Galleries are exiting the market and studios are being demolished in what the government is referring to as their actions against organized crime.

How the Chinese government values its once-thriving arts community in Beijing has fundamentally shifted in the last year as culture in the capital has taken a backseat to broader political machinations.

Last week, Beijing police armed with riot gear and rain slickers have begun the eviction of several hundred artists with studios in the art districts of Luomahu (Roma Lake) and Huantie. In most cases, tenants were given just seven days to relocate. According to the Art Newspaper, district administrators have described the eviction plan as a government crackdown on mafia activity; notices plastered around Huantie described artists as “security problems” and “unstable factors.”

“They are driving us all away on the excuse of cleaning up the underworld,” artist Canon Duan told the publication. “We’re not prepared at all. And no one has explained it to us.” Some artists working in the district have had their studios for nearly a decade, but their property could be confiscated by the government if they don’t leave.

Regular studio demolitions began last summer with the destruction and partial eviction of Ai Weiwei’s studio only a few miles away from Huantie in the studio and gallery district of Caochangdi. The government’s reasoning has shifted. Back then, authorities said that demolitions were part of an ongoing reconstruction plan for the capital; now, the campaign is said to be about ending organized crime.

Displacement of artists in Beijing is not happening in a bubble; it’s part of a larger narrative about how Chinese authorities are reconsidering the cultural economy’s power in the country. China’s lucrative film and television industries have also experienced controversial reforms in the last year. Changes began last fall when the government secretly detained the A-list celebrity Fan Bingbing for tax evasion. President Xi Jinping’s subsequent curtailment of tax dodging and high salaries in the industry have created what critics have called a “cold winter” for entertainment companies. Studios postponed their shooting schedules in February as they waited to see how the Chinese government would further impact the industry.

At the nexus of this referendum on the independence of soft power outlets like art, film, and television is the ongoing trade war playing out between China and the United States. Last week, Pace announced that it would close its 22,000-square-foot space in the heart of Beijing’s 798 Art District. In 2008, Pace was the first American contemporary art gallery to open in mainland China, years before competitors brought their own branches to Hong Kong, Shanghai, and the capital.

“It’s impossible to do business in mainland China right now and it has been for awhile,” Arne Glimcher, Pace’s founder, told ARTnews. “The last straw is Trump’s duty on Chinese artists coming into this country and Xi Jinping’s duty on Americans coming into China.”

And Pace isn’t the only Western gallery who has recently closed up shop. The French gallerist Pascal de Sarthe told the South China Morning Post that he was actually forced out of his Beijing gallery space in Caochangdi last August.

“This allowed us to rethink how to do business in China and ultimately led us to the same conclusion as Pace — to operate only a private viewing room while maintaining our team, instead of reopening a new gallery space,” said the dealer, who still maintains a sales office in the capital along with gallery outposts in Paris and Hong Kong. “We should ask ourselves, are galleries — as a business model — obsolete in this environment?”

Rising trade tariffs may have been the last straw, but galleries have struggled to compete in China for years. The Western expansion of art institutions into cities like Beijing and Shanghai has involved a lot of educational investment for both buyers and sellers. Auction houses like Christie’s and Sotheby’s have periodically run educational programs in both cities to promote interest in the art market. The former currently offers short courses in Hong Kong for art enthusiasts, professionals, practitioners, and collectors, which offers studio visits and auction previews.

“Since Xi has come to power, people are afraid to conspicuously show their wealth and the mainland Chinese are not buying in China,” Glimcher added in his remarks. “If they are, they [are] buying for their apartments in other places in the world and they come to Hong Kong anyway.”

The art industry’s consolidation in Hong Kong follows in the footsteps of leaders in the luxury market who know that their clients would rather travel south from cities like Beijing and China than pay immense taxes on high-end goods. Fashion, jewelry, and makeup retailers have typically operated showrooms in the malls of Shanghai and Beijing for customers to see clothing firsthand before they later purchase items in Hong Kong, which has no sales tax.

Christie’s and Sotheby’s did not reply to Hyperallergic’s request for comment about whether or not they intended to continue running their Beijing outposts following Pace’s exit from the city. As for now, the future of the capital’s art ecosystem — both its local arts community and its internationally connected market — remains in jeopardy.