For the first time since Beijing took over the former British colony in 1997, the Chinese military held a parade of troops and armoured vehicles through the streets of Hong Kong on August 1. The spectacle was nominally organised to mark the 77th anniversary of the founding of Peoples Liberation Army (PLA) but its purpose was more sinister—a show of force designed to demonstrate that Beijing was firmly in control.

About 3,000 soldiers—nine infantry columns and two armoured columns—were involved. Twelve military helicopters flew overhead while the Chinese national and army anthems blared out in order to create an atmosphere of patriotic fervour. Among the audience were high-ranking officials of the Hong Kong government, including Chief Executive Tung Chee-hwa.

Wang Jitang, the PLA commander in Hong Kong, declared that the military parade “displays the army’s strength and determination to maintain Hong Kong’s prosperity and stability”. He also emphasised the PLA would “actively support the Special Administrative Zone government headed by Mr Tung to implement its policy according to the law”.

The message came across loud and clear: if need be, the PLA will intervene in Hong Kong to head off political unrest and prop up the Tung administration. The timing of the parade was blatantly political. After all, no Chinese troops marched through the streets of Hong Kong two years ago to mark the more significant 75th anniversary of the PLA’s founding.

The turnout to watch the parade was estimated at 27,000—a tiny fraction of the hundreds of thousands who joined the Hong Kong protest on July 1 to demand democratic and social reforms. Moreover, while many of those who observed the military parade last week had been prodded and cajoled into attending, those who participated in the protest did so in defiance of official attempts at intimidation.

On July 1 last year, a huge rally of half a million people gathered to oppose the Tung government’s draconian anti-subversion bill. The demonstration provoked rifts in the Hong Kong administration and eventually forced it to modify, then finally withdraw, the legislation. July 1—originally a public holiday to mark the anniversary of Hong Kong’s handover to Beijing—has now become a day of political protest.

This year’s demonstration was called in response to the decision of the Standing Committee of the National People’s Congress in Beijing in April to rule out any direct election of the post of Chief Executive in 2007 and for the entire Legislative Council in 2008. The attendance was estimated at between 200,000 and 500,000, despite attempts by opposition legislators to reach a compromise with Beijing.

Significantly, a number of Democratic Party politicians accepted invitations to attend the military parade last weekend. In Hong Kong, the Chinese military is associated with the brutal crackdown on anti-government protestors in Tiananmen Square in June 1989. The massacre provoked a massive protest demonstration by more than one million people in Hong Kong and the anniversary continues to be marked each year by a rally.

Democratic Party chairman Yeung Sum declared that he had been “impressed” by the PLA’s military display. He told the media that he wanted “to sit down with central government officials to talk about residents’ concerns, such as political reform”. He expressed the hope that opposition legislators would be invited to Beijing for discussions after the Legislative Council elections in September.

To date Beijing has shunned any dialogue with Democratic Party leaders, a number of whom are banned from travelling to China. The Democratic Party, however, is more than willing to reach an accommodation with the Chinese leadership in order to head off social and political unrest. Yeung and others expressed their dissatisfaction at not being able to meet with Beijing officials or speak at the military parade.

Beijing is clearly worried about the outcome of the Legislative Council elections. In district-level elections last November, pro-Beijing parties were defeated in a massive landslide. The Democratic Party and its allies expect another easy win in next month’s contest for half of the 60 Legislative Council seats. While pro-Beijing appointees will fill the remainder of the seats, Chinese authorities are concerned that political unrest in Hong Kong will spill over onto the mainland.

Under the agreement between Britain and China, the Hong Kong special administrative zone was to operate under the principle of “one country, two systems” and to move toward a fully representative form of government. But any granting of even limited democratic rights in Hong Kong will only fuel demands for similar reforms elsewhere in China.

Following last year’s protest, the Chinese authorities allowed residents from some 20 Chinese cities to visit Hong Kong as tourists to boost its depressed economy and create more jobs. But the measure has created political problems as thousands of mainland visitors have not only seen the tourist sites but spoken to local residents and even taken part in protest rallies.

At the same time, the growing use of mobile phones and the Internet has made it increasingly difficult for the Beijing’s propaganda machine to retain its monopoly. News of political unrest in Hong Kong has filtered into China and emboldened protesters there to voice their grievances over rampant official corruption, growing poverty and employment, and the lack of basic democratic rights.

An article in the New York Times, for example, warned on August 1 that despite being “the world’s fastest-growing economy,” the social divide between rich and poor and between urban areas and rural provinces, is making China one of the world’s “most unequal societies.”

“The countryside simmers with unrest. Farmers flock to cities to find work. The poor demand social, economic and political benefits that the Communist Party has been reluctant to deliver... Even in a country that ruthlessly punishes dissent, some three million people took part in protests last year, police data show. Most were farmers, laid off workers and victims of official corruption, who blocked roads, swarmed government offices, even immolated themselves in Tiananmen Square in Beijing to demand social justice.”

The article focused on the frustration felt among hundreds of millions of rural peasants—traditionally a “bellwether” of social stability. Not only are they suffering under heavy taxation and official corruption, but are treated as second-class citizen in cities where they are denied the rights of residents and access to basic services.

It also noted that matters were getting worse. “This year, the number of destitute poor, which China classifies as those earning less than $75 a year, increased for the first time in 25 years. The government estimates that the number of people in this lowest stratum grew by 800,000, to 85 million people, even as the economy grew by a robust 9 percent.”

The New York Times does not, of course, draw the obvious connection: as in the US, the economic growth that has enriched a tiny layer of the Chinese elite has been at the expense of the vast majority. And as elsewhere in the world, the program of market reform and economic restructuring is deeply popular in China.

Noting the recent surprise election defeat of the Bharatiya Janata Party (BJP) in India, Chen Xiwen, an adviser to Premier Wen Jiabao, told the newspaper: “India does show that if this problem [of growing social inequality] cannot be managed rationally, it could become a danger”.

The response of the Stalinist bureaucracy to protest and discontent in China has been repression. It will be no different in Hong Kong. Last weekend’s military parade was meant as a warning that continued opposition to Beijing and demands for democratic rights will be met with police state methods.