Recently, I attended one of those consulate functions where a country's diplomats and chamber of commerce host a reception for a visiting dignitary. The chamber's chairwoman told the assembled audience that they should not believe everything in the newspapers about the political climate in Hong Kong. "Everything in the city is just fine," she said, punctuating this huge generalisation with the well-worn bromide: "Hong Kong is open for business."

Besides its staggering banality, the sentiment sends the wrong message to the international community about the climate of political intimidation and the sad state of "one country, two systems". The political hounding of key democrats clearly shows that everything in Hong Kong is most certainly not "just fine". The prospect of Beijing's anti-separation law proves that the leadership believes the "one country, two systems" concept is now a write-off as far as Taiwan is concerned. President Chen Shui-bian's second election victory consigned Deng Xiaoping's clever artifice to the ideological graveyard. Now, Hong Kong could suffer the consequences of its demise, with the continued deterioration of its autonomy and open business environment. Let's face it: Beijing no longer needs the special administrative region as its role model for "one country, two systems". And this is not "just fine".

If Hong Kong no longer provides Beijing with its best case for the principle, then how long before we see the intimidation we have already witnessed in politics creep into the business circles of the motherland's "economic city"? The intimidation of the democratic camp, and any mainland interference in this September's Legislative Council election, could eventually threaten the city's business environment, which the anti-democratic forces say they are defending from the onslaught of those who want to turn Hong Kong into a welfare state.

Big advertisers have been pressured into withdrawing business from unpatriotic publications. Beijing has targeted the mainland business interests of a prominent supporter of Mr Chen. How long before we see a Hong-Kong-based company hustled out of a market by a "connected" mainland firm through threats and bullying?

The members of western chambers of commerce know instinctively that democratic institutions ensure governments and businesses stay as honest as possible. Western companies pay the price to operate in an environment where there is a level playing field because they know that in a monopoly or cartel environment not everybody wins. Democratic institutions ensure that many more companies have the chance to survive and even prosper.

It is not "just fine" that these western chambers of commerce remain silent about threats to Hong Kong's autonomy. It is shameful for them to declare that everything is "just fine", because threats and bullying will eventually corrode Hong Kong's free competitive spirit.

Douglas George Anderson is a journalist and consultant in Hong Kong.