'Good boy' Macau to win policy rewards from China: report

December 12, 2019 16:23
China is expected to announce some 'gifts' to Macau for being an obedient child, unlike Hong Kong. Photo: Bloomberg

Chinese President Xi Jinping will announce a raft of new policies aimed at diversifying Macau's economy and helping the territory reduce its reliance on the casino sector and develop as a financial center, Reuters reports.

The move, likely next week when Xi visits Macau for its 20th handover anniversary celebrations, is seen by officials and executives in the territory as a reward for having avoided the anti-government protests that have gripped nearby Hong Kong over the past six months, the report said.

The expected policies include the establishment of a yuan-denominated stock exchange and the acceleration of a renminbi settlement center already in the works, as well as the allocation of land for Macau to develop in neighboring mainland China, the news agency said, citing interviews with officials and corporate executives.

While there has been speculation about the proposals in recent months, the fact they have been officially approved has not previously been reported.

“The financial industry used to be an idea that we reserved for Hong Kong," an unidentified Chinese official was quoted as saying. "We used to give all the favorable policies to Hong Kong. But now we want to diversify it.”

Xi’s trip to mark the 20th anniversary of Macau’s return to China comes as the central government has praised the city for upholding the “one country, two systems” framework that governs both Hong Kong and Macau.

In contrast, China has condemned anti-government protests in Hong Kong and accused demonstrators in the financial center of undermining national stability. 

Beijing has instructed state-owned banks and enterprises to help set up infrastructure in Macau to aid financial diversification, sources told Reuters.

Two officials who helped develop the Shanghai stock exchange are said to have moved to Macau this year to help establish its yuan-based stock exchange.

Chinese officials, and bankers in Hong Kong, say the push to develop financial infrastructure in Macau is part of a plan to avoid any major market disruption in Hong Kong that could impact Chinese businesses.

The idea is not for Macau to replace or undermine Hong Kong but for China to have a contingency plan in case the situation in Hong Kong worsens, they said.

“Xi Jinping has made very clear that he wants a diversified Macau economy,” another Chinese official who declined to be identified was quoted as saying. "The future focus will be on tourism and finance, to make it a center to host international meetings like Singapore.”

Macau’s new exchange will initially be focused on bond trading to encourage local and Chinese companies to issue debt in the city, according to the report.

The exchange will also focus on startups and target companies from Portuguese-speaking countries, ensuring it does not directly compete with bourses in Hong Kong or in the southern Chinese city of Shenzhen.

Macau was a Portuguese colony until it was handed to China in 1999.

An announcement that Macau will join the Beijing-backed Asian Infrastructure Investment Bank is also expected during Xi’s visit, according to the report.

Xi is expected to announce policies to further integrate Macau with mainland cities in the Greater Bay Area, the region around the Pearl River Delta that also includes Hong Kong.

As part of that effort, Macau will be allocated more land on the mainland island of Hengqin to develop in areas such as education and healthcare, sources told Reuters.

Macau’s casino operators, which have been hit by slowing economic growth, the Sino-US trade war and a weakening Chinese yuan, are also looking at development opportunities in Hengqin.

Beijing has previously allocated Macau portions of land on the former oyster farming island, which lies just across the water from its casinos, including land for Macau University’s campus which opened in 2013.

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, the report noted.

“This is the candy that Hong Kong did not want,” Larry So, a political commentator and retired Macau university professor, was quoted as saying.

"It is a gift for Macau, for Macau being a good boy.”

-- Contact us at [email protected]