Hong Kong pro-democracy protests that brought tens of thousands on to the streets last week dwindled to a few hundred on Wednesday after activist leaders agreed to talks with the government which are all but certain to go nowhere.
The student-led protests have calmed since clashes with police more than a week ago, and the number of protesters calling for universal suffrage has fallen dramatically since violent scuffles broke out at the weekend between demonstrators and pro-Beijing opponents.
Friday's talks will focus on "the basis for political development", the government said, referring to plans for a 2017 election of the chief executive, Hong Kong's leader, but it was unclear how discussions could reconcile two such polarized positions.
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"The lack of room for the government to back away from (China's) decision will make it difficult for the government to satisfy the student leaders' requested demands," Citi Group said in a research note.
China's Communist Party leaders rule Hong Kong through a "one country, two systems" formula which allows wide-ranging autonomy and freedoms not enjoyed on the mainland and specifies universal suffrage as an eventual goal.
But Beijing ruled on Aug. 31 it would vet candidates who want to run for chief executive in 2017, which the democracy activists said rendered the universal suffrage concept meaningless.
China, with separatist headaches in Tibet and Xinjiang, is concerned that calls for democracy might spread on the mainland and is unlikely to give an inch of ground after the worst unrest in the former British colony since it returned to China in 1997.
A couple of hundred protesters were camped out on Wednesday on the roads leading into the city's main government and business districts - the Central district.
The mood has seesawed over the past week between chaos and calm with an almost carnival feel as protesters played guitars and drums and danced. Police have taken a hands-off approach since Sept. 28, when they fired tear gas and pepper spray.
The Occupy Central protests have presented Beijing with one of its biggest political challenges since it crushed pro-democracy demonstrations in and around Tiananmen Square in the Chinese capital in 1989.
Retail authorities have warned that a quick solution is needed before Hong Kong suffers a fall in October sales, an important shopping month that encompasses the Golden Week holiday period, for the first time since 2003.
The Hong Kong Retail Management Association said late on Monday that sales at chain stores had dropped between 30 and 45 percent from Oct. 1-5 in Central and neighboring Admiralty, as well as in the nearby shopping district of Causeway Bay.
Sales fell just as sharply across the harbour in Kowloon's gritty district of Mong Kok, scene of some of the most violent clashes between protesters and police and pro-Beijing groups.
The protests have helped wipe close to $50 billion off the value of shares on the Hong Kong stock exchange. The World Bank has said the protests were hurting Hong Kong's economy, although the impact on China was limited.