Inside Asian Gaming

inside asian gaming MArch 2016 20 exported to the mainland and, to a much lesser extent, Hong Kong. Gambling aside, the governments of China’s two SARs make no tax contribution to the central government’s coffers; unlike China’s 34 provinces, autonomous regions and municipalities. Even foreign gambling cities like Las Vegas make a contribution to the nation they belong to. For the provision of national defense, then, Macau is getting a free ride. When China gave the nod to Macau’s 2002 gaming liberalization, it didn’t think the industry would balloon into something seven times the size of Las Vegas, in 2013 making Macau richer than any country in the world (ranked by the World Bank in terms of GDP per capita by purchasing power parity). More than this, it didn’t foresee that Macau’s casinos and banks would become a conduit for corrupt Chinese officials to launder money stolen from China and transfer it into overseas accounts. “At that time the so-called ‘rise of China’ was just beginning. Beijing didn’t anticipate the rapid growth of China and Macau, and the amount of Chinese money flowing out through Macau, to the extent that in 2013 it would have to set up the National Security Commission to monitor this capital outflow,” says Lo. The US Congressional-Executive Commission on China’s 2013 report cited a study finding that more than US$200 billion in “ill- gotten funds are channeled through Macau each year.” Enriched by his huge profits from Macau, Sheldon Adelson has spent hundreds of millions of dollars trying to influence (some might say “buy”) US congressional and presidential elections. This had led some US commentators to remark, wryly, that corruption money from China is corrupting American politics. Chinese academics, meanwhile, say this facilitation of corruption is the only issue important enough to make Macau, with its 0.047% of China’s population, a personal priority of Xi Jinping. In light of these harms, why doesn’t the mainland set up its own special zones to allow casino gambling say, on Hainan Island or in Yunnan? That way it could keep the gaming revenues for itself and block off a major channel of capital outflow. Nobody interviewed for this article thinks China would do this. To begin with, the Communist Party fears casino gambling once legalized might run out of control, boosting organized crime and corrupting China’s society and government, perhaps to the extent that opium did in the 19th century. Bruce Kwong, who is an Assistant Professor at the University of Macau’s Department of Government and Public Administration, says deep-rooted ideological objections also figure. “According to the words of Zhou Enlai, gambling is against the very concept of China,” he says. Historically, Macau developed its gaming industry because it had few other resources to supply its livelihood, no deep-water port like Hong Kong or world-class industries in law and finance. China recognizes this fact of the Macau way of life. “Whether or not you believe the One Country Two Systems policy is being observed, its ultimate purpose is still to act as a model for the reunification with Taiwan,” says Eilo Yu. “If Macau failed it wouldn’t just kill confidence towards the policy inside Taiwan, but also within Hong Kong, which is still very important to China.” To say Hong Kong is more important to Beijing is not to say that Macau or its prosperity don’t matter. Social unrest in a failed Macau would be a nightmare for the central government. Macau also serves as a diplomatic bridge between China and the lusophonic world; not just Brazil and Portugal, but also Portugal’s former colonies in Africa. Eilo Yu says that Macau’s role as a financial intermediary between China and the outside world, although smaller than Hong Kong, still gains it the protection of Chinese officials. Lastly, it’s not completely true to say Macau doesn’t contribute financially to China. Every one of Macau’s six gambling concessionaires has now invested in Hengqin, and their billions now It’s not a case of China wanting to put the genie back in the bottle. Rather, China is saying, ‘Macau has done unbelievably well out of concessions allowed under the Basic Law. It’s profited from unbridled growth and we’re the ones that have been subsidizing that growth. It’s time for Macau to pull its weight.’ Feature In Focus