Hong Kong leader refuses to resign but offers talks with protesters

Hong Kong leader Leung Chun-ying agreed on Friday to open talks with pro-democracy protesters but he and his Chinese government backers made clear that they would not back down in the face of the city's worst unrest in decades.

Leung refused to bow to an ultimatum from protesters to resign and repeated police warnings of serious consequences should they try to block off or occupy government buildings.

He told reporters just minutes before the ultimatum expired at midnight that Chief Secretary Carrie Lam would meet students soon to discuss political reforms, but gave no timeframe.

Tens of thousands have taken to Hong Kong's streets in the past week to demand full democracy, including a free voting system when they come to choose a new leader in 2017. However, numbers dwindled considerably at one protest site as Hong Kong people returned to work after a two-day holiday.

The protests have ebbed and flowed since last Sunday when police used pepper spray, tear gas and baton charges to break up the demonstrations, which are the biggest since the former British colony was handed back to Chinese rule in 1997.

China rules Hong Kong through a "one country, two systems" formula underpinned by a "Basic Law", which accords Hong Kong some autonomy and freedoms not enjoyed on the mainland and has universal suffrage as an eventual goal.

Beijing, however, decreed on August 31 it would vet candidates who want to run for chief executive at an election in 2017, angering democracy activists who took to the streets.

While Leung made an apparent concession by offering talks, Beijing restated its resolute opposition to the protests and a completely free vote in Hong Kong.

"For a few consecutive days, some people have been making trouble in Hong Kong, stirring up illegal assemblies in the name of seeking 'real universal suffrage'," China's official People's Daily said in a front-page commentary on Friday.

"Such acts have outrightly violated the Basic Law, Hong Kong's law, as well as the principle of the rule of law, and they are doomed to fail," the commentary warned.

Thousands of protesters had gathered outside Leung's office in central Hong Kong in anticipation of the ultimatum, but were disappointed when Leung stood firm.

Their numbers fell to hundreds as the sun rose on Friday and Hong Kongers prepared to go back to work after a two-day holiday. Protesters prevented two trucks from delivering supplies for about 100 police guarding Leung's office.

The stand-off outside Leung's office was peaceful but police condemned protesters for blocking food, water and medical supplies for officers and said in a statement they would take "appropriate measures" if they did not stop immediately.

In a statement, Leung's office also described the blockade of pedestrian pathways outside as "serious illegal" activity.

There were also signs of tension between the protesters and government employees trying to go back to work.

"I need to go to work. I'm a cleaner. Why do you have to block me from going to work?" said one woman as she quarrelled with protesters. "You don't need to earn a living but I do."

The government later declared its main office building closed for the day, with workers going to secondary sites.

Other protest sites in the Central business district and in the densely packed Mong Kok residential district were quiet. The number of protesters in the luxury shopping area of Causeway Bay fell sharply to about 100, with police removing barricades that demonstrators had placed across some streets.

Protesters there called to each other to say they should regroup in the area around Leung's office later on Friday.

DISAPPOINTMENT, SUSPICION

Some protesters suspect authorities are trying to buy time with their offer of talks to wait for numbers to dwindle.

"I hope the chief executive can stop siding with Beijing and do one thing for Hong Kong people," Martin Lee, founding chairman of Hong Kong's Democratic Party, told protesters.

"He should go to Beijing and say 'I cannot really continue to run this place unless you give Hong Kong people what they deserve and what you have promised."

The protests so far have been an amalgam of students, activists from the "Occupy" movement and ordinary Hong Kongers. They have come together under the banner of "Umbrella Revolution", so called because many of them used umbrellas to ward off pepper spray used by police on Sunday.

Some now fear that the lack of any clear leadership could prove to be a telling weakness for the disparate groups.

"We are worrying the movement will lose steam without a clear leader leading. We are worrying that people will go back to normal like nothing has happened," said protester Kenneth Mok, 22, a civil engineering graduate.

Benny Tai, who began the "Occupy Central" movement, said there were different groups but their goals were the same. Tai also welcomed the chance for talks with chief secretary Lam.

"We hope that we all can make use of this space to have a good dialogue to solve the current situation," Tai told reporters near Leung's headquarters.

Asia trading hub at a standstill

The protests have brought parts of the Asian trading hub to a standstill. ANZ economists sent out a research note on Friday estimating that the protests may have cost retailers HK$2.2 billion ($283.5 million) so far, with retailers of luxury goods, cosmetics and consumer durables hardest hit.

The "Occupy Central" movement presents one of the biggest political challenges for Beijing since it violently crushed pro-democracy protests in and around Tiananmen Square in 1989.

Cracking down too hard could shake confidence in market-driven Hong Kong, which has a separate legal system from the rest of the country, but not reacting firmly enough could embolden dissidents in mainland China.

Hong Kong's benchmark share index, the Hang Seng, plunged 7.3 per cent in September, in part because of the uncertainty surrounding the protests. It was down 1 percent on Friday, echoing falls in global markets. Spooked by the protests, some banks and other financial firms have begun moving staff to back-up premises on the outskirts of the city.