Strategic position in Chinese and global economy
The Macao Special Administrative Region of the People’s Republic of China plays a strategic role in the Chinese and global economy. World-famous for its gambling mecca, Macao continues to maintain growth in its foreign direct investment (FDI) flows, especially in traditional sectors such as gambling and hotel industry. With the creation of new products, there has been a growing focus on the banking and financial sector. According to the World Investment Report 2017 published by the United Nations Conference on Trade and Development, Macao received about USD 1.14 billion and 3.03 billion in FDI flows in 2015 and 2016 respectively. Notably, such developments are marked by the approval of the Central Government’s policies with the purpose of stabilizing the local economy as well as by the progressive increase in the number of visitors to Macao.
At the geopolitical level, the region is part of the Guangdong – Hong Kong – Macao Greater Bay Area within the Pearl River Delta, which is made up of nine cities in the interior of the People’s Republic of China, namely Shenzhen, Guangzhou, Zhuhai, Zhaoqing, Dongguan, Huizhou, Foshan, Zhongshan and Jiangmen.
So, what role can this small pearl of the East play?
After a slight recession in the last two years, which resulted in its gaming revenue taking a sharp plunge, Macau has seen renewed economic growth in the second half of 2016, thus dispelling rumors of its decline. In fact, Macao’s GDP for 2016 was USD 44.7 billion more than that of Zhuhai, Jiangmen and Zhaoqing.
More revealingly still, Macao had the highest GDP per capita of all the cities in the Greater Bay Area Initiative, being vastly ahead of its runner-up, Hong Kong — with almost 70,000 USD compared to just over 40,000 USD of the latter. In addition, it is expected that Macao’s economy will grow 5.2% in 2017 and 5.3% in 2018 on average.
“One Center, One Platform” and “One Band, One Route” Initiatives
At the central governmental level, two programs have been launched to promote strategic development and cooperation: (i) the “One Center, One Platform” Initiative through which Macao is to become a universal center for tourism and leisure as well as to serve as a bridge for trade and services between mainland China and the Portuguese-speaking countries; and (ii) the “One Band, One Route” Initiative, the aim of which is to promote cultural exchange and strengthen economic cooperation with more than 65 countries in the Asian, African and European continents.
In line with these Initiatives, the Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Bay Area was published in early July with the goal of maximizing the benefits of the region through the integration of these three cities. The aim of the agreement is to consolidate the role of these cities in high-level international cooperation, elevate their role in guiding national economic development and China’s opening to the outside world, promote the development of China’s special administrative regions and maintain prosperity and long-term stability. General principles, prioritized cooperation areas and important cooperation mechanisms were also set out in the agreement. Through this initiative, the plan to unite the three cities can be effectively materialized, combining and harnessing their respective strengths and roles not only in the Greater Bay Area but also in the country as a whole — in areas such as finance, technology and manufacturing.
High growth potential
Macau’s growth potential is reflected in the number of tourists from mainland China in 2016, which reached 122 million, a figure that is expected to double by 2025. In addition, major infrastructure projects such as the Hong Kong – Zhuhai – Macao Bridge, in which investment already amounts to more than US $ 10 billion, are expected to attract about 40 million visitors to Macao by 2025.
The efforts to attract investors and tourists have indeed borne fruit, culminating in the opening of two mega resorts last year: Wynn Palace (USD 4.1 billion), The Parisian Macao (USD 2.7 billion); and in less than two years’ time, The 13 (USD 1 billion), MGM Cotai (USD 2.5 billion), Lisboa Palace (USD 3.8 billion) and Morpheus (an iconic project by the world-famous Iraqi architect, meanwhile deceased, Zaha Hadid). In addition to the numerous opportunities in the construction sector, the business opportunities for the suppliers of goods and service providers in the hotel industry continue to multiply. This substantial investment has also fostered growth in other sectors that are directly as well as indirectly related, such as entertainment (in view of the government’s commitment to diversification) and health (which can be seen in the incipient construction of Cotai’s new mega hospital center).
The contribution of the Forum for Economic and Trade Cooperation between China and the Portuguese-speaking Countries, which is based in Macao, has been significant in advancing the special cooperative relationship between the Macao SAR and the Lusophone countries. Since its creation, it has helped deepen the Portuguese-speaking countries’ (PALOP) understanding of Macao’s role as a vital link with mainland China, which has contributed to closer economic cooperation (evident in the latest available statistics which show an increase in trade of 43.3% compared to the same period last year). In the areas of justice and culture, Macao’s role in providing legal, translation, publication and training services in the Portuguese language with the intention of establishing a commercial platform for the PALOPs should be highlighted. At the same time, the aim is to establish a Portuguese language and cultural training center in Macao by taking advantage of the long-standing Portuguese-Chinese ties.