China Rewards Protest-free Macau With Financial Policy

Reuters reports that Xi Jinping is next week expected to announce a series of central policies aimed at diversifying the casino-reliant economy of Macau. This comes as six-month running pro-democracy protests in Hong Kong are giving no signs of slowing soon. According to officials and executives quoted, the move can be seen as a reward for signaling devotion to the “one country, two systems” framework of governance, and also a means to avoid market disruption caused by the political situation in Hong Kong.  Farah Master and Keith Zhai report:

[…] “The financial industry used to be an idea that we reserved for Hong Kong,” said one Chinese official who requested anonymity. “We used to give all the favorable policies to Hong Kong. But now we want to diversify it.”

[…] While the new initiatives were not explicitly linked to toeing the official line, Chinese officials have repeatedly praised Macau for setting an example in maintaining national security and adhering to the central government’s requirements.

“This is the candy that Hong Kong did not want,” said Larry So, a political commentator and retired Macau university professor. “It is a gift for Macau, for Macau being a good boy.”

[…] In recent weeks, Xi has said at several gatherings of senior government officials that it is crucial to find ways to implement the “Macau model” in Hong Kong, two people familiar with the discussions said, on condition of anonymity.

[…] “Macau will be an example of China’s reunification,” Ho Iat Seng, who is set to become Macau’s next chief executive on Dec. 20, told state broadcaster China Central Television last month. [Source]

The policies that Xi will announce include the establishment of a yuan-denominated stock exchange, the acceleration of a renminbi settlement center that is already underway, and the allocation of land for Macau to develop on the island of Hengqin. Stocks for Macau casinos took a jump following the Reuters’ report, after low gaming revenues related to China’s slowing economy took a toll on them last month.

Xi is also expected to announce Macau’s decision to join the Beijing-backed Asia Infrastructure Investment Bank while visiting the city next week. At Bloomberg News, Jihye Lee and Jinshan Hong note that the plans have been in progress for some time, providing context on how they fit into Beijing’s “Greater Bay Area” development plan to further integrate the mainland with Macau and Hong Kong:

The plans may have been in the works for a while. The Securities Times reported in October that a proposal for a securities exchange in Macau were submitted to the Chinese central government. Authorities were researching how to fit Macau’s advantages into Xi’s broader Greater Bay Area plan to knit the region together more tightly, the Security Times said at the time.

The blueprint for China’s long-awaited plan to create a high-tech megalopolis on its southern coastline rivaling California’s Silicon Valley was unveiled in February. Proposals include setting up a futures exchange in Guangzhou with carbon emissions as the first product and setting up a securities market in Macau using yuan settlement.

Macau is looking to diversify its economy as growth in China slows and the high-rollers who helped make the city the world’s largest gaming hub look elsewhere. Local casinos are poised for the first decline in annual gaming revenue since 2016, when Xi’s anti-corrupting campaign battered revenues. [Source]

Last week, two senior leaders of the American Chamber of Commerce in Hong Kong were denied entry into Macau. The denial, which came without an official explanation, may have been an act of retaliation for President Trump signing the Hong Kong Human Rights and Democracy Act into law late last month. Beijing also censured the U.S. for “interfering in China’s internal affairs” after the law was passed, and imposed sanctions on five U.S.-based NGOs that, according to the foreign ministry, had played an “egregious role” in the Hong Kong protests. Amy Gunia reports for TIME, noting that Macau’s government has taken moves to ensure that solidarity for the Hong Kong movement isn’t on display in the city:

The president of the American Chamber of Commerce in Hong Kong, Tara Joseph, and the group’s chair, Robert Grieves, were separately denied entry into the Chinese-ruled territory on Saturday.

[…] “We are puzzled as to why this happened, given this was simply a social occasion to celebrate AmCham Macau’s annual gathering,” an AmCham spokesperson said in a statement.

[…] Their refused entry comes at a time of escalating fiction between Washington and Beijing. The world’s first and second largest economies are trying to end their bruising trade war, while also clashing over the ongoing political unrest in Hong Kong.

[…] Macau has been quick to clamp down on any shows of solidarity for its neighboring enclave. Officials in Macau have denied requests for demonstrations and have reportedly detained several people showing support for the Hong Kong protesters. [Source]

In an opinion essay published at the South China Morning Post, Alice Wu argues that Beijing’s calls for Hong Kong to be more like Macau demonstrate just how bad the CCP is at reading public sentiment in Hong Kongwhich, she argues, is also a major cause for Beijing’s current troubles in the region.

With public sentiment renegading again in the “renegade province” (Taiwan) and “the prodigal son” (Hong Kong) going on another prodigal binge, it is no wonder Beijing is turning its attention to, and the spotlight on, the trouble-free Macau, especially since it will soon be celebrating the 20th anniversary of reunification with China. Macau is now the main feature, considered the shining model of “one country, two systems”; so much so that the chairman of the Standing Committee of the National People’s Congress, Li Zhanshu, basically told Hong Kong to emulate Macau in implementation.

Macau won the hearts of Beijing’s leaders by enacting national security legislation without incident, unlike Hong Kong, and by having more “patriots” in leadership positions. There is nothing wrong with praising Macau and appreciating and celebrating this former Portuguese colony, of course. It is most unwise, however, to want Hong Kong, or anyone else, to be more like Macau.

Hong Kong could not be Macau, even if it wanted to. We don’t need to dive into the inherent differences – geographical, demographical, historical, cultural – and realities that render that impossible. Macau deserves to be celebrated for its distinct character, just as Hong Kong should be.

By turning a blind eye to the reasons behind the years of deteriorating Hong Kong-Beijing relations, Beijing is doing no one any favours. Beijing must come to accept that it did not have an accurate assessment of what was happening in Hong Kong, and that has nothing to do with Hongkongers’ understanding and interpretation of the Basic Law, nor does it have anything to do with Hong Kong not being “Macau enough”. […] [Source]

Last month at Quartz, Isabella Steger similarly argued that Beijing’s continued inability to read public opinion in Hong Kong is partly to blame for it “missing numerous chances that may have stopped unrest from escalating.”


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