I'm not so sure: they wouldn't want to be seen internationally as the 800-Lb gorilla. I suspect they'll impose sanctions and start making food and other essentials hard to obtain.
Of course not, which is why they still haven't done anything drastic, even though online commenters constantly keep saying this will be Tiananmen 2.0 or that tanks will roll in soon. China has been building it's international profile, and one wrong move with HK will destroy everything.
But I do suspect that they'll be willing to sacrifice a bit of their reputation, if things seriously get out of hand, I do think they'll eventually send in the PLA, on request of the HK government. While that will quell the unrest, it will seriously damage HK's reputation as a safe financial city. Even the recent protests has caused companies to start looking at other nearby cities, Singapore probably being the nearest one.
Tourism and property sales has already taken a massive hit, and will likely put a lot of people out of business by the end of the year.
But with that said, the only thing that can resolve this is for the government to do whatever it takes to stop the protests. Like it or not, HK is quickly losing its appeal to international businesses and travelers.
China didn't have any issue with being the gorilla in cases like Tibet. So, no real reason why HK would be any different.
China hasn’t forgotten the brutal economic sanctions and political isolation it faced in the wake of Tiananmen Square back in ‘89. A similar event in HK would certainly result in sanctions, which a struggling Chinese economy can’t handle.
The contrast between political fallout from an HK crackdown vs Tibet is vast, they aren’t very comparable situations.