Communist Party authorities have sent a clear warning that forceful intervention is possible to quell the violence.
Violence in Hong Kong's anti-government protests is becoming more serious but the government is confident it can handle the crisis itself, the city's embattled leader said on Tuesday.
Carrie Lam was speaking in public for the first time since demonstrations escalated on Sunday, when police fired water cannon and volleys of tear gas in running battles with protesters who threw bricks and petrol bombs.
The Chinese-ruled city is grappling with its biggest political crisis since its handover to Beijing in 1997 and Communist Party authorities have sent a clear warning that forceful intervention is possible to quell the violence.
Hong Kong's Beijing-backed leader said she would not give up on building a platform for dialogue, although the time was not right to set up an independent inquiry into the crisis, one of the cornerstone demands of protesters.
"We should prepare for reconciliation in society by communicating with different people ... We want to put an end to the chaotic situation in Hong Kong," Lam said, adding she did not believe her government had lost control.
More demonstrations are planned over coming days and weeks, posing a direct challenge to authorities in Beijing, who are eager to quell the unrest ahead of the 70th anniversary of the founding of the People's Republic of China on Oct. 1.
The unrest escalated in mid-June over a now-suspended extradition bill that would have allowed Hong Kong people to be sent to mainland China for trial in courts controlled by the Communist Party.
But the demonstrations have evolved over 12 straight weeks into a broad demand for greater democracy under the "one country, two systems" formula following the handover to China by colonial ruler Britain in 1997.
Authorities have so far refused to meet any of the protesters’ five key demands: withdraw the extradition bill, set up an independent inquiry into the protests and perceived police brutality, stop describing the protests as "rioting", waive charges against those arrested, and resume political reform.
The government said on Monday illegal violence was pushing Hong Kong to the brink of great danger after weekend clashes that included the first gun-shot and the arrest of 86 people, the youngest just 12.
The protests come as Hong Kong is facing its first recession in a decade, with all its growth pillars under significant stress. Rating agencies have raised long-term questions over the quality of the city's governance.
The unrest has sent jitters across the Asian financial centre, prompting some Hong Kong tycoons to start moving personal wealth offshore and residents to look for homes elsewhere.
Jamie Mi, partner at Melbourne-based Kay & Burton, said the real estate agency was receiving about one-third more enquiries from Hong Kong buyers than usual, with most buyers targeting high-end properties priced above A$5 million ($3.4 million).
Juwai.com, China's largest international property website, recorded a 50% increase in Hong Kong enquiries for Australian properties in the past quarter.