Keep circulating

As the latest Policy Address lays down a blueprint for the city’s join the nation’s ‘dual circulation’ and build up its own ‘dual circulation’ to keep the economy going amid the pandemic, some analysts call for a new round of financial relief measures to stabilise the internal circulation 

As Chief Executive, Ho Iat Seng, closely toes the line of the central government in the latest Policy Address, further falling back on the city’s integration with Mainland China to expedite the economic recovery amid the novel coronavirus (COVID-19) outbreak, he is keeping his cards close to his chest whether more stimulus measures will be rolled out to keep local businesses afloat when the existing ammunition is running low. 

In his second Policy Address, since taking the city’s top job exactly a year ago, titled “Consolidating the Foundation, Advancing amid Hardship”, Mr Ho continues to spend a significant amount of coverage on how to bring the economy back to life as the global pandemic persists. Signaling out the financial industry, traditional Chinese medicine (TCM) sector and cross-border e-commerce as some up-and-coming sectors to boost the local economy, apart from gaming in the wake of the virus outbreak, the Policy Address for 2021 published last month underscores the importance of aligning the territory’s development with the nation’s, particularly through the new ‘dual circulation’ strategy. This bureaucratic term was first proposed by Chinese President Xi Jinping this May as a means to stimulate the mainland economy, focusing on the domestic demand and innovation alongside with the overseas market and investments. 

“The [Central Government] has come up with this new development strategy of ‘dual circulation’, offering new historic opportunities for the integration of Macau into the national development,” said Mr Ho last month. “As long as Macau has… actively participated in the circulation of the Mainland economy, [the city] could secure a place in the enormous Mainland market.” For the city to join the nation’s “dual circulation”, the Policy Address notes the city should further facilitate the efficient transfer of people, goods and capital with the Mainland, while it should live up to its bridging role between the international community and the Mainland.  

“In the perspective of Mainland China, Macau is still widely regarded and positioned as ‘abroad’, given the implementation of ‘One Country, Two Systems’. This will impose hurdles for the city to join the ‘economic circulation’ of the Mainland,”  Lou Shenghua, a professor at the School of Humanities and Social Sciences of the Macau Polytechnic Institute 

‘Abroad’ status 

Hailing the Policy Address acknowledging the importance of the city’s integration with the Mainland’s ‘economic circulation’, the professor at the School of Humanities and Social Sciences of the Macau Polytechnic Institute, Lou Shenghua, warns it might not be a smooth path. “In the perspective of Mainland China, Macau is still widely regarded and positioned as ‘abroad’, given the implementation of ‘One Country, Two Systems’. This will impose hurdles for the city to join the ‘economic circulation’ of the Mainland,” he says, referring to the city’s mini-constitution that ensures the city separate economic, judicial and political systems from across the border. 

Using the city’s aim of developing the cross-border e-commerce to diversity its economy as an example, the former advisor to the secretary for administration and justice notes the tax exemption for the mainlanders to shop in Macau caps at the total value of RMB5,000 (MOP6,053/US$760.1) in goods, while the tax exemption for the mainlanders to shop in Hainan has recently been expanded to RMB100,000 given the development of the Hainan free trade zone. “Should this tax exemption quota not change, it might be less appealing for [Mainland consumers] to shop in Macau even via cross-border e-commerce platforms,” he illustrates.  

“The SAR Government should then strive for more policies and support from the central government to smooth out the integration of Macau into the ‘economic circulation’ of the Mainland… putting less emphasis on the differences between Macau and other Mainland cities [in this aspect],” the academic notes. 

“The market of Macau alone is small and limited, and the market could only expand when the city collaborates with Hengqin and [other cities] in the Greater Bay Area,” says Samuel Tong Kai Chung, president of the Macau Institute of Management 

Hengqin cooperation 

While Samuel Tong Kai Chung, president of the Macau Institute of Management, agrees the local authorities should ask for more policy support, he thinks Macau should emphasise its edges over other mainland cities in contrast, namely its status as the free economic zone and independent customs territory. In order to join the ‘dual circulation’ of the mainland, the cooperation with nearby Hengqin, Guangdong province and within the Guangdong-Hong Kong-Macau Greater Bay Area is the key for the territory.   

“The market of Macau alone is small and limited, and the market could only expand when the city collaborates with Hengqin and [other cities] in the Greater Bay Area,” the scholar says. “Only with a bigger market could the economic and industrial diversifications [of Macau] start achieving positive results.” 

Albeit Henging being designated by the central government as a platform to assist in the development of the city more than a decade earlier, conspicuous signs of progress for the cooperation between the two sides could only be seen in the past two years, after the central government unveiled the outline development plan for the Greater Bay Area in early 2019. The Macau Government has also put more emphasis on the nearby island in its policy promulgation since then: the term “Hengqin” shows up 53 times in the Policy Address for 2021 and 57 times a year earlier under the helm of Ho Iat Seng, compared with just close to 18 times, on average, a year, in the Policy Address during the second term of former chief executive Fernando Chui Sai On. 


As Macau engages in the nation’s strategy of ‘dual circulation’, the city could focus at the same time on its own ‘dual circulation’ amid the pandemic, says the strategic planning department of the Bank of China Macau Branch (BOC Macau) in a statement. The lender notes the terms concerning integration with the Mainland are mentioned more often in the latest Policy Address than the document for 2020, namely “Mainland China” (97 times: 85 times), “the central government” (37 times: 28 times), “Guangdong-Macau” (44 times: 35 times) and “cross-border” (42 times: 30 times). These show that “the Macau economy has to rely more on the national development for its ‘external circulation’ as the pandemic has dampened the overseas demand”, says BOC Macau. 

In additional to the ‘external circulation’, the lender says the Policy Address highlights that the Government will focus on three aspects to ensure the ‘internal circulation’ of the city, namely: developing the financial sectors, TCM and cross-border commerce besides gaming; increasing investments in public works to create domestic demand; and supporting the local small-and medium-sized enterprises (SMEs). 

Accounting for over 90 percent of companies here, SMEs are of paramount importance to the local economy, and two rounds of measures have been launched earlier this year to keep local companies, particularly SMEs, afloat amid the unprecedented public health crisis, from the one-off financial subsidies of up to MOP1 million (US$125,000) to consumer e-vouchers for residents to spend in local shops to special loan and interest subsidy schemes and tax reduction. The two rounds of financial relief measures have consumed MOP42.6 billion in the fiscal reserve and MOP10 billion in the semi-autonomous Macau Foundation, including the financial subsidies for businesses and employees totalling MOP6.38 billion. “Two rounds of financial relief measures have been quickly in place, alleviating the financial pressure of residents… while the situation of local companies have remained stable in general this year,” said Mr. Ho in the latest Policy Address.  

“SMEs are still facing life or death calls,” says legislator Ho Ion Sang 

Chilling winter 

However, the Chief Executive has refrained to pledge for a new round of financial relief measures. “Looking forward to next year, the local economy is expected to achieve positive momentum in general and assume gradual recovery… but the pace of economic recovery might be relatively slow and the challenges for SMEs and many industries will remain,” Mr. Ho said. “[The government] will launch measures to spike the economy depending on the circumstances.” 

“Though the latest Policy Address has maintained a number of past measures, including the cash handout, to relieve the financial burdens of the general public,” says legislator Ho Ion Sang, “the local economy still faces a lot of internal and external uncertainties next year like whether the gaming revenue and the visitors’ arrivals to the city will grow as expected.” The Macau administration has expected the gaming revenue will hit MOP130 billion in 2021, or over MOP10.83 billion a month, representing a growth of nearly 49 percent from the latest monthly gaming revenue that stood at MOP7.27 billion in October. The total number of visitors to the city, mostly from the Greater China market, is expected to be around 14 million next year, or 40,000 visitors a day, doubling from the daily tally of 20,000 visitors in recent weeks. 

“SMEs are still facing life or death calls,” says the lawmaker, noting many of the first two rounds of financial relief measures, such as the consumer vouchers, will lapse by the end of this year. “There are worries that more firms and businesses will start to close down early next year at the conclusion of these measures.” 

Government figures show only 503 companies were dissolved in the first three quarters of 2020, 28.4 percent fewer than the same period last year, while the number of firms here totalled 75,095 as at Sept 30 this year, up by 6.9 percent year-on-year. But the tourism industry representatives have recently said in a high-profile manner that three to four travel agencies might close down and 200 staff might be sacked over the pandemic and the implementation of the city-wide minimum wage in November. Two local business chambers have recently carried out surveys showing that nearly 1,000 local SMEs in the central and northern districts have reflected their business volume resuming back to 50-70 per cent of the pre-pandemic era, but still 10 per cent of them have closed down or plan to close down. 

“Thus, the government should continue strengthening the tourism promotion of the city to support the tourism and gaming industry while it should also roll out the third round of financial relief measures, especially targeting at SMEs, to help them survive in this chilling winter,” says Mr Ho, the lawmaker.