President Xi Praises Macau, Gives Red Packets

On December 20, Macau celebrated the successes of its first 20 years, and looked ahead under a new Chief Executive. Much work lies ahead, but a big headstart has been made thanks to a series of support measures unveiled at the end of the president’s trip.

By Macau Inc. Staff

President Xi Jinping had only kind words for Macau during his three-day visit to preside over the 20th Anniversary celebrations in the runup to December 20. And he came bearing gifts – known in Chinese as “Red Packets – which were unveiled on the final day.

Calling Macau “small but rich”, “small but strong”, “small but healthy”, and “small but beautiful”, the president placed special focus on the need for cooperation between Zhuhai and Macau in developing neighboring Hengqin, which should provide new impetus for economic development. Later that day, his words were followed by action from several central government ministries, which unveiled a series of measures designed to support the “moderate diversification” of Macau’s economy.

The president’s focus during his main speech on the morning of December 20 was on the successful implementation of the “One Country, Two Systems” principle, which he emphasized repeatedly was the foundation for Macau’s past and future success.

He also raised “four hopes” for the continued development of the SAR. They were:

  • To keep pace with the times and further improve the governance level of the SAR;
  • To persist in pioneering and innovating to further promote sustainable and healthy economic development;
  • To persist in putting people first, further protecting and improving their livelihoods;
  • To adhere to principles of tolerance and mutual aid, and further promote social harmony and stability.

The speech contained no details about any specific policies designed to support Macau in achieving these “hopes”, however. It was only later in the day that the central government ministries began announcing their packages for Macau.

The most eye-catching came from the National Development and Reform Commission (NDRC), which focused on plans to support Hengqin in establishing a so-called “Guangdong-Macau Deep Cooperation Zone.” This is different from the Cross-Border Industrial Park that already exists on Hengqin.

Hengqin-Macao cooperation will open up new development space

The NDRC did not go into much detail, referring only to its intention to “actively support” the zone’s establishment by setting up a “system of mechanisms for joint discussion and co-management between Guangdong and Macau.” It did not say where the boundaries of this zone might be.

The NDRC did hint at some tantalizing possibilities, however. It said it wanted to “optimize the ‘separation management’ policy”, which could mean changes are coming in border inspection policy. The new Hengqin Port, which has opened its immigration facility (although its trains are not yet open for ticketing), is perhaps just the start of a series of initiatives aimed at integrating management of ports between the two. It has Immigration and Customs officers from both Macau and Guangdong co-located inside one building.

Moreover, the NDRC said it was “looking at ways to explore the application of civil and commercial laws”. This raises the obvious question of whether it means Macau law or Guangdong law will prevail, or, eventually, a combination of the two?

The direction seems to be for the Guangdong side of this cooperation to move toward the Macau side. The NDRC used language such as “deepen trade reforms” and “expand the Opening Up process,” to create a business environment that is “highly connected with international rules.”

In doing all of this, the objective is to help Macau’s economy to develop in a moderately diverse manner, the NDRC said.

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The second “gift pack” came from the China Banking and Insurance Regulatory Commission (CBIRC), which said it would:

  • Encourage and support banks in Macau to set up institutions in the mainland to conduct business.
  • Include Macau in the list of “overseas investable regions” of mainland insurance funds, and support these funds to invest in the SAR.
  • Support mainland financial leasing enterprises to set up in Macau, and promote the development of Macau’s so-called “characteristic finance”.

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The third “gift pack” came from the State Administration of Foreign Exchange (SAFE), aimed at further facilitating cross-border investment flows for Hengqin-based, Macau-invested enterprises. These measures included:

  • Carry out a pilot reform of foreign debt registration management. Hengqin-based, Macau-funded enterprises can register foreign debts with the local foreign exchange bureau at up to twice the value of their net assets. These debts can be converted into foreign exchange and remitted directly through banks.
  • Allow Hengqin-based, Macau-funded enterprises flexibility in their borrowing needs, i.e. their types of debt can be of a wider variety of risk management.
  • Further relax restrictions on currency convertibility. Foreign debts may be held in one currency yet withdrawn or repaid in another through the banks.

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The fourth “gift pack” was the one most eagerly anticipated, because it had been predicted by a Reuters report the week before Xi’s visit. This was unveiled by the

Securities Times news portal, reporting that Guangdong will work with Macau to accelerate the feasibility study of establishing of a new equity exchange, known as the Macau Stock Exchange, which would be denominated in Renminbi, and would support the exchange’s establishment.

Earlier in the week, the Central Bank (PBOC), got the ball rolling by announcing four initiatives:

  • Increasing the daily remittance limit of Macau residents to RMB accounts in the mainland from 50,000 yuan to 80,000 yuan;
  • Formal approval of Macau mobile payment platforms for use in Zhuhai;
  • Individual banks approved as pilot banks to open bank accounts in the mainland for Macau residents by proxy;
  • Canceling the 20,000 yuan limit on transactions within Macau for exchanging Renminbi.

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The president ran a tight schedule during his trip. Although he did not set foot in any of the SAR’s economic engines – the integrated resorts – he did take the time to see a wide cross-section of society. Public events included stops at the Government Comprehensive Service Building, the Yingcai High School Affiliated Talents School, and the Sino-Portuguese Platform Complex. His focus was on learning more about the current situation in public service, economics, education, urban planning and other related fields.

President Xi visits the Yingcai High School Affiliated Talents School

The visit was not without controversy. International media decried the government’s heightened security measures, which resulted in several journalists being detained at the border crossings and some being rejected. And the customary critical voices of opposition lawmakers Au Kam San and Sulu Sou, as well as political activist Jason Chao, were raised during interviews with those media that did get in.

However, there was no evidence of the apparently deep-seated dissatisfaction with Macau’s governance that these activists mentioned. There were no public protests. On the contrary, the city was full of flag-waving fans, and large crowds turned out to see the president.

Commentators said the visit was important for many reasons, and that the president’s speech was not only aimed at subtly reminding Hong Kong of its duty to better perform its duties under “One Country, Two Systems”. They pointed to the installation of a new Chief Executive who had clearly been given a strong mandate for improvement.

Lawmakers were among the more outspoken. Lei Cheng I, for instance, said he hoped that the new government would make greater efforts to steer the economy away from its predicament of being dependent on a single industry, while at the same time improving livelihoods.

The gaming industry was not without a voice, either. Pansy Ho, co-chairperson of MGM China, was quoted by local media as saying that she expected the new government to provide clearer guidelines and directions for the gaming industry.

Ho Iat Seng: Focus on Regional Cooperation

The new Chief Executive of Macau Special Administrative Region, Ho Iat Seng, said soon after being sworn that economic development and other achievements over the past 20 years had provided a solid foundation for future development and had provided the city with unique advantages. His focus going forward would be to strengthen regional cooperation, especially with Zhuhai in finding innovative ways to jointly develop the Hengqin New Area, as well as “moderately diversifying” Macau’s economy. “I believe that with the support and guidance of the central government, we will work together to forge ahead, transform and innovate,” he said. “Macau will have a better tomorrow. ‘One Country, Two Systems’ will be even more brilliantly implemented.”

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