March 9, 2017 11:50 AM EST

Midnight has just struck at a nightclub in Beijing’s tony Sanlitun neighborhood, and the dance floor is alive with lime green wigs and clashing daiquiris. On the stage, a blond drag queen called Hathor—after the ancient Egyptian deity—performs a strutting lip-sync to Mariah Carey’s “All I Want for Christmas Is You,” while young women in vintage suits and penciled mustaches whoop encouragement.

“Every bar wants a gay night right now,” says Marlon Ma, 25, who puts on Beijing’s award-winning LGBT event GLAM—which stands for “good-looking Asian male”—and organized the city’s first drag show last year. “I move venues every six months,” he says, rubbing thumb and forefingers together in the international sign for hard cash. “Before it was probably half foreigners, but I’m seeing more Chinese now than ever before.”

Beijing’s gay scene has shifted from the fringes to the mainstream of Beijing nightlife, as the world’s most populous nation—or at least its major cities—grudgingly becomes more tolerant. Helping things along is the realization that China’s burgeoning LGBT community, estimated­ at some 70 million people, is a free-spending sector that few businesses can afford to ignore.

The country’s so-called pink economy is currently valued at $300 billion a year, making it the world’s third largest after Europe and the U.S. (Globally, the LGBT community is estimated to spend more than $3 trillion a year.) There’s even a Pride celebration; now in its ninth year, the ShanghaiPRIDE arts and advocacy festival encompasses concerts, film screenings, a “fun run” and gastronomy in China’s giddy financial hub. Though the festival was once treated with suspicion, all manner of businesses now clamor to be listed as sponsors. “It’s progressing, and we see a lot of new faces every year,” says co-founder Charlene Liu, 43, a semi­conductor engineer. “The most resistance we had was the first year, as nobody knew what it was. One year we had to sit down with seven or eight government departments. But now we are cool with them.”

China even boasts the world’s most popular LGBT socializing app, called Blued, whose more than 3 million active daily users surpasses even global gay hookup phenomenon Grindr. Late last year, Blued launched a live-streaming platform that now has more than 100,000 users. “The consumer power of the gay community is robust, but it has always been neglected,” says Blued CEO and founder Geng Le, a former police officer. “We want to tell people that the pink economy is very strong.”

Blued’s swanky new Beijing office testifies to that. The sweeping open-plan design is straight out of Silicon Valley, right down to the midfloor gym equipment and mini­fridges crammed with Red Bull. But this is an unabashed LGBT ­enterprise; around three-quarters of staff are gay, and neat rows of computers sit amid rainbow murals and paintings of classical Greek hunks draped in sheer clothes. Even the conference-area chairs come in a vivid palette of rainbow colors. It’s here that Blued recently held a Pink Economy Innovation and Entrepreneurship Contest that attracted more than 60 LGBT-facing business pitches. “The whole society is moving forward, it’s becoming more accepting, more diverse, and individual value is more emphasized,” says Geng, a photograph of himself meeting Chinese Premier Li Keqiang hanging overhead.

Official endorsement wasn’t easily acquired. Blued’s first incarnation, launched as a website 16 years ago, was a little more risqué than its current slick app and was frequently shut down. But a proven commitment to social responsibility has since helped assuage the authorities. Now Blued reminds users every three months to take a free HIV test at one of its centers. (There’s one on the ground floor of its Beijing headquarters.) “Blued has a lot of dialogue in China with officials, and we help educate society about the gay community,” says Geng. “We push everything forward.”

Consequently, LGBT life is flourishing in China, especially, and perhaps surprisingly, among young straight females. A subculture of funu—a self-deprecating term translated as “rotten women”—is defined as hetero­sexual women who enjoy watching attractive gay men interact. The perceived homo­erotic yearning between the main protagonists in the hit BBC drama Sherlock was a particular funu craze.

This growing acceptance prompted Zhu Qiming, CEO of Beijing tech firm Star-G Technologies, to plow $140,000 into developing a mobile role-player computer game specifically for the gay market. Due for release later this year, Rainbow Super Band allows players to choose an avatar and customize it to match their personality. (One of the avatars­ is a Bible-clutching priest. “Do you think that’s a problem?” asks Zhu.)

Players can form relationships with other users through positive interactions, even buying virtual gifts—snazzy watches or shoes, for example—with real money, providing Star-G with a revenue stream. “We are making a very large-scale, complicated game for gay people,” says Zhu. “We provide the social gameplay so this group can meet others with the same interests.”

Acceptance is still a relative term throughout much of an essentially priggish nation. Same-sex liaisons were famously celebrated in early Chinese literature and art. However, society became horribly strait-laced following Mao Zedong’s revolution, when sexuality was sublimated to the great cause of communism. Homo­sexuality was made a crime, and while it was decriminalized in 1997, it remained classified as a “mental illness” until 2001.

Cultural friction still exists due to deep-rooted values regarding the primacy of the family and the common desire for a male heir. Though regulations have now been loosened, for decades the one-child policy reinforced intense obligations felt by grown children to procreate to please their aging parents. As a result, an estimated 70% of gay Chinese have entered into a hetero­sexual marriage, according to prominent Chinese sexologist Li Yinhe.

Familial pressure can manifest in shocking ways. Last year, a man in central China’s Henan province alleged he was subjected to 19 days of beatings and the force-feeding of drugs at a mental hospital after coming out to his parents and wife as gay. The 37-year-old underwent the “conversion therapy” after being sectioned by his family for a “­sexual-preference disorder.”

Tolerance remains scant in the provinces and among broader audiences. Last summer, a gay Internet soap opera called Addiction was nixed three episodes short of its 15-show run, despite being the second most popular show on iQiyi, China’s version of Netflix. And Ma says that after his first drag show last year, 95% of reader comments in the national media were horrifying. “Even gay people from other smaller cities were saying it’s disgusting,” he says. “They didn’t understand what a drag act was, that it’s a type of performance. That was really sad and a reality check.”

Neither will Chinese LGBT activism follow the same path as the West’s. The lack of a free press means that New York City’s Stonewall riots of 1969, following a police raid on a gay bar in Greenwich Village, would never be allowed to spark similar sympathy or action in China. Nor would assassinated gay San Francisco city official Harvey Milk be allowed to advocate his beliefs and policies within the meticulously choreographed Chinese Communist Party (CCP). “I am sure there are gay officials in China, but none will come out openly in the near future,” says Geng. The CCP is also paranoid about any expression of community solidarity outside its auspices, especially that rooted in popular mobilization. “If you have 300 people walking down the street, then it could be read as a protest,” says Ma. “It’s not just an antigay thing.”

Business and the pink dollar have to lead the way. Last summer, 10 same-sex couples won a free wedding ceremony and honeymoon in California courtesy of Taobao, the online shopping platform run by Alibaba, which obviously felt comfortable enough to run the competition despite same-sex marriage being illegal in China. In January a trans­gender man won a landmark court case for unfair dismissal against his employer. Says Ma, “Once my generation is grown up, everything should be way easier.”

That is also when the real dividends of China’s pink economy will be reaped. As Liu points out, today’s gay Chinese with real spending power—ages 30 to 50—are typically in closeted heterosexual relationships. But some young ­Chinese are able to come out in their teens or 20s to a somewhat more accepting society, and the beginnings of a social apparatus to help them thrive in their own skin. This generation has not yet reached its peak economic potential. “Right now, China’s pink economy is still in a nurturing stage,” says Liu. “But in five, 10 years, you’ll see it really blossoming.” Call it China’s LGBT Spring. —With reporting by Yang Siqi/ Beijing

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