Rallies in Hong Kong took place today in defense of Snowden and to prevent his extradition.
It's been my opinion that a quick and easy way for China to embarrass American would be to grant asylum, but whether or not that happens remains to be seen. This seems like an unlikely scenario, however Hong Kong can separately provide asylum, and China cannot intervene. Whether any party agrees to asylum or extradition is, of course, speculation at this point.
According to Hong Kong law, if the U.S. was to request the city to surrender Snowden, Beijing could step in only if its defence or foreign affairs would be significantly affected by Hong Kong's actions. Beijing is not allowed to interfere with any asylum proceedings.