Western governments should reduce trade with China so they are not vulnerable to bullying from Beijing, a new report citing the example of Hong Kong has warned. Beijing has been helped to achieve its political ambitions in the city by a steady rise in investment from mainland China over the past two decades, finds the report by Hong Kong Watch, an advocacy organisation. “The massive influx of red capital explains why Beijing failed to pass national security legislation in 2003 but succeeded in 2020,” said Johnny Patterson, policy director of Hong Kong Watch. “State capitalism dictates that the Communist Party’s interests are the first priority for every business.” Employees of Chinese firms in Hong Kong, for instance, were banned from participating in the pro-democracy protests that roiled the streets in 2019. Thirty-five percent of Hong Kong media outlets also have a major mainland Chinese stake, which has allowed Beijing to “shape the media environment through censorship and editorial control,” according to the report. Chinese firms were banned from taking advertisements out in Hong Kong media outlets that carried coverage deemed unfavourable by Beijing – a move that squeezed a business lifeline for news organisations.