Jimmy Lai was smuggled on a fishing boat to Hong Kong when he was 12, and said when he arrived he had never felt so free. Today he is in prison and Apple Daily, the pro-democracy tabloid he founded, is set to close. Its assets were frozen by the government last week and five of its senior executives, including top editors, arrested after a police raid. They were detained under the national security law Beijing imposed on the former British colony last year.

That law, it is now abundantly clear, was a watershed moment that has utterly changed Hong Kong’s political environment. It is being deployed progressively to snuff out the freedoms Hong Kong was promised in the city’s 1997 handover to China. It was used first to crack down on politics and civil society after the anti-government protests of 2019. The move against Apple Daily is the first time it has been applied directly against journalists.

Police have told local media they are analysing articles and opinion pieces published by the newspaper on suspicion that it has become a tool to endanger national security. This amounts to criminalisation of normal journalism and opinion-writing. By implication, any article the government decides constitutes “collusion with foreign powers” or calls for sanctions on China or Chinese officials can be prosecuted under the security law. This suggests the law is aimed less at tackling what might be considered genuine national security threats elsewhere, and more at simply crushing all dissent.

This is not just a direct attack on free speech. With penalties under the security law ranging up to life imprisonment, the Apple Daily case is likely to result in self-censorship by some other publications. It appears aimed at intimidating the media in general and deterring businesses from advertising in anti-government outlets.

The implications range well beyond journalism. Banks will be wary that analysts’ reports critical of Chinese politics or state companies could cause them trouble. It is a small jump from the move against Apple Daily, its assets frozen by a court order, to assaults on bigger or foreign businesses.

Such developments strip away the advantages that long made Hong Kong such an important financial hub and gateway to mainland China: the free flow of ideas and information, backed by rule of law. Some companies are already questioning the benefits of remaining in the city, with its sky-high real estate. Some are moving to the mainland. Others are considering shifting to Singapore, which has quietly started to woo disgruntled businesses from Hong Kong.

Singapore has an authoritarian system and curbs on press freedom, too. But while media and companies there know they cannot speak their mind on Singapore’s leading families, open discussion is possible on other parts of Asia, including China.

The Hong Kong people and authorities will care deeply about the implications for the city. Beijing cares little. According to the United Nations Conference on Trade and Development (Unctad), China overtook the US as the world’s top destination for foreign direct investment last year, despite its authoritarian turn under Xi Jinping. Beijing is today attracted less by big US businesses’ capital than the possibility that, having Chinese operations to protect, they will lobby against White House hawkishness. The risk remains that entrepreneurs who once flocked to Hong Kong to set up shop will in future go abroad. Yet, however short-sighted, when it comes to suppressing dissent in Hong Kong and any prospect of it spreading, that is a risk Beijing is prepared to take.