Beijing’s Empty Capital: Politics Draining the City’s Economy ?

Poonam Sharma
Beijing, the restless former capital of ambition. Culture. High finance. Now the city is a shadow of its past. Behind the posters hailing the propaganda slogans and neat plazas, the lifeblood of the city—the people, the creativity, and commercial energy—is draining away. The change is not the result of bad luck or the company of some fleeting slump. It is the inevitable consequence of decades of politically and economically self-inflicted wounds.

From Fashion Capital to Empty Streets

At its peak, Beijing’s nightlife precincts were packed with models, venture capitalists, artists, and hungry expats. Rooftop bars and smoke-filled lounges pulsed with deal-making and creative activity. Nowadays, a vegetable market in a fifth-tier city is more lively on a Saturday evening. The expats have disappeared, the entrepreneurs scattered, and the middle-eastern traders who used to drive portions of the retail economy away.

The consequence is not just the disappearance of a handful of cocktail bars—it is the loss of the city’s cosmopolitan engine. These were individuals who invested, innovated, and diversified the culture. Without them, Beijing streets in the evening are not silent but empty. No sizzling noodle vendors, no floating music, no barbecue smoke that lingers into the late hours—just the ring of footsteps and the occasional police megaphone telling people to keep moving.

Four of Six Economic Pillars Shattered

Beijing previously rested on six solid economic pillars: technology, finance, education, culture, foreign investment, and tourism. Four of them are shattered now.

Technology: The city’s elite tech industry once was China’s Silicon Valley, with firms like Baidu vying for talent. But constant crackdowns, rectification campaigns, and choking censorship made creativity a liability. Start-ups closed, foreign ambitions perished, and bright engineers emigrated—replaced by bureaucrats who care mainly about staying out of trouble.

Finance: Chaoyang’s financial hub, where dealmakers once prowled the streets, is now still. Excess regulation has stifled investment business, 30–50% pay cuts have even been imposed on regulators, and well-paid bankers no longer dine out in restaurants around the city. When top spenders leave, shockwaves reach luxury retail and high-end restaurants as well.

Education: The 2021 crackdown on private tutoring was an economic nuclear attack. New Oriental alone let go of tens of thousands of employees, and lost 80% of sales overnight. This wasn’t just devastating a sector—it dismantled a social rung for millions of middle-class households who viewed education as a route up the ladder. Haidian’s former bustling tutoring center is now quiet.

Culture: Beijing’s soft power—its arts, music, and cinema cultures—are being smothered by censorship. Small theaters shut, music clubs closed down, and even offbeat fashion shows have trouble drawing crowds. Only the cleaned-up survivor remains dull and uninspired.

Foreign investment and tourism continue to operate, but they are attached to the same vulnerability. Multinationals have relocated regional headquarters to Singapore or Bangkok, leaving the shiny office skyscrapers of Beijing half vacant. Tourism, previously a golden goose, is bleeding.

The Tourism Collapse

Beijing is supposed to be a tourism powerhouse—the Great Wall, the Forbidden City, the Summer Palace. Instead, tourists call it expensive, overpoliced, and underwhelming. The city’s heavy-handedness in enforcing Covid restrictions—QR code checkpoints, invasive surveillance, and arbitrary detentions using national security legislation—has frightened off foreign travelers.

Overseas visitors to China dropped from 32 million in 2019 to a mere 14 million in 2023, with Beijing’s portion declining further. Tokyo and Kyoto, however, are overflowing, providing just what Beijing no longer does: affordability, energy, and a sense of welcome.

A Shrinking City

Demographic decline is the stealthy killer. Beijing peaked in 2016; it has been declining ever since—not only retirees, but also young working-age citizens, the very folks who keep a city vibrant. Two political decisions hastened the decline.

To begin with, the notorious 2017 “low-end population” crackdown saw migrant workers tens of thousands strong ejected in winter with 24 hours’ notice. Bulldozers rolled over entire neighborhoods. They were delivery riders, cooks, shopkeepers, construction workers—the city’s circulatory system. Pulling them out was akin to cutting off arteries.

Second, the “Xiong’an New Area” policy was designed to relocate non-capital functions, including factories and their employees, 100 kilometers out. Companies departed. Employees moved. Beijing became an old town in a hurry—20% of its population is over 60 now, a demographic anchor that suffocates economic dynamism.

Illusion of Prosperity

Official GDP figures remain robust because Beijing hosts state-owned firms that earn money across the country. Profits earned in distant provinces are credited to the capital, which hides the deterioration in its domestic economy. The situation on the ground is grim: small company profits have imploded, service employment has disappeared, and consumer confidence has vanished.

Restaurants experienced an 88% profit crash last year—almost 90%—a structural calamity, not a temporary downturn. Citizens stockpile cash, scared about the future. The old social contract—that Beijing’s chaos, pollution, and stress were worth it because the city seethed with opportunity—has been shattered.

The Spirit Has Left

For decades, people came to Beijing to reinvent themselves. You could arrive with nothing, meet someone in a bar, and walk away with a deal that changed your life. That promise has evaporated. Now, the capital is marked by fear, overregulation, and cultural sterility.

The city remains, yet without the dynamism of its inhabitants, without its receptiveness to ideas and foreigners, it is a monument to what once was. Behind the starched façade lies a decaying capital—a city where the lights might still burn, yet the soul has fled.