This is the problem where Beijing does care about its image to the enemy. That's how the enemy takes advantage. If Beijing wants to be respected by the West... then surrender... unconditionally. That's the only way to get their respect.
It's true that Beijing does care about its image, but it has nothing to do with "respect"; it's something far more pragmatic: money. Hong Kong is still a useful conduit, I'm sorry to say, and if Beijing goes in guns blazing then there will be Western backlash. Even if European elites want to keep doing business with China, their own populations of howling baboons will force their hand to cut ties and impose sanctions. More importantly, 1C2S gives Beijing an excellent firewall from events happening in Hong Kong (which is why President Xi reaffirmed it in his National Day address) and the perfect excuse to dump the problem in the SAR government's lap. The costs of direct intervention exceed the benefits at the present time, it's as simple as that. Unless something drastically changes, that's the way the situation will evolve.
Emotionally, nothing would make me happier than to see their corpses stacked higher than the Himalayas, but this isn't about feeling good. It's a nasty problem and Beijing is managing it with an ugly kluge, but sometimes there are just no better options. Long term, China will re-route the financial piping around Hong Kong which would naturally strangle the city.
