly 800,000 people had taken part in a controversial mock referendum, whose results showed that Hong Kongers want more say in the choosing of their chief executive. Chinese leaders declared the poll illegal.

The protests are part of a growing confrontation about the future of Hong Kong, but they also are where two visions for the future of China collide. Demonstrators want an expansion of the former British territory's social and political freedoms, which were retained under the handover agreement. Chinese leaders do not want full, Western-style democracy in Hong Kong because they view such freedoms as an unwelcome example for China. They have taken a more aggressive line on Hong Kong as President Xi Jinping attempts to consolidate his power at home and China's influence in the region.

The raucous but nonviolent crowd — which organizers said numbered 510,000, the police far fewer — streamed through the Central District, Hong Kong's business hub, singing protest songs and brandishing anti-government placards. The protesters vented frustration at what they see as increasing interference from Beijing, epitomized by a "white paper" issued by the Chinese government on June 10. It asserted that the autonomy granted to Hong Kong in 1997 was entirely dependent on China's leaders. In the early morning of July 2, a sit-in outside government offices was broken up by police, who detained hundreds of protesters.

The Basic Law, under which Hong Kong has been governed since 1997, describes the election of the chief executive and legislative council by universal suffrage as the "ultimate aim," and the government is due, after years of delay, to present a democratic-reform plan later this year. Candidates for chief executive are currently chosen by a mostly pro-Beijing committee of 1,200 people, who then also elect the leader. Pro­democracy groups want the freedom to nominate any candidate they like. If authorities do not give some ground, activists have warned, they may stage more disruptive protests under the banner of a group called Occupy Central.

Some of the city's worried business elites are urging restraint. On June 27, the local offices of the "big four" accountancy firms placed an advertisement in newspapers registering concerns about Occupy Central. On June 30, anonymous employees of the firms placed their own newspaper advertisement saying that they did not share their bosses' views.

In Beijing, officials and newspapers warn darkly of a foreign conspiracy to destabilize Hong Kong. They make much, for example, of two prodemocracy leaders, Anson Chan and Martin Lee, meeting America's vice president, Joe Biden, in the White House in April.

Chan, who was Hong Kong's leading civil servant at the end of British rule and during the first years after the handover, scoffs at the notion of foreign meddling. She argues that most countries are falling over themselves to do business with China, not conspire against it. She notes the recent visit to London of Chinese prime minister Li Keqiang, and his signing of a series of investment agreements.

Chan says it is the Chinese government's stance that has driven people to activism. On June 27, more than 1,000 Hong Kong lawyers marched in defense of judicial independence, which they view as under threat. One said it was not the type of thing his colleagues would typically do, but "we've had enough of this."

The intensity of such feelings in Hong Kong is reminiscent of 2003, when 500,000 people marched in opposition to the Chinese government's attempt to push through a tough anti-subversion law. Chinese leaders were stunned by such opposition and changed their approach, seeking to embed their views more deeply in Hong Kong society via business interests and media. That strategy has largely worked, but in other ways the growing influence of the mainland has become a rallying point.

Mainland tourists have flocked to Hong Kong. Wealthy investors bid up already-expensive property to prices beyond the reach of many Hong Kongers. Pro-Beijing parts of the government want to encourage "patriotic education" in schools, and the mainland's liaison office in Hong Kong has played an increasingly influential role.

All this has made residents uneasy, leading more ordinary Hong Kongers, especially the young, to take a more political stance. Many of the July 1 protesters were students. Nelly Kwong, a 21-year-old nursing student, was taking part in her first July 1 protest. "We are not afraid," she said. "We are fighting for our future."

Copyright 2013 The Economist Newspaper Limited, London. All Rights Reserved. Reprinted with permission.