For the past couple of years, we’ve been watching from afar as the democratic cornerstones of Hong Kong society eroded. After the British turned over the city to the Chinese Communist Party, things began going downhill quickly. We also watched as a pro-democracy movement swelled, with leaders arising to organize protests and demand that China sticks to its agreement to leave Hong Kong’s democratic traditions intact for a reasonable period of adjustment. Now, most of those leaders are in prison, under house arrest, or simply missing. The government, under Beijing frontperson, Leader Carrie Lam, has been restructured to severely dilute the influence of the opposition party.

Personally, I’d been waiting for the Chinese tanks and troops to roll into the city and just start setting up mass reeducation camps. That, I assumed, would be the death knell for any hope of reform. The lights would be going out when democracy finally collapsed. But there is a second factor that may spell doom taking place without the benefit of tanks and troops flooding the streets. Private businesses are leaving the city already, with more looking to quickly consider their options to do the same. The failure of democracy will be terrible, but the failure of capitalism may be arriving first. And as anyone who has studied American society will tell you, capitalism and democracy go hand in hand, and one doesn’t survive long without the other. (Wall Street Journal, subscription required)

Apprehensive about Hong Kong’s future as the best place to do business in China and beyond, multinational firms are pulling up stakes, adding to uncertainty about the outlook for one of the world’s premier commercial cities.

Buffeted by political upheaval, an authoritarian crackdown by mainland China and the pandemic, global companies and professionals are heading to rival business cities such as Singapore, and to Shanghai, the Chinese commercial hub some see as a better place to profit from the nation’s vast economy.

Ever since the U.K. returned Hong Kong to China in 1997, the city’s leaders have billed the semiautonomous territory as “Asia’s World City”—an open society with a British-style legal system where foreign professionals could feel at home. Today, Hong Kong is becoming less open and more fused to the mainland economy.

Multiple banks and financial institutions have either already begun the process of evacuating in favor of Singapore or Shanghai or are exploring the steps required to do so. The WSJ reports that a recent survey of members of the American Chamber of Commerce in Hong Kong showed that nearly half (43%) were in the process of leaving or making plans to do so.

Signs of the exodus are everywhere. The city currently lists the highest rate of commercial real estate vacancies in nearly two decades, with most of those entities having had to surrender their property to the state. International companies accounted for roughly 80% of the vacancies.

The parent company of Timberland and the North Face recently announced they were leaving Hong Kong after 25 years and taking their 900 person workforce with them. Sony Interactive Entertainment has already begun moving its regional executive offices.

This is a very sad thing to watch playing out like some sort of slow-motion dystopian film. Not all that long ago, Hong Kong was a beacon of capitalism and economic opportunity, as well as offering fairly robust personal rights to free speech. Now that the CCP is clamping down, it is decaying in the same way that everything eventually falls apart after it’s infected by true communism. Beijing puppets such as Carrie Lam will be rewarded for their loyalty to the party over the people and no doubt she will be able to keep her station and her privileges after the collapse is complete.

Businesses that are viewed as being useful to the central party, such as the remaining banking and investment sector players, will be kept around. Those deemed less useful or disloyal will mysteriously collapse at some point. For such a market-oriented society that’s suddenly falling under this type of shadow, the future seems clear. The exodus of capitalism will spell the end of the former wonders of Hong Kong.