Beijing, we have a problem

China had an unpleasant surprise to unveil for Macau in mid-2008: it became more difficult for Mainland citizens who could use the Individual Visit Scheme (IVS, launched in 2003) to enter the Macau SAR. 

At the time, some people wrote that the measure was intended to help Macau, cooling the gaming sector, but it is difficult to see how this, at that peculiar moment, may have helped. 

In the research paper Casino Tourism, Economic Inequality, and Housing Bubbles team leader Xinhua Gu (from the University of Macau) has no doubts: the tightening of visa policy was “a negative shock.”  

“With Chinese Mainlanders losing an estimated $87 billion each year from gaming in Macau, new restrictions were imposed upon the IVS system to moderate the number of Mainland visitors to the city,” state Chinese professors Mingjie Sheng and Chaolin Gu. “In order to slow capital outflow and to mitigate the growing problem of gambling addiction, the Chinese central government tightened the IVS in 2008, permitting Mainlanders to visit Macau just once every three months. These restrictions led to a sudden drop in Mainlander arrivals: 2008 saw a fall of 22.0% from a year earlier, when 14.9 million mainlanders visited Macau.” 

A report in Asian Economic Institute (2009) was unequivocal: “Macau’s economy has been aggravated by Chinese travel restrictions. With these constraints, the Chinese authorities seek to restrain money laundering and illegal activity. But the fact is that it has affected, negatively, the number of visas issued to Mainland Chinese high-rollers.”  

“The central government attaches great importance to the impact of the financial crisis upon Macau, and will continue to provide full support for Macau to overcome the difficulties and achieve optimal diversification” – Hu Jintao 

University of Macau academic Xinhua Gu told Macau Business: “Evidence shows that the rest of the world makes a slim or trivial contribution to tourism development or economic growth in Macau. Mainland China was less badly hit by the 2008-09 global crisis than were other economies so that the adverse effects of that crisis on Macau proved quite limited. As a matter of fact, the 2008 transient downturn of the Macau tourism economy, albeit coinciding with the crisis, was due to the visa tightening of Mainland China to crack down on its residents’ problem gambling here in Macau.” 

Professor Xinhua states very clearly: “The local authorities also responded to such a problem by imposing certain restrictions on tourist arrivals yet with no real or lasting effect as Mainlander arrivals increased more steeply later on. The above descriptive statements, though expressed in words, are based upon serious studies in the empirical literature of academic circles.” 

Beijing only returned to intervene when it realised that Macau had not handled the message itself. 

Edmund Ho was in Beijing for help in December and the response came in the form of a package of measures [see text in these pages] supported by President Hu Jintao and Prime Minister Wen Jiabao.  

A few weeks later, Vice President Xi Jinping came to Macau and offered Hengqin “for future joint development by the city of Zhuhai, Guangdong Province and Macau to facilitate closer co-operation and co-ordination between the two,” wrote University of Macau professors Zhang Yang and Fung Kwan. “Hengqin Island is believed to offer Macau great opportunity for territorial expansion and economic diversification.” 

“In times of trouble, the central government would be able to take measures to help Macau through its difficulties, while in times when Macau is in danger of over-heating the central government could employ appropriate policies to cool down the economy,” add Victor Zheng and Wan Po-san, from Chinese University of Hong Kong.  

“The central government attaches great importance to the impact of the financial crisis on Macau, and will continue to provide full support for Macau to overcome the difficulties and achieve optimal diversification,” said President Hu Jintao that December. 


Nine Measures in Six Areas 

“The central government will unswervingly support Macau to overcome difficulties and maintain economic prosperity and social stability in the region. In principle, the series of policies and measures the central government has implemented for Hong Kong could be applied to Macau. Concrete studies have been conducted on the policies and measures to support Macau, and recommended nine measures in six areas,” said Premier Wen Jiabao during a meeting in Beijing with Edmund Ho.  

  1. Strengthen financial co-operation between Mainland and Macau 

* Expand trial Renminbi (Chinese yuan) business in Macau 

  1. Promote infrastructure projects related to Macau   

* Initiate construction of Hong Kong-Zhuhai-Macau Bridge by end-2009 

* Initiate studies on infrastructure projects related to Macau 

  1. Enhance closer economic cooperation between Guangdong and Macau  

* Formulate and implement Outline Plan for Reform and Development of Pearl River Delta (2008-2020) 

* Fully support Macau’s optimal economic diversification   

* Encourage Macau’s participation in development of Zhuhai’s Hengqin Island. 

  1. Assist Macau-funded SMEs to mitigate business difficulties 

* Adopt more direct, powerful and effective measures to support Macau-funded SMEs    to mitigate business difficulties 

* Further open up Mainland’s service industry to Macau businesses 

* Further open up Mainland’s service industry to Macau businesses 

* Safeguard supply of food and other necessities to Macau    

* Safeguard quantity and quality of food supplies to Macau