Hong Kong is at a gentle boil. As of this writing, tens of thousands of students have been politely demonstrating, calling for the Beijing-appointed chief executive, C.Y. Leung, to resign and be replaced through free elections.

Politics don’t often divert Hong Kong’s manic obsession with business and finance, but the upsurge of youthful discontent has presented China with one of its biggest popular challenges since the 1989 Tiananmen uprising – which China insists never happened.

So far, China’s Communist Party and its tough new boss, Xi Jinping, have stood back and taken no serious action to curb the peaceful demonstrations. Now, however, protest leaders are threatening to seize government buildings unless Beijing drops plans to select Hong Kong’s new government in 2017. This is a direct challenge to Beijing’s national authority.

Considering that Beijing is ruthlessly crushing protests by Uighur Muslims in its strategic westernmost province of Xinjiang, Hong Kong’s demands for true autonomy and self-rule come at a particularly difficult time for the Communist Party which is feting its 65th anniversary of taking over China.

Western media, often hostile to China, is portraying the uprising as a struggle by democrats against party dictatorship. Reality is rather more complex. Hong Kong never had democracy under British Imperial rule: it was run by an autocratic British colonial governor – and run pretty well.

When China assumed control in 1997 of long-lost Hong Kong, it vowed to maintain its special self-governing status for 50 years, except for defense and foreign affairs. China appointed the former colony’s chief executive, but locals were given some latitude.

This “one state, two systems’ worked well. But a new generation wants democracy and real political power. Beijing is unlikely to ever accept such a development. Hong Kong is isolated from the rest of China and self-contained, but Beijing fears the internet and social media will spread the virus of democracy – even chaos – to the rest of China.

China’s leadership has a deep-seated fear of uprisings. Though largely unknown to westerners, China endured a cataclysmic revolt from 1850 to the late 1860’s, the Taiping Rebellion. A nobody named Hong proclaimed himself the younger brother of Jesus Christ and launched a peasant rebellion against the doddering Manchu Qing dynasty that eventually cost over 20 million lives. Western forces led by Gen. Charles Gordon – henceforth known as “Chinese” Gordon – finally crushed the Taiping Heavenly Army.

Beijing’s deep fear of today’s eccentric Falun Gong religious movement reflects the lasting danger of another Taping-style uprising. Gordon went on to fight another religious-nationalist movement, the Dervishes of Sudan. He was killed in Khartoum.

The authorities in Beijing are also on the lookout for western machinations in Hong Kong and Xinjiang. A number of US-financed non-government organizations (NGO’s) operate in Hong Kong. Similar groups, notably the US National Endowment for Democracy, were involved in attempts to overthrow the governments of Georgia, Ukraine, Iran and Russia. They very effectively used social media to stir up discontent and spark large anti-government rallies.

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As a result, China’s security police are cracking down ever harder. Beijing also knows that among the so-called “terrorist camps” in Afghanistan when the US invaded in 2001 were CIA-run bases training Uighurs to fight in western China. The US public was never told about these camps. Most of the other supposed “terrorist camps” in Afghanistan were actually being used by Pakistani intelligence to train guerilla fighters for use in Indian-ruled Kashmir.

Meanwhile, Beijing is also warily watching US efforts, that began under the Bush administration, to draw India into a military alliance and further widen its huge market for arms.

Secret talks are underway between Washington and Delhi for India to take a more extensive economic and new military role in Afghanistan.

New US-supplied weapons systems have strengthened India’s military capabilities against main rival, China. At this moment, Indian and Chinese troops are in a confrontation in the high mountains of Ladakh, carefully watched by Pakistan, a close ally of China.

Indians are too smart and independent-minded to become mere native troops (sepoys) for Washington. But they will certainly use their new influence in the US to promote their power vis-à-vis China. Beijing is sharply aware of this development; it tends to overestimate the threat of the US-India strategic alliance. Chinese hardliners darkly suspect the US of planning to break up China, starting in Xinjiang and Hong Kong.

On a more prosaic level, Hong Kong and Shanghai have long been bitter rivals. Years ago, Hong Kong was the only gateway into Communist China. Today, most of China’s trade doors are open, considerably reducing Hong Kong’s commercial and financial importance. The Party has long favored more reliable Shanghai over too-westernized Hong Kong.

The slow decline of Hong Kong and rise of Shanghai and Shenzen are producing economic stress inside the former colony. Interestingly, many of Hong Kong’s original movers and shakers came originally from Shanghai.

China would be most unwise to send its army into Hong Kong at a time when it is trying to become the world’s epicenter of commerce and finance. So a backroom deal may be likely in which Beijing makes some concessions without loosing much face. Otherwise, the tempest in the Hong Kong teapot could become a political tsunami for the rest of always restless China.