Last year, just prior to the beginning of the Occupy protests, a large group of Hong Kong’s elite, headed by the richest of them, Li Ka-shing, and former Chief Executive and second generation shipping tycoon C H Tung, were invited to Beijing for a face to face meeting with new President Xi Jinping.

The meeting was widely seen at the time as giving huge face to the elite, in the process infuriating many in Hong Kong who saw both tycoons as exploitive oligopolists, defenders of the status quo and a barrier to democratic development.

For sure, Xi’s actions were a red rag to demonstrators. But in retrospect the president’s purpose may not have been to praise the elite but to warn them: be more genuinely patriotic through actions, not words, or face the consequences. In fact, China appears to have fallen out of love with Hong Kong’s oligarchs.

Questions remain whether the elites were too eager to diversify outside both the mainland and Hong Kong–which they appeared ready to do. Or it may be because Beijing now believes that it is in its political interest, as well as the interests of expansionist state enterprises, to seek to undercut a group previously seen as both loyal and essential to Hong Kong’s stability.

From the tycoons’ immediate viewpoint, keeping a low profile on political issues was preferable, particularly as popular sentiment in Hong Kong was against them, so seeming to take a hard line against political reform demands would make them more vulnerable.

Since the Xi meeting, and Occupy, the leader of the pack, Li Ka-shing, has signaled clearly that his family is now in the business of wealth preservation, not increased risk-taking in Hong Kong or the mainland. Li has announced a major reshuffle of assets between his two major listed companies, Cheung Kong and Hutchison, in a way that not only favors the family interests but, more importantly, separates Cheung Kong’s Hong Kong and China-focused property interests from the port, telecoms, retail, infrastructure and oil interests overseas within Hutchison.

Furthermore Li is also bidding US$15 billion to buy Britain’s O2 telecoms company from indebted Spanish telecom giant Telefonica. Added to Hutchison’s existing network, this would make Li Britain’s largest telecoms operator. He is already its biggest port owner and has huge power and infrastructure interests in Britain and Australia, and also recently bought a British railway rolling stock owner.

The O2 move could be seen simply as following a well-established path – using cash thrown off by his Hong Kong interests to build a global portfolio. It could reasonably be argued that Li already owns too much in Hong Kong to be comfortable. That diversification process dates back to the 1980s with his acquisition of Canada’s Husky Oil.

But Beijing may see all this in a different light, particularly at a time when Xi is focusing on nationalism and anti-western rhetoric. The second and third generation tycoons are almost all western educated and find operating in predictable western systems a lot easier than China, where connections can create rapid wealth, but where losing it is almost equally easy.

Another problem for the elite is that most of them backed one of their own, the amiable lightweight Henry Tang, for chief executive in 2012. Tang self-destructed, resulting in the selection of CY Leung, an intelligent but dour and obedient follower of instructions from a Communist Party of which he is assumed to be a member. Leung is equally elitist but a believer in the leadership of the Party, not of the merchant class.

Neither the business elite nor the bureaucracy have much liking for Leung but he has the trump card – Beijing’s support, not merely verbally but through the activities of united front actors guided by the Liaison Office, Beijing’s formal presence in Hong Kong.

Of course government policies must still favor certain business groups. This is the price to be paid for their support in the Legislative Council where they are vastly over-represented thanks to the “rotten borough” system of narrow-franchise functional constituencies. But these sometimes have interests different from those of the property and utility giants.

The latter may have to choose between seeing their role much diminished as mainland state enterprises seek a share of the Hong Kong pie, or of committing themselves not just to an outpouring of “patriotic” rhetoric and pretending to be good Marxists, but investing more in China rather than the West. It is not that China needs their money any longer. Their role as early drivers of China’s investment-led growth ended long ago. Nor are they sufficiently popular in Hong Kong to become symbols of the territory’s autonomy or representatives of Cantonese identity against the Beijing juggernaut.

The Hong Kong government continues to protect their profits. Land shortages benefit government revenue – a well as a less than savory relationship with the Heung Yee Kuk, the feudal entity that effectively controls land policies in the New Territories – as much as developer profits. The bureaucracy remains too indolent and elite-connected to take action that would undermine utility and retail giant profits.

But the owners of such franchises must now surely know that the time is coming when they are squeezed between popular antipathy toward them and state enterprises looking to take their place. No local groups have the money to replace the existing small group of huge businesses. And no foreign company is likely to want to risk challenging mainland giants in Hong Kong, a turf they now see as theirs to inherit. The astute and unsentimental trader that he is, Li Ka-shing seems to have little doubt where the future lies.