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The new golden child: what Beijing’s nurturing of Macau says about how it sees the city – and how it sees Hong Kong

When Macau last hosted President Xi Jinping,back in December 2014, it was to mark the 15th anniversary of the former Portuguese territory’s return to Chinese sovereignty.

That was when the city heard him talking about its “problems, difficulties and challenges”. He urged Macau to adopt a “global, nationwide and future perspective”, diversifying its economy and cleaning up its casinos.

It did not take long for Macau to feel the impact and fully understand the meaning and implications of the president’s words. Xi’s nationwide crackdown on corruption started to scare off Chinese high-rollers and triggered an unprecedented plunge in gaming revenue, which began in June 2014 and continued in the following months.

More than two years later, with casino revenue slowly recovering and more non-casino attractions opening for business, Macau looks primed to embrace new challenges.

Premier Li Keqiang’s visit to Macau last week was an eye-opener in terms of Beijing’s plans for the special administrative region. His words, as well as attitude, were distinctly more positive than Xi’s had been.

Li praised the city. He called it “treasured soil of the lotus flower of the motherland”. He delivered a package of measures meant to boost Macau’s economy and transform it into a gateway between China and the Portuguese-speaking world.

Such ideas had been floated for several years. But Li’s visit this time was widely seen as a reflection of Beijing’s strong will to encourage Macau to position itself as a key diplomatic player in China’s relations with Portuguese-speaking countries.

Such a move, observers noted, would also grant the former Portuguese enclave a greater geopolitical role in the southern China context. And at the same time, it sends a message to neighbouring Hong Kong, the sister special administrative region, seen as far more rebellious and unstable in comparison.

The theory goes that, if the Hong Kong government doesn’t address the city’s increasing political unrest and social problems, other cities such as Macau will be groomed and elevated to positions of greater relevance, while Hong Kong falls behind.

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“Macau is politically far quieter and more harmonious than Hong Kong,” said Sonny Lo Shiu-hing, professor and head of the department of social sciences at the Education University.

“Hong Kong poses a political threat, so it’s logical for Beijing to shift its economic and diplomatic support slightly in favour of Macau. That’s also in line with the idea of achieving a balanced economic development in the southern China region.”

Premier Li last week attended a conference of ministers from China and Portuguese-speaking countries, dubbed Forum Macau, with Portugal, Brazil, Angola, Cape Verde, Guinea-Bissau, Mozambique and East Timor. The forum, created in 2003 to enhance trade and investment between members of the sino-lusophone grouping, organises a summit of national leaders every three years.

During his three-day visit, Li announced 18 measures to support the development of Forum Macau and 19 other measures designed by the central government to boost Macau’s economy. The long list included supporting the city in hosting an annual global tourism forum, as well as establishing the headquarters of the cooperation and development fund for China and Portuguese-speaking countries there.

“Through those practical measures, we can see that he has a good knowledge of Macau and that he understands the needs of its people,” said Joey Lao Chi Ngai, director of the Macau Economic Association. “The visit was very important and significant. Premier Li gave many positive comments about Macau … It gave a lot of hope to Macau people. These are exciting times.”

Li’s flowing praise for Macau and the package of measures he brought from Beijing contrasted starkly with previous visits of Chinese state leaders to Hong Kong.

The last such visit was by Zhang Dejiang, the Communist Party’s third highest-ranking official, in May. He was the first national leader to make the trip since the Occupy movement of 2014, when protesters blocked roads for 79 days in the name of democracy.

Zhang, who was in Hong Kong officially to attend a major conference on China’s “One belt, One Road” international trade strategy, took the opportunity to warn the former British colony against growing independence talk.

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When describing Hong Kong’s progress, Zhang’s language was not as complimentary as it was later for Macau. Leung Chun-ying’s government had “spotted where the problems lie, and is trying its best to foster economic development … The policies adopted have started working, gradually making some achievements,” he said.

Nothing was mentioned about the role of Hong Kong – traditionally the bridge between China and the rest of the world – in the grand scheme of things.

Macau, a 30.5 sq km territory often overshadowed by more well-known Hong Kong, was in for markedly different treatment. Premier Li said last week: “The beautiful Macau is where Chinese and Western cultures converge, and a landmark for the successful practice of the ‘one country, two systems’ principle … I believe that Macau’s future, placed in an open environment,will be better.”

Li noted that, despite the gaming hub’s structural challenges, it still managed to maintain a fiscal surplus, high employment rates, good living standards and a peaceful society.

But the visit also appeared to have touched him in a different way. “I deeply felt Macau fellow citizen’s attachment to the motherland,” he said.

Asked whether he intended to visit Hong Kong as well, the premier replied that he would like to do so, noting that the city should continue to push forward the implementation of “one country, two systems”, the governing principle that grants people in both Hong Kong and Macau a greater degree of freedom and autonomy than mainlanders.

The more positive approach to Macau in comparison with Hong Kong seems obvious, along with the reasons for such differing treatment. But Beijing’s plans for Macau have also raised questions among those who live in the city and pay attention to official speeches by national leaders. Will the projection of Macau as a bridge between China and the lusophone world be a practicable reality? And why now, almost 17 years after the handover from Portugal, and when China has already developed business links directly with Portuguese-speaking countries such as Brazil and Angola?

“I think there is political will,” Macau-based Portuguese lawyer Alvaro Rodrigues said. “It seems clear to me that China is resolute in transforming Macau into a platform between the country and the Portuguese speaking nations. Macau has many advantages, including the language and the historical background, to effectively play as a bridge between Chinese businessmen and those from the Portuguese-speaking countries.”

Portuguese is one of Macau’s two official languages – along with Cantonese – and its legal system is based on the law of its former colonial ruler.

“This is definitely our competitive advantage … We have been building this platform for many years,” said economist Lao.

The timing also seems right for the “consolidation” of Macau’s economy, said professor Lo of EdU, and author of the book Political Change in Macau.

“The central government policy towards Macau is quite strategic … Macau has a diplomatic function in the eyes of China and this is in line with the central government’s strategy of diversifying Macau’s economy away from the focus on casinos.”

The city’s economy has long been heavily dependent on the casino industry, which contributes about 80 per cent of government revenue.

Although China has already cemented relationships with Portuguese-speaking countries over the past 10 to 20 years, “Macau, with its Portuguese heritage and legacy, provides an easy doorstep for China to further enhance relationships with those countries,” Lo said. “I think the Beijing government’s sincerity is very clear at this moment.”

The cumulative value of trade between China and Portuguese-speaking nations exceeded US$360 billion between 2013 and 2015, China’s deputy minister of commerce said last week.

But the message of diversification has more than just financial implications.

“I think Beijing’s emphasis on a ‘proper degree of economic diversification’ has a geopolitical tone in another aspect: rather than relying on foreign-investment casino capital, including of Hong Kong, America, Australia … Macau has to maximise its diplomatic space under the guidance and full support of the central government,” Lo said.

The fact that Macau is far more harmonious than Hong Kong, as well as being politically and economically in line with Beijing’s five-year development plan, plays in its favour. Whereas Macau has just put forward a five-year development plan, Hong Kong’s political and economic integration with the mainland has remained a contentious theme, with calls for independence growing stronger in the past months as some radical new faces elected to the legislature test the boundaries of Beijing’s tolerance.

“Hong Kong has to think about its economic positioning in the future, because with the increasing competitiveness of the Pearl River Delta region and the diplomatic space enjoyed by Macau under the tutelage of Beijing, Hong Kong’s economic competitiveness won’t be as strong,” Lo said.

“The people of Hong Kong may have to reflect about the political deadlock and turbulence in the territory”

Lo predicted Beijing would implement more policies in support of Macau, while its attitude towards Hong Kong would remain “very cautious.”

But although Macau seems to be reaping the rewards of toeing the line as the “better-behaved special administrative region”, not all are impressed by Li and his words of encouragement.

Jason Chao Teng-hei, vice-president of the pro-democracy New Macau Association, said there was an “escalation of abuse of power by the Macau authorities” during the premier’s visit.

Several protests were held in the city, but the premier did not directly address the issues in any of his speeches.

Portuguese-language newspaper Ponto Final complained in an article how hard it was for the local media to cover Li’s visit, with access blocked by metal barriers and no chance to pose questions.

“Chinese officials are well aware of the dissident voices in Macau, but they are very good at avoiding them,” Chao said. “What happened last week was a diplomatic show and such deals won’t necessarily benefit Macau. The real talks happen behind the curtains … I think Macau is just a very small piece in a large puzzle.”

Beijing offers bag of goodies for Macau and Portuguese-speaking world

In his first official visit to Macau last week, Chinese Premier Li Keqiang arrived in the former Portuguese enclave with a bag full of goodies – 18 to support Macau Forum and 19 to boost the city’s economy. They include the following:

China will invest four billion yuan (HK$4.6 billion) in Portuguese-speaking countries in Africa and Asia. Two billion yuan is meant to further strength cooperation in infrastructure development. The other 2 billion will be used to support livelihood projects, including agricultural development and malaria prevention.

Beijing promised to write off 500 million yuan of debt arising from its interest-free loans to Portuguese-speaking countries that are members of the forum.

Macau should establish a Chinese-Portuguese bilingual talent training base.

A renminbi clearing centre for Portuguese-speaking countries and a system for trade credit insurance involving those countries will be set up in the city.

The headquarters of the China-Portuguese-speaking Countries Cooperation and Development Fund will move from Beijing to Macau.

The city is expected to have three centres to promote cooperation between China and Portuguese-speaking countries. They will focus on food distribution, which is the only one now working, Sino-Portuguese economic and trade cooperation, and small and medium enterprises.

Macau will host an annual global tourism economic forum.

Beijing approved a scheme that will allow vehicles registered in Macau to enter Hengqin, a free trade zone in neighbouring Zhuhai which is connected to the city by a bridge. The scheme should be in place by year’s end.

The central government announced a “free-to-travel yacht scheme” allowing leisure journeys in waters linking Guangdong and Macau. It is expected to come into effect before June 30 next year.

Macau is expected to develop a centre for traditional Chinese medicine in collaboration with the World Health Organisation and the mainland health authorities.