Victor Zheng Po-san Wan

Gambling Dynamism The Macao Miracle Dynamism

Victor Zheng • Po-san Wan

Gambling Dynamism

The Macao Miracle Victor Zheng Po-san Wan Kong Institute of Asia-Pacifi c Studies Institute of Asia-Pacifi c Studies Chinese University of Hong Kong Chinese University of Hong Kong Hong Kong SAR Hong Kong SAR

ISBN 978-3-642-40748-2 ISBN 978-3-642-40749-9 (eBook) DOI 10.1007/978-3-642-40749-9 Springer Heidelberg New York Dordrecht London

Library of Congress Control Number: 2013952454

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Springer is part of Springer Science+Business Media (www.springer.com) Pref ace

Macao has become the talking point of the global community for its impressive economic growth from huge infl uxes of capital and tourists, which followed the Macao government’s introduction in 2002 of the policy to deregulate gam- bling. Later, when the “fi nancial tsunami” struck Macao in 2008 and many con- struction projects were brought to a sudden halt, equally animated debates were triggered—this time over the prediction that Macao’s economy would soon collapse as capital fl ed and tourists stopped pouring in. However, Macao’s gambling industry and economy did not fall into a developmental trap, as had been suggested by pes- simists. After a short dip in investment and a period of fi nancial restructuring, the gambling industry quickly regained its momentum and Macao’s economy reached new heights. How long has casino gambling been taking root in Macao? What are the devel- opmental features of Macao’s gambling industry? In what way does the industry fi t in with Macao’s East-meets-West liminal position? After the return of sovereignty, how did the policy to deregulate gambling unleash such a level of economic dyna- mism? As casino gambling has become increasingly dominant in Macao, in what ways have gambling-related industries and industries unrelated to gambling been affected? Also, to what extent has the general public shared the benefi ts or been forced to bear the costs of Macao’s impressive economic growth? More importantly, is an economy dominated by gambling sustainable? The aim of this book is to offer some answers to the aforementioned series of questions from a holistic perspective. The dynamism of the gambling industry in Macao will be unravelled with special reference not only to economic theories, but sociological arguments, by examining the historical background and throwing light on contemporary competitors, and by pointing to various objective and subjective indicators for illustration. On the whole, we found that although various objective indicators showed that the number of visitors to Macao grew rapidly, the unemployment rate dropped steadily, and public revenues increased remarkably after the full implementation of the casino deregulation policy; the subjective indicators demonstrated that many Macao residents did not think that it was easy to fi nd a job with reasonable pay and benefi ts.

v vi Preface

A large proportion of the Macao population did not think that there had been any improvement in their family’s economic situation in the past few years. They believed that the purchasing power of their nominal income had largely been eroded by the continual increase in real prices, especially for property and daily necessities. In other words, the major benefi ts from the liberalization policy did not accrue to the common people, whose feelings of disappointment and discontent were mounting. An equally challenging task ahead for Macao is to determine whether an econ- omy that is heavily reliant on gambling is sustainable. Given Macao’s unique status as the sole casino playground in Chinese territory under the framework of “one country, two systems”, it is certain that in the near future there will be no city in mainland where casino gambling is made lawful. However, Macao should not become complacent because of this. The Macao SAR government should for- mulate relevant policies to solve socio-political problems triggered by the drastic expansion of the gambling business. At the same time, it should try to diversify Macao’s economic structure to reduce over-dependence on the gambling industry. Regional integration should also be encouraged. In short, gambling will continue to serve as an impetus for Macao’s economic expansion and diversifi cation in the com- ing decades. This book would not have been completed without the support and help of many people and institutions. We would like to convey our heartfelt gratitude to all of them. First, we thank the staff of the former Research Centre for Sustainable Development Strategies (Centro de Estudos Estratégicos para o Desenvolvimento Sustentável), the Macao Foundation (Fundação ), the Statistics and Census Service (Direcção dos Serviços de Estatística e Censos), and the Identifi cation Services Bureau (Direcção dos Serviços de Identifi cação) for their kind assistance during various stages of our research. Deepest thanks are also given to Prof. Fanny M. Cheung, Prof. Siu-lun Wong, Dr. Daniel Chi-wai Tse, Prof. Wu Zhiliang, Dr. Cora Wa-fong Chiang, Prof. Ieong Tou Hong, Dr. Chan U Chan, Mr. Chris Leung, and Ms. Agnes Vong for their valuable advice and unfailing support not only during our fi eldwork but also in the whole process of research. We are grateful to Dr. Josephine Khu for editorial support. Also, we are indebted to the members of our research team, Dr. Kevin Wong, Ms. Akira Zhang, and Ms. Chi Zhang, for their great effort in bringing this book to completion.

Hong Kong SAR Victor Zheng Po-san Wan Contents

1 Gambling and Society: A Theoretical Revisiting of the Issue ...... 1 1.1 Introduction ...... 1 1.2 Gambling and Society: Functional or Dysfunctional? ...... 2 1.3 A Continuous Debate: Ethical vs Unethical ...... 6 1.4 Legalized Gambling: Greater Benefi ts or Greater Costs? ...... 8 1.5 The Rise of Casino Capitalism ...... 13 1.6 Research Focus and Methodology ...... 16 1.7 Conclusion ...... 18 References ...... 19 2 Macao and Globalization: A Gambling Perspective ...... 23 2.1 Introduction ...... 23 2.2 The History of Macao: A Snapshot ...... 26 2.3 Liminality and the “Macao Formula”: A Bridge-cum-“Safety Valve” for China ...... 32 2.4 The History of : A Deep-Rooted Culture ...... 37 2.5 Legalized Gambling in Macao ...... 40 2.6 Conclusion ...... 45 References ...... 46 3 The Return to Chinese Sovereignty: A Historical Turning Point ...... 49 3.1 Introduction ...... 49 3.2 From Colony to Special Administrative Region ...... 50 3.2.1 Settling the Hong Kong Question ...... 50 3.2.2 Settling the Macao Question ...... 52 3.3 Challenges in the New Millennium ...... 56 3.3.1 Economic Downturn ...... 57 3.3.2 Crime Wave ...... 57 3.3.3 Business Competition ...... 59

vii viii Contents

3.4 Deregulation as a Multi-goal Strategy ...... 60 3.4.1 National Interests ...... 60 3.4.2 Local Interests ...... 61 3.5 Rapid Economic Growth After Liberalization ...... 65 3.5.1 National Policy Support ...... 65 3.5.2 and Tourist Attractions ...... 66 3.6 Conclusion ...... 68 References ...... 68 4 Gambling Expansion and Economic Growth ...... 73 4.1 Introduction ...... 73 4.2 Casinos Mushroomed ...... 74 4.3 Economic Invigoration as Tourists Pour In ...... 75 4.3.1 Gross Domestic Product ...... 75 4.3.2 Inbound Tourists ...... 77 4.3.3 Tax Revenue ...... 79 4.4 Employment Growth with an Infl ux of Foreign Workers ...... 81 4.4.1 Employment in the Gambling Industry ...... 81 4.4.2 Unemployment and Underemployment ...... 82 4.4.3 Non-resident Workers ...... 82 4.4.4 Employment Earnings ...... 84 4.5 Increasing Dependence on the Gambling Industry and Fine-Tuning Policies ...... 86 4.6 Classifi cation and Profi le of the Respondents ...... 87 4.7 Improvements in Fringe Benefi ts and Job Prospects ...... 92 4.7.1 Job Fringe Benefi ts ...... 92 4.7.2 Job Stability and Prospects ...... 93 4.7.3 Fairness of Occupational Income ...... 94 4.7.4 Career Move ...... 95 4.8 Improvements in Household Economic Condition and Outlook ...... 96 4.8.1 Household Budget ...... 96 4.8.2 Changes in Household Economic Condition ...... 97 4.8.3 Expected Changes in Household Economic Condition ...... 98 4.9 Conclusion ...... 99 References ...... 101 5 Gambling Expansion and Social Change ...... 103 5.1 Introduction ...... 103 5.2 Social Evils Became More Complex ...... 104 5.2.1 Crime Rate ...... 104 5.2.2 Suspicious Transaction Reports ...... 106 5.2.3 Corruption ...... 108 5.2.4 Divorce Rate ...... 109 5.2.5 Juvenile Delinquency ...... 110 5.2.6 Pathological Gambling ...... 111 Contents ix

5.3 Mixed Views on Social Problems and Public Security ...... 113 5.3.1 Seriousness of Social Problems ...... 113 5.3.2 Public Security Situation ...... 115 5.4 Class Identity and Relative Income ...... 117 5.4.1 Subjective Class Position ...... 117 5.4.2 Relative Income ...... 118 5.5 Decline in Satisfaction with Social Stability, Equality, and Integrity ...... 120 5.5.1 Social Stability ...... 120 5.5.2 Social Equality ...... 120 5.5.3 Social Integrity and Cleanliness ...... 121 5.5.4 A Good or Bad Society? ...... 122 5.6 Conclusion ...... 124 References ...... 127 6 Gambling Expansion and Political Development ...... 129 6.1 Introduction ...... 129 6.2 The Pace of Political Development and Pressure for Participation ...... 130 6.2.1 Composition of the Legislative Assembly ...... 131 6.2.2 Voting Rates ...... 132 6.2.3 Civic Associations ...... 133 6.2.4 Political Protests ...... 134 6.3 Political Involvement: Interest, Effi cacy, and Participation ...... 135 6.3.1 Political Interest ...... 135 6.3.2 Internal Political Effi cacy ...... 137 6.3.3 External Political Effi cacy ...... 139 6.3.4 Socio-political Participation ...... 140 6.4 Decline in Satisfaction with Democratic Development, Human Rights, and Government Performance ...... 142 6.4.1 Democratic Development ...... 142 6.4.2 Human Rights ...... 143 6.4.3 The Government’s Performance ...... 144 6.5 Conclusion ...... 146 References ...... 147 7 National/Regional Integration and Local Development ...... 151 7.1 Introduction ...... 151 7.2 Embracing Regional Integration as a Development Strategy...... 152 7.2.1 External Trade ...... 152 7.2.2 Foreign Direct Investment ...... 156 7.3 Enlarging the Foundation for Sustaining Growth ...... 159 7.3.1 Extensive Land Reclamation ...... 159 7.3.2 National Policy Support ...... 160 7.4 Negative Views on National/Regional Integration ...... 164 x Contents

7.5 The Perception of Cross-Boundary Activities Remains Positive ...... 166 7.6 National and Local Identities ...... 169 7.7 Conclusion ...... 171 References ...... 173 8 The First Decade and the Road Ahead ...... 175 8.1 Introduction ...... 175 8.2 Challenges and Opportunities in the Gambling Industry ...... 177 8.3 Challenges and Opportunities Facing the Economy ...... 180 8.4 Challenges and Opportunities for the Society ...... 184 8.5 Challenges and Opportunities in Government and Politics ...... 186 8.6 Challenges and Opportunities from Regional Integration ...... 189 8.7 Conclusion ...... 192 References ...... 193

Chronology of Gambling Events in Macao...... 195 References ...... 198

Glossary ...... 201 Abbreviations and Acronyms

ANOVA Analysis of Variance CCAC Comissariado contra a Corrupção (Commission Against Corruption) CEEDS Centro de Estudos Estratégicos para o Desenvolvimento Sustentável (Research Centre for Sustainable Development Strategies) CEPA Closer Economic Partnership Arrangement DICJ Direcção de Inspecção e Coordenação de Jogos (Gaming Inspection and Coordination Bureau) DSEC Direcção dos Serviços de Estatística e Censos (Statistics and Census Service) DSEJ Direcção dos Serviços de Educação e Juventude (Education and Youth Affairs Bureau) DSM Diagnostic and Statistical Manual of Mental Disorder EU European Union FDI Foreign Direct Investment Galaxy Galaxy Casino, S.A. GDP Gross Domestic Product GEI Gambling and Entertainment Industries GGR Gross Gaming Revenue GIF Gabinete de Informação Financeira (Financial Intelligence Offi ce) GNI Gambling Non-Related Industries GRI Gambling-Related Industries Melco Melco PBL Jogos (Macau), S.A. (Renamed Melco Crown Gaming (Macau) Limited in June 2008) MGM MGM Grand Paradise, S.A. MICE Meetings, Incentives, Conferences, and Exhibitions MOP Macao Pataca (Currency) PRC People’s Republic of China RMB Chinese Yuan (Currency) SAR Special Administrative Region SARS Severe Acute Respiratory Syndrome SJM Sociedade de Jogos de Macau, S.A.

xi xii Abbreviations and Acronyms

STDM Sociedade de Turismo e Diversões de Macau, S.A. STR Suspicious Transaction Report UK United Kingdom UNESCO United Nations Educational, Scientifi c and Cultural Organization US United States of America Venetian Venetian Macau, S.A. Wynn Wynn Resorts (Macau), S.A. Chapter 1 Gambling and Society: A Theoretical Revisiting of the Issue

1.1 Introduction

In Shakespeare’s longest play, Hamlet , the following monologue spoken by Prince Hamlet to a pair of courtiers, Rosencrantz and Guildenstern, is frequently quoted to illustrate the paradoxical and tragic nature of human beings: What a piece of work is a man! How noble in reason! How infi nite in faculties! In form and moving how express and admirable! In action how like an angel! In apprehension how like a god! The beauty of the world, the paragon of animals! And yet to me what is this quintessence of dust? (Shakespeare 1936 , p. 1163) Without a doubt, from antiquity until the present day, questions such as whether human nature is originally good or bad, why life is full of suffering, and why there is so much evil in the world have baffl ed philosophers. The argument between two ancient and infl uential philosophers, Mencius and Xunzi, is well known. The former asserted that human beings are innately good; it is social evils that lead to bad moral character. The latter, however, believed that humans are by nature bad and that the purpose of moral cultivation is to shape the nature of human beings so that they achieve goodness (Chan 1963 ). People both in the East and the West tend to think of human beings as “the noblest of all God’s pieces of work”, but also as naturally self-seeking, greedy, competitive, and even aggressive. A common saying or understanding is that although human beings are inculcated with good values, they are also socialized with bad ones because the environment in which they were brought up or live is far from simple. Hence, although we learn to be honest, strong, generous, hardworking, and self-disciplined, we sometimes tell lies, feel weak, and are selfi sh, lazy, and indulgent. As society is the gathering of numerous individuals, we generally refer to collective good values as virtues and to collective bad values as vices. In most societies around the globe, whether in the past or present, gambling not only was or is regarded as a type of entertainment or leisure activity, but also as a vice or social evil. This book attempts to unravel the paradoxical and Janus-faced nature

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 1 DOI 10.1007/978-3-642-40749-9_1, © Springer-Verlag Berlin Heidelberg 2014 2 1 Gambling and Society: A Theoretical Revisiting of the Issue of gambling with special reference to Macao’s history and society—especially in evaluating recent developments in Macao after the implementation of the policy to liberalize gambling.

1.2 Gambling and Society: Functional or Dysfunctional?

Gambling is a universal phenomenon in human societies. Many traditional gambling activities, such as playing dice, tossing coins/tokens, and betting on horse races or cock fi ghts, which were popular hundreds or thousands years ago, are still fashionable today. However, the ubiquity of gambling in human history has simultaneously led to prolonged debates on its positive and/or negative effects. Some people see gambling as a kind of recuperative pastime, as a playful or leisure activity, but some think that gambling can lead to moral decay, and to more crime and corruption. Some people consider gambling to be a purely economic activity and advocate its legalization. They contend that legalizing gambling will not only create jobs, but also bring in a great deal of tax revenue. However, some people refute the above view, arguing that legalized gambling usually leads to greater government expenditures and higher social costs, which will ultimately offset the benefi ts that are generated. In short, gambling is a highly controversial activity, and people remain extremely divided in their perceptions of its nature and effects. Before engaging in an in-depth analysis of gambling, let us fi rst defi ne what is meant when the term gambling is used. Generally, gambling is seen as involving “games of chance”. The Macmillan Dictionary ( 2012 ) defi nes gambling as “an activity in which you risk money in the hope of winning more money if you are lucky or if you guess something correctly”, or “a situation in which you take a risk on something that can give you important benefi ts”. If this is the defi nition, then gambling can encompass all kinds of activi- ties from the tossing of a coin in betting heads or tails to deciding who pays for lunch, to short-selling stocks, bonds, or derivatives when speculating over the fl uc- tuations of the market for profi t. Of course, the level of risk involved in these activi- ties usually corresponds to the level of the benefi t at stake. Since gambling is so widespread that it can be regarded something that everyone does, ordinary people simply defi ne gambling as an attempt to make easy money, or even anything involv- ing risks or uncertainty. As the term is broad and highly ambiguous, gambling activ- ities “can be found in almost every aspect of social life, from personal relationships to international politics” (McMillen 1996 , p. 6). More interestingly, while most of the economic benefi ts of gambling are pecuniary or can be calculated numerically, very few of the social costs can be quantifi ed or measured objectively; thus, the debates over gambling are invariably controversial, complicated, and never-ending (Cozic and Winters 1995 ; McGowan et al. 2000 ). As gambling is usually seen as a symbiont in human society, most of the explana- tions of the phenomenon start from the functionalist perspective. According to structural functionalists, human society is made up of cooperating parts, groups, or 1.2 Gambling and Society: Functional or Dysfunctional? 3 institutions that operate in an orderly manner according to a set of rules and values. Each part, whether material or immaterial, fulfi ls certain functions, and interrelates with and affects all of the others. If parts are functional, they will bring progress and solidarity to the social system. If parts are dysfunctional, disruption will result. Some functions are manifest (obvious and intended), but some are latent (unrecog- nized and unintended). Usually, a part or institution arises and persists because it is functionally useful. It will cease to exist if it does not serve some function. When social needs change, the functionality of the part will also change (Parsons 1949 ; Merton 1957 ). For a very long time, the pervasiveness of gambling in human history has caused a number of researchers to think that gambling is innate in human beings. For instance, American journalist Clyde Davis observed that “the urge to gamble, to risk a little in hopes of gaining a good deal, the desire to get something for nothing, seems to be one of the most fundamental traits of human nature” (quoted in Li and Smith 1976 , p. 189). Putting this view of “human nature” in the context of the social system, it is not surprising to fi nd quite a number of works suggesting that gambling serves certain important and positive functions, such as satisfying a basic human need for excitement, relaxation, leisure, adventure, entertainment, and so on (Cozic and Winters 1995 ; Reith 1999 ; Pantalon et al. 2008 ). Gambling, juxtaposed to work and other activities with recognizable social obligations, can be seen as an expressive social activity enjoyed as an end in itself (McMillen 1996 ). Another function of gambling, but one that people are seldom aware of, is to serve as a “safety valve” for society. As we all know, human society is stressful— fi lled with unsatisfi ed desires, far from acceptable interpersonal relationships, the burden of work, and so on. If such stress is left unaddressed, it may turn into grievances, anti-social feelings, or violence, which may ultimately undermine social stability. By using gambling as an outlet for stress, the argument is that people can escape from a dull, boring, or unhappy life. Because gambling can prevent possibly violent forms of dissent from building up, some researchers have argued that it is conducive to social stability (Devereux 1968 ; Fabiansson 2010 ). Since gambling can bring excitement, is a leisure activity, and can release personal stress as engaging in sports or exercising can do, Campbell ( 1976 ) found that a certain level of gambling activity could help working-class gamblers to stave off depression, because by engaging in gambling they are participating in the process of making decisions—something that they are often denied in the factory, offi ce, or home. They are also experiencing the hope of winning, the joy of winning, and the peak emotion of total involvement in an activity. If workers were given a break to engage in gambling during their monotonous and long working hours, not only could productivity be increased, but accident rates and absenteeism could also be reduced. There is also the unconventional argument that gambling offers a way of boost- ing one’s self-esteem and giving hope or opportunities to the middle class and eth- nic minorities to achieve upward social mobility. According to Scodel (1964 ), because of the intense competition in the US, the fear of losing one’s position in the middle class is very strong. There is also a great deal of insecurity among ethnic 4 1 Gambling and Society: A Theoretical Revisiting of the Issue minorities about their claim to be American. Some of them are attracted to gambling because it provides them with an opportunity to demonstrate self-reliance, self- assurance, independence, and the ability to make decisions, which might be less possible in their other roles. Li and Smith (1976 , p. 193) further argued that gam- bling can be an avenue for achieving success and recognition “without suffering the consequences of realizing that their opportunities are indeed limited”. Of course, there are also some people who really consider gambling to be “the road to riches” (Cooper 1995 , p. 26). Last, but not least, cross-cultural studies have further revealed that in some societies, gambling is often organized around religious or communal activities to justify certain communal choices (Geertz 1972 ; Altman 1985 ; Duara 1995 ). In this sense, gambling is tinged with religion, as it signifi es God’s blessing or decision. This seems understandable, as the most important rule in gambling is luck— something happening to people for no particular reason. Apart from manifest functions, gambling has some latent functions, which are usually neglected. The most fundamental or infl uential of these is serving as the baseline for hard work, honesty, and an emphasis on saving. This function is derived from the retributive theory of punishment advocated by Durkheim. As functionalists see society as an integration of various highly differentiated parts, and each part functions interdependently with many others, the question of how to maintain a state of solidarity (social order and stability) seems to be of the utmost importance. Although it has been suggested that a set of shared beliefs or values is the key to ensuring societal cohesion, it seems diffi cult to draw the line between conformity and nonconformity. In this regard, Durkheim ([1895] 1982) argued that deviant behaviour or, to be more specifi c, crime and punishment, in fact serves the key latent function of maintaining social order and norms. He used two important concepts— “the normality of crime” and “the social utility of mis-behaviour”—to illustrate that a certain amount of social evil or vice is benefi cial for society. In other words, punishment not only serves the important manifest function of deterrence but also a pivotal latent function as a key mechanism in reaffi rming the moral code. Other functionalists have also pointed out that such aspects of society as prostitution, poverty, and illegal immigration contribute to the stability of the social system instead of to its disturbance (Davis 1937 ; Gans 1972 ; Ferrante 1995 ). Of course, we should bear in mind that although a certain amount of crime can serve the function of deterrence, too much of it will turn to a plague and shake the foundations of social stability. In the way that crime has served both manifest and latent functions in all societies from the past until the present, gambling has likewise served both types of functions, as a form of entertainment on the one hand and as a counter-example of not making money without effort on the other. That explains why some researchers not only see gambling as serving some basic human needs, but also as an opportunity for the players to demonstrate their strength of character and commitment to social values such as hard work, the taking of risks, courage, creativity, and honesty (Knapp 1976 ; Donahue 1995 ). To a great extent, although gambling breeds a number of social evils, its existence acts as a counter-example for reaffi rming social stability and common morality. In short, gambling is a necessary evil in human society. 1.2 Gambling and Society: Functional or Dysfunctional? 5

Judging from the principle that “a part will cease to exist if it does not serve some function” and looking at the pervasiveness of gambling in most societies from the past until the present day, we can come to the conclusion that gambling is of use to a society. A coin has two sides, but perceptions of gambling are pre- dominantly one dimensional. The most disapproving view is that gambling is an addictive “good”. Engaging in it may not only lead to fi nancial problems at the personal and familial levels, but if not constrained could be downright harmful to the gamblers in particular and to society in general (Zola 1967 ; Centre for Social and Health Outcomes Research and Evaluation and Te Ropu Whariki 2008 ). Some people even see gambling as a self-defeating and irrational form of behaviour, and believe that getting addicted to the activity will “lead to [a] dissolute character” (Zabilka 1995 , p. 33). If the mentality of relying on luck or making money without effort instead of working hard becomes widespread, the motive to work and produce will be weakened, as well the ethic of saving (Paton 1914 ; Ramp and Badgley 2009 ). Another frequently quoted detrimental effect of gambling is that it usually aggravates all kinds of social evils: pathological gambling, alcoholism, drug abuse, family strife, prostitution, juvenile delinquency, triads, corruption, loan- sharking, money-laundering, and so on. Government expenditure may have to increase to fi ght these social problems or to help the victims, and especially to reinforce proper public morality and social values. If the government is unable to keep these social evils under control, they may become serious threats to society (Collins 2003 ; Graffam and Southgate 2005 ; Spectrum Gaming Group 2009; Williams et al. 2011a ). To sum up, from the existence and pervasiveness of gambling in human history, it is not diffi cult to determine that gambling serves some basic human needs for fun, excitement, and relaxation. It also serves other social functions, such as drawing the line between what constitutes a proper work ethic and the morality of saving and what does not, and acting as a release for social stress arising from alienation, the monotony of work, personal frustrations, or unhappiness. However, from the fact that most societies in the past regarded gambling as a social evil and outlawed it, the view that gambling has serious negative effects cannot be ruled out. Family feuds, debt, and unsatisfactory interpersonal relationships are some of the admittedly negative effects of rampant gambling. Degraded public morality, a poor work ethic, and an increase in the number of problem gamblers are some others. Although gam- bling is Janus-faced and its functions or effects are highly diverse and contradictory, it is clear that it has been impossible to extinguish this activity from human society. Approaching this problem in a rational and objective manner will not only lead to a better understanding of gambling, but will also assist in determining how more benefi ts might be derived from the activity—or at least in reckoning how its costs might be minimized.1

1 Unlike functionalists, Marxists see gambling as an institution that defends the rule of the elite and continues the exploitation of the working class (Chambers 2011). However, since this point of view is not especially relevant to our discussion, we do not explore it in detail in this book. 6 1 Gambling and Society: A Theoretical Revisiting of the Issue

1.3 A Continuous Debate: Ethical vs Unethical

Argued in parallel with the theory of functionality is the issue of whether gambling is ethical or unethical. Although in the past some level of gambling was considered benign for serving basic human needs, for a very long time the activity was banned in most societies as being immoral and socially threatening. One explanation for the ban comes from the perspective of religion. As argued by Zabilka (1995 , p. 30), a signifi cant part of the sacred writings of most of the world’s religions attempts “to defi ne how to live on the edge between selfi shness and selfl essness”. Like prostitu- tion, theft, and homosexuality, gambling has been grouped under the category of vice. Engaging in gambling has not only been condemned as morally corrupt, but has also been perceived as a violation of social values. Focusing on predominantly Christian societies, it is clear that in the past gam- bling was classifi ed as selfi sh behaviour that was the opposite of selfl essness. Gambling goes against God’s teaching (Cooper 1995 ). In the Holy Bible (Exodus 20:15), God’s message is clear: “Thou shalt not steal”. But gambling is similar to “an attempt to take the goods that belong to someone else without working for them or giving something in return” (Zabilka 1995 , p. 33). Thus, gambling could be considered tantamount to encouraging people to steal or to “robbery by mutual consent”, and to breaching the conventional work ethic that stresses industriousness. Also, gambling has been criticized for breaking God’s rule that “Thou shalt not covet” (Exodus 20:17). This is because its practice “is a form of covetousness that encourages greed” and does not follow the teaching that “we are to live by our own work” (Cooper 1995 , pp. 23–24). In this vein, the gambler commits at least two of the seven deadly sins, sloth and greed. Not surprisingly, then, gambling has been considered one of the classic vices and was banned in most societies. Apart from the criticism that gambling infringes on God’s teachings against robbery and greed, it has also been blamed for leading to more organized crime and social evils. Such an accusation in the past had its basis in the prolonged prohibition of the activity in most societies (Bankoff 1991 ). As a result, criminals became the only operators of this highly profi table business (King 1969 ; Dunstan 1997 ). There were frequent reports of gambling operators bribing government offi cials to avoid capture by law enforcement authorities (Dombrink 1996 ). The habit-forming nature of gambling and accounts of some gamblers falling into heavy debt leading to serious personal problems and family strife were other frequently told stories (National Research Council 1999 ). All of these accounts gave the general public a negative impression that gambling “feeds moral depravity and corruption” (Cooper 1995 , p. 25) and that casinos were inherently pernicious, crime-ridden places. Although gambling was considered contrary to the biblical work ethic and was frequently associated with crime and social evils, social perceptions have changed over time. The most infl uential factor leading to such a change is believed to be the spread of liberalism in the West after the 1960s. After the release of the 1957 Wolfenden Report in Great Britain, which argued for the decriminalization of certain practices regarded as vices, such as homosexual offences and prostitution, similar heated debates began in the US. Some open-minded socio-legal scholars 1.3 A Continuous Debate: Ethical vs Unethical 7 cast doubt on the issue of using criminal law to control vices, and expounded on the decriminalization of some forms of “victimless vices”. However, such an argument came under serious attack from conservative pan-moralists, as they considered that “the web of society is torn by the collective actions of individuals causing vice- related harm to themselves” (Dombrink 1996 , p. 46). Although such heated debates have cooled down somewhat, the discussions on whether criminal sanctions are effective or appropriate for handling “victimless vices”, and the limitations of the application and the possible negative consequences of criminal sanctions on vices have continued (Kadish 1967 ; Skolnick 1968 ). The courts of various states sooner or later addressed certain vices such as marijuana, abortion, and sodomy by taking a liberal approach and a more tolerant stance. Unlike other classic vices, gambling was seen to be “the most socially acceptable vice” in many societies, and some forms of gambling (especially government-run ) were tolerated in some parts of the world, including the US.2 In this regard, since the 1970s systematic studies have been conducted to evaluate the potential of commercialized gambling in the US. Many of these studies indicated that gambling was the least harmful of the various vices to individuals and society as a whole. The threat to social stability and public morality was thus conceived to be less great from gambling than from other vices. Also, it was believed that there would be less social opposition to the legalization of gambling than to the legalization of other activities traditionally regarded as vices (Geis 1972 ; Skolnick and Dombrink 1978 ). Whether infl uenced by such studies, or by repeated liberal social movements, social perceptions of various “victimless crimes” have changed enormously since the 1970s. Casino gambling in New Jersey and South Dakota was legalized following the move in Nevada, as these states faced a serious economic recession on the one hand and depleted government revenue for supporting increases in social welfare on the other (Abt et al. 1985 ). In the 1990s, the legalization of gambling gathered pace and increased in scale. States such as Illinois, Indiana, Mississippi, Missouri, Louisiana, and others moved to introduce legalized gambling as a key industry for stimulating economic growth (Chambers 2011 , p. 91). Not only did casinos become increasingly accepted—mushrooming in most states—other types of gambling also proliferated, from pari-mutuel betting on horses, dogs, and jai-alai, to slot machines, wagers on sports, bets in card rooms, video , and the paying out of prizes in charity gaming, bingos, and so on. In 2011, global gambling revenue climbed to a record $419 billion and is expected to reach $500 billion by 2014 (Los Angeles Times 2012 ). The saying that “yesterday’s vice is frequently today’s entertainment” is true in the case of gambling (Zabilka 1995 , p. 30). The change in public attitudes and government policies from regarding gambling as a serious social evil potentially threatening to social order to the liberal view of it as a “victimless crime” that should be decriminalized, and then to legalizing it to

2 For example, in Asia, a was established in Manila by the royal decree of 29 January 1850 and was operated by a government offi ce (Bankoff 1991 , p. 267). Spanish consuls in Asia were directed to encourage the sale of tickets, which were a source of revenue for the Spanish administration in the Philippines (Wickberg 1965 , p. 229). In the West, according to Chambers ( 2011 , p. 38), before 1970 21 Western countries had introduced lotteries to raise funds for welfare projects. 8 1 Gambling and Society: A Theoretical Revisiting of the Issue generate income and jobs, is reminiscent of the “private vices and public benefi ts” paradox expounded by Mandeville in the early eighteenth century. In his classic work, The Fable of the Bees , Mandeville ([1714] 1981) used the metaphor of a bee colony to illustrate the innovative idea that without the desire of individual bees for gain, the bee colony could not thrive. In this vein, he asserted that vicious greed or selfi sh behaviour for personal gain could produce positive social effects if properly administered. In other words, Mandeville contended that private vice was a neces- sary condition for economic prosperity. Also, he criticized church education that focused on instilling higher virtues among the poor as mere hypocrisy, regarding the so-called higher virtues as a hindrance to social progress. Although Mandeville was denounced by the church for spreading “immoral ideas”, his “private vices and public benefi ts” paradox inspired a great many aca- demic discussions and exchanges of ideas. In Adam Smith’s key works, such as The Theory of Moral Sentiments ([1759] 2002 ) and The Wealth of Nations ( [1776] 2003), viewpoints such as the self interest of individuals resulting in invisible coop- eration and economic prosperity without the intention and knowledge of these indi- viduals, or individual collective action automatically bringing about benefi ts to the public, are clearly consistent with those of Mandeville. Standing on the same ground that selfi sh motives promote the interests of society as a whole, it is not diffi cult to see why gambling was decriminalized and even legalized in some American states, as the socio-economic-political atmosphere changed in the 1970s. The spread of liberal ideas, which saw gambling as a legitimate leisure activity and not as a social evil that could lead to moral decay or crime, clearly facilitated the move to channel individual gambling desires towards socially desirable ends, i.e., generating jobs and public revenues. Nevertheless, controversies over whether gambling is ethical or unethical persist. A series of recent surveys in different countries indicated that 32 % of Americans and 28 % of Canadians still consider gambling to be “morally wrong” (Chambers 2011, p. 67). Ethical concerns are still a fundamental issue for charities. Many charity groups, religious organizations in particular, opt not to use gambling revenue and are opposed to charity fundraising through casinos. 3 Clearly, although most states in the US (or many Western societies) have made gambling legal, gambling continues to be a highly controversial activity in society.

1.4 Legalized Gambling: Greater Benefi ts or Greater Costs?

There is historical evidence showing that making gambling an illegal activity only drives problems underground. It does not lead to the total eradication of gambling and its related social evils. Knowing the impossibility of eradicating gambling in

3 For example, in a survey of Canadian charity groups, 66 % opted not to use gambling revenue. Among these organizations, 63 % (90 % for religious organizations) cited ethical concerns as a reason (Azmier and Roach 2000 , p. 12). This ethical issue has not been resolved and is as polarizing as it was in 2000 (CBC News 2010 ). 1.4 Legalized Gambling: Greater Benefi ts or Greater Costs? 9 human societies, and also understanding its benign functions if properly managed, starting from the 1980s many Western governments have chosen to bring such underground activities to the surface to better control and administer them. A fre- quently quoted argument is that if a government manages to turn gambling into a legalized business, gambling activities would come under proper regulation. In addition, common people would have more options for entertainment and leisure, while tremendous economic benefi ts would also be generated for society. The discussion on whether gambling should be promoted or legalized has always been highly controversial. The traditional view is that casino gambling is an addic- tive “good”, the consumption of which is harmful, both pathologically and psycho- logically, to gamblers and also a threat to the harmony and stability of the family and society as a whole. Those who hold such a view also consider gambling to be a “directly unproductive profi t-seeking” activity that should not be allowed by law (Bhagwati 1982 ; Dixit and Grossman 1984 ). The view from the liberal perspective is that gambling is an ordinary form of sport or popular entertainment that can stimulate economic growth, create employment, and raise revenues for the govern- ment (Rephann et al. 1997 ; Walker 2007 ). Since the 1960s, people who espouse the latter view have proposed legalizing casino gambling and turning it into a highly profi table industry. According to various studies, gambling has been legalized in most societies since the 1970s because of prolonged economic recessions and the pressure of increasing public expenditures. Two factors that contributed to such a change were economic restructuring and the rise of the welfare state (Chambers 2011 ). The former refers to efforts to deal with the phenomenon of declining industries, which has led to a steady rise in unemployment and forced governments to fi nd new economic engines to absorb workers who have been made redundant. The latter refers to growing welfare provisions, which have been driving governments to fi nd new kinds of busi- nesses to raise tax revenues. Under such circumstances, legalized gambling can come to be considered a panacea that not only could lead to the creation of new jobs, bring in new investment, and therefore stimulate economic growth in other sectors, but also raise attractive and stable revenues to fi ll depleted government coffers (Smeral 1998 ; Alexander and Paterline 2005 ; HLT Advisory Inc. 2008 ; Eadington and Doyle 2009 ; Calcagno et al. 2010 ; Williams et al. 2011a ). How can such tremendous economic benefi ts be achieved? Proponents of the legalization of gambling paint the following rosy picture. First and foremost, when gambling is declared legal, investors will be enticed into putting capital into the building of casinos, hotels, resorts, theme parks, and infrastructure. When these investment projects are actually implemented, not only will jobs of various kinds be created, but industries in many other areas such as construction, restau- rants, transport, banking, fi nance, and insurance, will also thrive. As the economy grows, the unemployment rate will decline while general wage levels will rise. In addition, the tremendous revenues that the government can obtain from the gambling business can be used for such good causes as providing community care and public services (United States General Accounting Offi ce 2000 ; Collins 2003 ; Williams et al. 2011b ). 10 1 Gambling and Society: A Theoretical Revisiting of the Issue

Apart from tremendous direct economic benefi ts, substantial indirect economic benefi ts could come about after making gambling lawful. Generally, tourism is expected to be the key industry to benefi t from the development of a legalized gam- bling industry. Although visitors, some from halfway across the globe, are attracted mainly for the purpose of gambling, they may not only visit casinos but also go sightseeing, shopping, and engage in other forms of entertainment. In fact, as more visitors fl ow in, not only will the tourist industry fl ourish, but other related indus- tries will also benefi t, such as the hotel, entertainment, restaurant, retailing, and convention industries, becoming more competitive in regional markets. In addition, as most gambling markets target non-local customers, transportation links to regional and global cities could also improve (Bybee and Aguero 2000 ; California Economic Forecast 2008 ; Lahr et al. 2010 ). Last, but not least, from the point of view of free market economists gambling is an ordinary leisure activity or form of entertainment. Making gambling unlawful undermines “consumer sovereignty”, that is, the consumer’s right to make a deci- sion about what to consume. If gambling were to be made lawful, individual con- sumers would no longer be deprived of the right to make a consumption decision about an activity that they enjoy (Lehne 1986 ; Productivity Commission 1999 ; South Waikato District Council 2006 ). In sum, as there are number of economic benefi ts to be reaped from the legalization of gambling, since the 1970s there has been much support for the proposal. In disputing the view that legalized gambling can bring substantial economic benefi ts, opponents have argued that such so-called economic benefi ts are usually outweighed by extra economic costs. First, the sudden and rapid infl ux of capital that generally accompanies the legalization of gambling usually pushes up property prices, rents, and the prices of daily necessities, which will have an adverse effect on the standard of living of local residents, especially the lower classes. Opponents have also pointed out that the expansion of the gambling business will push up the cost of production for existing local industries, creating diffi culties for them. As casinos themselves are often full-service complexes that offer a range of goods and services, including food services, retail marketing, and lodging, local enterprises could fi nd it diffi cult to compete with the casinos and be forced to shut down (Goodman 1995 ; Grinols 2004 ; Walker and Jackson 2007 ). In addition to cannibalizing existing industries, the opening up of the gambling industry may displace local workers and residents as well. It has been argued that many of the newly created jobs may not be fi lled by local residents, as casino opera- tors generally discriminate against local labour with the excuse that local people lack the requisite skills to work in the industry. There is some evidence to show that this excuse has been used to carry out a policy of importing labour (Dunkley 2010 ; Lages 2010 ). As such, very few local workers would have the chance to obtain a better job or higher wages as a result of the legalization of gambling. Although casino promoters have repeatedly emphasized that casino development is a good way to stimulate economic growth, opponents have been cautious, believing the real economic effects to be shallow or limited, and that only a small group of people who are directly engaged in the industry would be likely to benefi t. 1.4 Legalized Gambling: Greater Benefi ts or Greater Costs? 11

Where the majority of the population is restricted from participating in the highly concentrated “economic boom” of a fl ourishing gambling industry, the result may be social dissatisfaction. Hence, it is argued that rapid economic growth may not always translate into tangible economic benefi ts to residents, workers, and other local industries (Kindt 1995 ; Grinols and Omorov 1996 ; Walker and Jackson 2007 ). Gambling can be regarded as another kind of “trade” that may generate eco- nomic advantages, but local people may not benefi t if outside gamblers and tourists cannot be enticed to come. In a sense, casino gambling is a kind of service industry that is mainly for export. The more non-local gamblers and tourists there are, the greater the value of the gambling goods and services to be “exported”, and the more likely the industry is to benefi t local residents (Eadington 1995 ). Hence, how much the locals gain does indeed largely depend on the actual number of gamblers and tourists that arrive from outside the locality. Even if a large proportion of tourists are from outside the locality and gambling can generate suffi cient income, the local economy will not benefi t much if in the end much of this income goes to “outsiders”. When a government decides to make gam- bling a legal business, a not insignifi cant number of gambling franchises have to be granted to non-locals, because suffi cient local know-how, facilities, and connections in the industry are invariably lacking. As these non-local casino operators eventu- ally send out the profi ts that they have earned locally, the problem of capital out- fl ows will become acute. The importation of casino facilities and know-how will further accelerate the speed of capital outfl ows (due to payments for patents and royalties). Thus, it has been argued that “a casino acts like a black hole sucking money out of the local economy” (Rose 1995 , p. 150). Since the expansionary effect of casino gambling may diminish over time through competition, particularly when the number of neighbouring localities that offer legalized gambling increases, government revenue may ultimately be affected as many casino operators may ask for a tax reduction in order to enhance their competitiveness (Bloomberg 1995 ). In other words, the argument that legalizing gambling provides stable revenues to the public coffers may not hold. In short, opponents of legalized gambling maintain that “any positive impact would be so totally outweighed by the negatives that they should want no part of it”, and dismiss the rosy picture drawn by the proponents as “illusory benefi ts akin to ‘fool’s gold’” (Kindt 1995 , pp. 136, 143). Apart from the abovementioned refutation of the possible economic benefi ts to be had from legalizing gambling, opponents further contend that making gambling lawful will in fact engender many social problems that will infl ict a tremendous cost not only to individuals and families, but also to society as a whole. First, since gambling is an addictive “good” and running a gambling business is usually associated with crime and social evils, such socially undesirable developments as the presence of pathological gamblers, crime, and nuisance will emerge in the community (Smith et al. 2003 ; Centre for Social and Health Outcomes Research and Evaluation and Te Ropu Whariki 2008 ; South Australian Centre for Economic Studies 2008 ; Clark and Walker 2009 ; Spectrum Gaming Group 2009 ). More crime and the extra government 12 1 Gambling and Society: A Theoretical Revisiting of the Issue expenditures required to deal with increasing gambling-related problems are in fact the most important concerns of opponents of legalized gambling. It is also believed that the legalization of gambling would aggravate such ills as alcoholism, drug abuse, prostitution, wife battery, and money-laundering. Hence, an Attorney General of Michigan concluded that “any money brought into the city would quickly be spent on an expanded law enforcement effort to control the crime” (Kindt 1995 , p. 137), while Bloomberg (1995 , p. 157) argued that making gambling legal is similar to opening a Pandora’s box of uncontrollable evil effects in a local community. Comparing the huge social costs of maintaining social order against the uncertain economic benefi ts and unstable government revenue from legalized gambling, opponents invariably conclude that making gambling lawful will bring more harm than benefi t to a society as a whole, and therefore maintain their stance against the legalization of the activity. In refuting criticisms that gambling augments crime and social evils, proponents argue that in most societies where gambling is lawful, no clear relationship has been found between legalizing gambling and a rise in the crime rate. Rephann and his associates (1997 ), in examining 68 American counties where casinos were opened during the period 1989–1993, observed that “the average casino host county was no more likely to experience a crime wave than its non-casino match” and “there were no statistically signifi cant positive differences over the whole period during which casinos functioned”. Also, others have pointed out that most manufacturing industries produce pollution and other negative effects on a locality, but are allowed to keep running. As a kind of “smokeless industry”, although gambling inevitably has some unfavourable effects on a place, the negative consequences are usually exaggerated. For instance, in adopting the “cost-of-illness” approach expounded by opponents of legalized gambling (Single 2003 ), proponents have found that the costs of treat- ment, prevention, law enforcement, loss of productivity, and so on are far lower than the benefi ts that are generated (Walker 2007 ). Clearly, promoters of casino gambling dismiss the arguments of their opponents and insist that opening up the gambling industry would not only create a large number of jobs, but would also lead to a boom in tourism, thereby boosting government revenue and stimulating economic activities in other sectors. In put- ting forward this argument, proponents generally adopt a purely economic point of view and their analysis relies mainly on such objective indicators as GDP, employment rate, and public revenue. In contrast, opponents tend to take a socio- economic stance and use subjective indicators such as social value and public opinion to address the grievances and discontent of the locals. To sum up, current debates on this issue focus on the activities of gamblers and on socio-economic considerations, while there have been few studies on the role of government and the political dimensions of the issue. Also, when citing evidence in support of their position, proponents emphasize the benefi ts of legalized gambling and use objective indicators for illustration, while opponents stress the costs resulting from legalizing the activity and refer to subjective indicators to prove their point. Neither side tends to put objective and subjective indicators together for an inte- grated analysis. 1.5 The Rise of Casino Capitalism 13

1.5 The Rise of Casino Capitalism

Before the Second World War (hereafter WWII), although gambling had been made legal in some parts of the world, it was generally regarded as a dirty or marginalized business. Many governments insisted on taking the moral high ground by adopting a puritan attitude towards gambling. After WWII, especially after the spread of liberalism in the 1960s and also the prolonged economic recession in the 1970s, many liberal governments in the West gradually changed their attitude towards gambling. The turning-point was the argument and belief that legalizing the activity could increase employment, push up wages, attract capital infl ows, increase tax revenues, offer consumers more choices, and, more importantly, strengthen the competitiveness of other related industries such as tourism, entertainment, hotel and restaurants, and so on (Walker 2007 ; Williams et al. 2011b ). In fact, although it was believed that casino gambling could bring certain economic benefi ts, legalization would not have been possible without a change in public senti- ment in the direction of greater social tolerance and, more importantly, the role played by political advocacy. Studies have further indicated that since the 1960s, apart from technological advancements, which made the cost of industrial production cheaper and transportation easier, the breaking up of the Bretton Woods Agreement further stimulated cross-border capital fl ows from investors seeking better returns. The relo- cation of industries from Western countries to developing countries also became com- mon (Sassen 1998). As a result, most developed economies faced an economic downturn and rising unemployment—problems that seemed to be structural in nature. Although government revenue shrank because of the economic contraction, public expenditure for education, health care, and social services rose as greater demands were placed on the welfare state (Calcagno et al. 2010). Faced with such a high degree of socio-economic-political pressure, many governments were forced to turn to unconventional measures to boost their economies in order to win the support of vot- ers. This is an illustration of Habermas’s ( 1976) argument that politicians who fail to ensure economic prosperity will face a crisis of legitimacy. Undoubtedly, the movement to decriminalize gambling that started in the 1960s offered many governments, both central and local, a golden opportunity to turn a traditionally reviled activity into a money-earning business to help them out of their predicament (McMillen 1989 ). Before the 1970s, some Western countries such as Austria, France, Germany, Italy, and the UK, had made casino gambling legal, but on a limited scale and with restrictions on locations and hours of operation. In the casinos of some countries, only wealthy customers and tourists were welcomed. The public promotion of gambling was also restricted (Collins 2003 ; Chambers 2011 , pp. 4, 26). In other words, casino gambling was less popular than today. The benefi ts that were generated for society were also less salient or signifi cant. However, from the 1970s onwards, especially after repeated global oil crises, which badly undermined most economies in the developed world, more govern- ments turned to legalized gambling as a short-cut out of their economic quagmire, and the gambling business boomed. The pace of expansion in gambling was far 14 1 Gambling and Society: A Theoretical Revisiting of the Issue quicker than expected. In the US, the world’s largest casino market, before 1980 only two states, Nevada in 1931 and New Jersey in 1976, had made casino gambling a lawful business. Between 1989 and 1996, nine more states legalized casinos (Calcagno et al. 2010 , p. 70). By the end of 2011, there were 445 land-based or riverboat casinos, 47 racetrack casinos, 459 tribal casinos, 517 card rooms, and 11,091 electronic gambling devices operating in 38 states. In that year, commercial casino revenues reached $35.64 billion and $7.93 billion was contributed in direct gambling taxes (American Gaming Association 2012 , p. 4). Like any other busi- ness, the gambling industry goes through boom-and-bust cycles. Still, the fi gures for the total annual turnover in the gambling industry were impressive when com- pared to any other single business in the economy. The spread of neo-liberalism and the rise of casino capitalism have gone hand in hand not only in the US, but also around the globe. Unoffi cial statistics show that from 1970 to 2005, the number of countries that made casino gambling legal (not including other forms of gambling such as lotteries and slot machines outside casinos) increased from 8 to 19 (Chambers 2011 , p. 4). At present, in terms of the number of casinos, the top fi ve countries are the US (1,511), France (189), the Russian Federation (169), the Netherlands (167), and the UK (144); and the top fi ve cities are Las Vegas (122), Miami (74), Moscow (54), Tallinn (40), and Macao (32) (World Casino Directory 2012 ). In terms of annual casino gambling revenues, in 2010, the US topped the list at $57.49 billion, followed by Macao ($23.45 billion), Canada ($5.70 billion), France ($3.80 billion), Australia ($3.43 billion), Singapore ($2.83 billion), South Korea ($2.64 billion), Argentina ($2.32 billion), and Germany ($2.03 billion). The Asia-Pacifi c market, driven by new capacity in Macao and Singapore, has become the growth engine of the industry. Its share of the global market is expected to surge from 29.2 % in 2010 to 43.4 % in 2015, while that for the US will decrease from 48.9 to 40.1 % (PricewaterhouseCoopers 2011, pp. 5, 7, 14, 17, 20). The rapid growth of the gambling business since the 1970s would not have been possible without initiatives from governments to promote the industry (Thompson 1998 ; Cosgrave and Klassen 2009 ). For instance, opponents of gambling frequently accuse some governments of being “con artists” because, in their view, in order to make gambling a lawful business, the government intentionally spreads misleading messages about gambling or even encourages people to gamble (Cooper 1995 , p. 25). Furthermore, there is historical evidence showing that gambling was made legal when it served the interests of the ruling class, and made illegal when the activity appeared to pose a threat to the ruling class (Chambers 2011 , p. 11). Therefore, in order to ensure greater stability in the industry, an approach whereby the govern- ment and businessmen collaborate to pursue the legalization of gambling and promote the business as a money-earning industry to achieve common goals can be developed. Because of government support,4 many profi t-driven gambling

4 Apart from tax concessions, some key measures of government support include selling land at an attractive price for building casinos and related facilities, relaxing regulations to allow advertisements on gambling to be carried in the mass media, and improving the transportation network to make casino destinations more accessible. 1.5 The Rise of Casino Capitalism 15 operators took more proactive measures to boost their business than they might otherwise have attempted. In the 1990s, leaders of corporate gambling enterprises applied mass marketing techniques to promote gambling as an aspect of modern city life and a form of fam- ily entertainment. Such a marketing strategy ultimately increased the popularity and also transformed the image of gambling (Johnston 1992 ). Casino gambling was packaged like high-end entertainment, with large ultra-modern facilities. Promotions that suggested a spirit of adventure, and luxury resorts, spas, or theme parks, aimed not only at gamblers themselves, but also at accompanying family members. In addition, these facilities were usually open for 24 h. Because of this “innovative” marketing strategy, gambling gradually became a modern way of life (more specifi cally, the American way of life). Many casinos in the US have become must-visit destinations for international tourists. Corporations that control key casinos such as MGM Grand, Mirage, Flamingo, Venetian, Wynn, Palazzo, New York New York, and Harrah’s, have become multinational corporations with a market capitalization or total annual sales almost equal to that of some strategic companies, such as tobacco companies, automobile companies, and oil companies. Capital derived from the gambling industry had emerged as one of the dominant sources of capital in the US economy. In the late 1990s, as the gambling market in the US almost reached saturation point, many gambling operators tried to expand overseas by promoting the view that state intervention should be minimized and individual choices should be respected. At that time, gambling was still regarded in many societies as an immoral activity. In other words, before the US gambling operators came knocking on the doors of the governments of these societies, many of these societies had either made gam- bling unlawful or had opened it up partially to serve only certain categories of peo- ple or permitted operations only in some marginal areas of the country. This implied that there was a huge vacuum in the market for the American casino giants to fi ll. Around the time that American casino gambling operators were rapidly expand- ing locally and globally, the fi nancial arms of such American fi rms as Lehman Brothers, J. P. Morgan, Merrill Lynch, and Standard and Poor’s, were also swiftly extending their fi nancial networks all over the world by following the same ideol- ogy of liberalism and free markets. Since the US government saw that the expan- sionary strategy of the gambling operators could generate tremendous benefi ts for the country, while the US fi nancial fi rms also considered that such a strategy could bring them more business, both gave the US casino operators their full support (Abt 1996; McGowan 2001 ). Of course, the US gambling operators’ innovative promo- tional campaigns, which successfully presented the “good” of gambling under the attractive packaging of lavish entertainment facilities, made them invincible leaders in the world gambling market. As the US casino operators worked hand-in-hand with the US government and fi nancial fi rms, their expansion was also seen as the advancement of another aspect of US hegemony (McMillen 1996 ). Since the 1970s, the argument has been put forward that capitalism itself has become all about a “gambling economy”, with fi nancial markets totally detached from the realm of production. In fact, during the wave of deregulation in the 1990s, free 16 1 Gambling and Society: A Theoretical Revisiting of the Issue market mania dominated the international fi nancial and economic order. Along with moves to deregulate gambling, rules and laws for monitoring and confi ning fl ows of capital were also lifted. As fl ows of money became less restricted, not only was there a surge of growth in the gambling business, speculative trading in stock markets for short-term profi t also became rampant. Apart from the short-selling of stocks and options, betting on bonds and securities also increased in frequency. Highly risky investment products (e.g., derivatives) could be sold freely like daily necessities. Criticisms such as share trading halls becoming as crowded as casinos were frequently raised (Strange 1986 , 1998 ). Also heard were complaints that complicated fi nancial products with no clearly identifi ed risks were turning the international fi nancial system into gambling halls. This could explain why Cuba’s paramount leader, Fidel Castro, once remarked that the world has become “a huge casino” (Comaroff and Comaroff 2001 , p. 7). Without a doubt, many fi nancial institutions nowadays are making their investments as if they were gambling.5 In concluding the discussion in this section, we argue that in an era of globalization, international competition is not only military, diplomatic, and economic in nature, but has also come to focus on less traditional spheres such as space, sports, culture, and, undoubtedly, gambling. For example, in the US, growth in regional casinos has adversely affected the Atlantic City market. The success of Singapore’s resort casinos has cut into the Australian market. In other words, international competition nowadays is multi-faceted in nature. From this perspective, it should not be a surprise if some countries regard gambling as a strategic industry. Such a perception arises not merely because gambling is a policy-driven and policy-directed industry, but because of the reality that the level of competitiveness in this industry does not simply refl ect the effi ciency of the private or domestic sector; rather the different gambling policies of one’s neighbours also count.

1.6 Research Focus and Methodology

Having given a concise review of the literature on gambling, we can clearly see that although there is a plethora of research unravelling the history and development of gambling, and no lack of analyses of the activity from the psychological, sociological, and social policy perspectives, few of these studies have taken an interdisciplinary or integrated approach. When evaluating the costs and benefi ts of legalized gambling, only a few studies have taken an all-round perspective by attempting to make a full comparison of objective and subjective indicators. In addition, most of these studies have focused on Western experiences and practices, and little attention has been given to the operations and styles of gambling activities elsewhere. By using Macao, once renowned as “Monte Carlo of the Orient” and the “Las Vegas

5 To a certain extent, the collapse of Enron, Lehman Brothers, Bear Stearns, and a number of other large fi rms in the fi rst decade of the millennium because of too much speculative investment can be cited as footnotes to the “gamblicizing” of the international fi nancial market. 1.6 Research Focus and Methodology 17 of the East” and now the largest gambling city in the world,6 as a case for an in-depth study, and basing this research on various kinds of offi cial and unoffi cial data, the hope is that this study will not only contribute a much fuller view of gambling, but also draw academic attention to the history and culture of gambling in the Far East. The subject is an important one, as there is much room for the growth and development of this industry in an era of globalization and the rise of China. In order to achieve such research goals, especially that of assessing the socio- economic- political impact at different levels after the opening up of the casino business in Macao in 2002, we should not rely on a single parameter of measurement. Objective indicators, such as GDP growth rates and unemployment rates, are often chosen to measure economic performance. We agree that while such parameters are essential for achieving an understanding of overall economic development, they do little to explain the perceptions, attitudes, aspirations, and subjective well-being of residents. In other words, a high-quality analysis is one that makes simultaneous use of objective and subjective indicators. While objective indicators can be easily obtained from statistical data released regularly by the Statistics and Census Service (Direcção dos Serviços de Estatística e Censos, hereafter DSEC) of the Government of the Macao Special Administrative Region of China, subjective indicators are diffi cult to gather. From 2005 until 2012, a research team consisting of multi-disciplinary researchers from the Chinese University of Hong Kong, the University of Hong Kong, and the University of Macau was commissioned by the former Research Centre for Sustainable Development Strategies (Centro de Estudos Estratégicos para o Desenvolvimento Sustentável, hereafter CEEDS) of the Macao government to conduct a series of subjective social indicator surveys in Macao. Since we were members of the research team, CEEDS is kindly allowing us to use this valuable subjective dataset for analysis. This longitudinal study is divided into two parts. The fi rst part is a household survey, while the second part is a telephone poll. Both parts are conducted in alternate years, with different research themes and emphases. Since the analysis in this book uses various data drawn from the fi rst part of the study—a series of three household surveys conducted in 2005, 2007, and 2009, only the methodology relating to this part will be presented. The target population of the household surveys was Macao identity card holders aged 18 or above who reside in permanent residential living quarters in Macao. The survey was designed to yield a representative sample. With the help of the DSEC, a stratifi ed systematic sample of 3,500 residential addresses was selected each time from a total of around 145,000 living quarters. If a drawn address contained more than one household with persons aged 18 or above or contained a group households (such as a hostel), a random numbers table pre-attached to each address was used to select one household or one person. If the drawn household had more than one person aged 18 or above, a random selection grid was employed to select one interviewee. A face-to-face interview was then carried out to complete the questionnaire.

6 In 2011, Macao’s casino industry was four times bigger than that of Las Vegas ( The Economist 2011 ). 18 1 Gambling and Society: A Theoretical Revisiting of the Issue

Table 1.1 Response rate (%) 2005 2007 2009 Successful cases 70.7 69.3 71.3 (n) (2,060) (2,062) (2,020) Unsuccessful cases 29.3 30.7 28.7 Refusal 5.7 9.1 9.0 No contact 21.9 19.6 16.6 Others 1.7 2.0 3.1 Valid sample size (2,915) (2,977) (2,833) Original sample size (3,500) (3,500) (3,500)

The questionnaire contained about 200 questions in different life domains, including communication and media, cross-boundary activity, education, family, health, income and expenditure, living conditions, living standard, public security, recreation, retirement, social networks, social participation, social quality, social stratifi cation, subjective well-being, transport, and work. After excluding the invalid addresses (for example, non-residential, demolished, no target respondent, etc.), the respective response rates of the three surveys in 2005, 2007, and 2009 were 70.7, 69.3, and 71.3 %, while the total number of successful interviews were 2,060, 2,062, and 2,020, respectively. Details of the sampling results are summarized in Table 1.1 .

1.7 Conclusion

In the subsequent chapters, the history of the gambling industry in Macao and its development will be examined. The discussion will then turn to two important events in Macao—the return of sovereignty to China and the liberalization of the gambling industry. Both internal and external factors contributing to the subsequent transformation of the gambling industry will also be addressed. Following this, we will use both objective and subjective indicators to measure socio-economic- political developments in Macao following the introduction of the policy to liberal- ize gambling, with a special emphasis on Macao’s position as the sole city in China where casinos are allowed to operate legally. Macao’s strategic repositioning of its gambling industry, by reinforcing its socio-economic links in the region on the one hand and strengthening its trade and cultural connections with the Portuguese- speaking economies on the other, will also be explored. In the concluding chapter, possible future opportunities and challenges for Macao will be examined. The limi- tations and implications of the study will also be spelled out. Lastly, it should be mentioned that all Chinese terms, place names, personal names, company names, idioms, and proverbs in this book have been transliterated using the system, with the exception of those that are commonly used in the local mass media. The Chinese characters for most Chinese terms and names can be found in the Glossary at the end of this book. References 19

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2.1 Introduction

Macao (in English spelling) or Macau (in Portuguese spelling) is situated on the coast of southern China or, to be specifi c, on the southwestern margin of the Pearl River Delta adjacent to Zhuhai, Guangdong province (Fig. 2.1 ). It is believed to be the fi rst city in China to have been occupied by Europeans and also the fi rst Chinese city to embrace globalization through the development of worldwide trading routes. In addition, Macao witnessed the earliest and longest-lasting encounters between China and the West, and is praised to this day as being a unique blend of Western culture and Chinese civilization. In a number of recent surveys on world cities, Macao ranked at the very top of the list in terms of per capita GDP and attractiveness to young artists (Clark and Moonen 2011 , p. 45; Flavorwire 2011; McKinsey Global Institute 2011 , p. 3). Whatever the indicator, it is certain that Macao is an extra- ordinary city that is worthy of more in-depth study. Although the people of Macao have astonishingly high per capita GDP and the place has been attracting an increasing amount of international attention recently, Macao’s small territory and lack of resources are equally remarkable. The latest statistics show that Macao has a land area of only 29.9 km2 and a population of about 557,400 residents (DSEC 2012a , p. 1). 1 The territory consists of the peninsula of Macao and the islands of Taipa and Coloane (these two islands, once separate, are now connected by a strip of reclaimed land called the Cotai Strip). The peninsula and the islands are linked by three bridges (Fig. 2.2 ). Of all of Macao’s distinctive features, the most frequently mentioned is its status as the only city in Chinese territory in which casino gambling is legal. How did Macao once fall into Portuguese hands? How did a tiny fi shing village become transformed

1 Around 92.4 % of the population are of Chinese ethnicity, 0.6 % are of Portuguese ethnicity, 0.7 % are of mixed Chinese/Portuguese descent (usually referred to as Macanese), and over 6 % are of other ethnicities (DSEC 2012b , p. 11).

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 23 DOI 10.1007/978-3-642-40749-9_2, © Springer-Verlag Berlin Heidelberg 2014 24 2 Macao and Globalization: A Gambling Perspective

) 2012a Macao Special Administrative Region and adjacent regions (Source: Adapted from Cartography and Cadastre Bureau (Source: and adjacent regions Region Administrative Macao Special Fig. Fig. 2.1 2.1 Introduction 25

Fig. 2.2 Macao Special Administrative Region, 2012 (Source: Adapted from Cartography and Cadastre Bureau 2012b ) 26 2 Macao and Globalization: A Gambling Perspective into an international trading hub? Why was gambling legalized during the colonial period and why has the activity expanded greatly in scale after the return to Chinese sovereignty? All of these questions are briefl y explored below.

2.2 The History of Macao: A Snapshot

Although China’s initial contact with European nations can be traced back to as early as the Yuan dynasty (1271–1368), substantial trade and cultural exchanges would not become possible until the Ming dynasty (1368–1644). Surprisingly, despite its small territory and population, Macao became China’s single most important connection with the outside world. The Portuguese were the fi rst Europeans to come to China to seek to establish trade relations. In 1513, the fi rst batch of Portuguese seamen landed on Chinese soil after a long maritime expedition via the Cape of Good Hope, the Indian Ocean, and Malacca. Macao seemed to be a frontier in the southern coast of China where they were not only able to obtain shel- ter but also food, water, and daily necessities. Historical records further show that the name of Macao fi rst appeared in 1530, while Portuguese seamen and merchants set foot on the Macao peninsula in 1553 (Willis 2002 , pp. xiv–xv; Hao 2011, pp. 10, 12; Wu et al. 2009 , p. 59). However, because of racial, cultural, and socio-economic-political differences or misunderstandings, the Ming court showed little interest in agreeing to the Portuguese request to establish a trading relationship, even after repeated appeals from the latter. Although frustrated, the Portuguese did not give up or resort to mili- tary action (Wu et al. 2009 , p. 171). Instead, they tried to further their interests by other means. They even assisted the Guangdong government in its efforts to repel Japanese intruders and suppress the epidemic piracy in the coastal areas of China (Coates 2009 , pp. 28–30). As a result, in 1557, the Portuguese successfully con- vinced the Ming court to allow them to occupy a tiny piece of territory, where they were permitted to reside and carry out their trading activities. This piece of land was Macao (Lamas 1998 , p. 16). There are confl icting versions as to how the Portuguese would ultimately able to obtain Macao as a settlement. The Chinese considered that the Portuguese had been granted a temporary lease, while the Portuguese saw it as an unconditional cessation of territory. Nevertheless, the hard facts were that the Portuguese were allowed to build “permanent buildings”, but that “foreigners were going to pay taxes to the Chinese for their activities in Macau” (Lamas 1998 , p. 19). Whatever the interpreta- tion, an unprecedented model of overlapping “Portuguese-Chinese jurisdiction” or “Sino-Portuguese joint administration” was clearly established from that time onwards (Maxwell 1999 , p. 75). Under this pragmatic model, both sides seemed to admit that this “grey area” of Chinese territory could not only accommodate the trading needs of East and West, but also be a place of multi-racial or multi-cultural co-existence and mutual benefi t. As the earliest trading enclave in Chinese territory under Portuguese administration, Macao attracted people from all walks of life. What made Macao’s position so unique 2.2 The History of Macao: A Snapshot 27 was the imperial edict that stipulated that not only were foreigners who came to China required to do so via Macao, but also that Chinese people who wanted to go overseas were required to do so through Macao. As a result, since the 1550s Macao has become increasingly well known as a gateway of East–West trade and a breed- ing ground of multi-culturalism. Of course, the road in the transformation from fi shing village to international trading hub where the fl ag of multi-racial tolerance and co-existence is waved was not without diffi culties, strife, and setbacks. But, for the most part, both governments were able to settle their differences in a sensible, pragmatic, and tolerant way.2 In the fi rst century of Sino-Portuguese joint administration in the Ming dynasty, not only did trading activities increase, inter-racial contacts and marriages also became common. Western-style buildings, including chapels, bungalows, and vil- las, were erected on the Macao peninsula. European legal and social systems were eventually introduced. Catholic schools, which offered a bilingual and modern edu- cation, were established. In addition to the Portuguese, traders and missionaries of Italian, English, Spanish, and Dutch origin also came to Macao either to do business or to preach the gospel of Christ. Some also came to learn the Chinese language, art, and culture. Macao became a highly internationalized city on Chinese soil (Wu et al. 2009 , Volume 1). At about the same time as Portuguese infl uence in the world contracted drasti- cally, the Ming dynasty also fell into decline. Repeated famines and rebellions in the 1620s greatly undermined the Ming court’s authority, and threatened the nation’s defenses. The overthrowing of the Ming dynasty by the Manchus in 1644 did not bring drastic changes to Macao. The Portuguese were allowed to continue to admin- ister Macao. Such an arrangement indicated that the Qing court recognized the pre- vious dynasty’s pragmatism in keeping Macao as the unchallenged conduit for East–West trade. Because of this unwavering national policy, Macao retained its enviable status as an international trading hub for another two centuries until the early 1840s. Within this period, while maritime trade remained vibrant, socio- cultural and racial mixing naturally continued to take place (Porter 1996 ). The continued decline of the Portuguese empire and the growing expansion of Dutch and British infl uence in the late seventeenth century further changed the bal- ance of power and order in the world. Following Portuguese shipping routes, British seafarers, merchants, missionaries, and soldiers came to China in a similar quest to establish trading relations. However, unlike the Portuguese, the frustrated British not only tried to carry out trade by all possible means—notably by importing opium and promoting its consumption in China, but also resorting to military action to further their demands for trade (Montalto de Jesus 1984 ). The First Opium War (1839–1842) and the subsequent cessation of Hong Kong—an island with a deep-water harbour situated around 60 km away from Macao—to Britain not only marked the drastic decline of the Qing dynasty (1644–1911), but also a change in Sino-Portuguese relations. Shortly after the signing of the Sino- British Treaty of Nanking in 1842, the Portuguese asked the Qing court for terms as

2 For detailed information and analyses about Sino-Portuguese confl icts that have erupted in Macao, please refer to the discussions in Montalto de Jesus (1984 ), Fok (1978 ), and Wu et al. (2009 ). 28 2 Macao and Globalization: A Gambling Perspective favourable as those that the British had received. In particular, they demanded that Macao become a Portuguese colony instead of a territory under mixed jurisdiction. When the demand was rejected, the Portuguese expelled the Chinese offi cials from Macao in 1847 and stopped paying taxes to the Qing government in 1849. Not surprisingly, the Portuguese move not only led to a diplomatic row, but also to serious hostilities, which caused many casualties, including the death of Ferreira do Amaral (r. 1846–1849), the governor of Macao (Lamas 1998 , pp. 77–81; Deng and Xie 1999 , pp. 77–79; Wu et al. 2009 , p. 1647). After this serious confrontation, Portuguese control in Macao was no doubt fi rmer. However, the stronger infl uence or control over Macao did not imply the parallel strengthening of Macao’s position as an East–West trading conduit. In fact, just the opposite occurred—because of direct competition from Hong Kong, Macao’s international status declined rapidly. The opening of other treaty ports like Guangzhou, Fuzhou, Ningbo, and Shanghai further reduced Macao’s competitiveness. In other words, Macao’s unique trading position was superseded, and soon afterwards Macao became marginalized. As a result, Macao fell into a prolonged economic recession. Large numbers of fi rms were forced to close their doors, causing many residents to lose their jobs, and government revenue also diminished rapidly. In order to raise more funds for the depleted public coffers, the Macao Portuguese government turned to some traditionally immoral or underground activities, namely prostitution, gambling, alcohol, and opium (piao du yin chui , the so-called “four evils” in Chinese societies), selling franchises for such businesses through the “licensing system” (Lamas 1998 , pp. 83–84; Wu et al. 2009 , pp. 1658, 1708). Making dealing in indentured labour (also known as the coolie trade or human traffi cking) a licensed business for profi t was another disgraceful move that was also frequently denounced (Deng 1999 , pp. 171–219; Huang 1999a , pp. 219–239; Deng et al. 2000 , pp. 223–247). The common argument that the government frequently made was that banishing such activities would only cause them to go underground. Criminals would then have more chances to reap huge incomes from running such activities, and therefore would obtain more resources to fi nance other evil-doings. Making those activities legal would make it possible to bring this underground business to the surface to prevent abuses and for better administration, and could also divert income from the pockets of criminals to the coffers of the public for use in good causes. Although not a few people expressed scepticism of the argument, the irrefutable fact was that licensed brothels, opium divans, and gambling houses of different types and scales fl ourished in Macao because of the government’s blessing. Not only were local resi- dents attracted to these venues, but people from adjacent regions, especially from Hong Kong and Guangzhou, were also enticed to come. From then on, Macao’s notoriety as an evil, crime-ridden place became widespread. Some people even regarded Macao as a wicked city with its cocktail of brothels, drugs, and gambling (Cheng 1999 , p. 138). In the late nineteenth century, as criticism or pressure on Macao grew both locally and internationally, the Macao Portuguese government vowed to abolish the licensing system on the coolie trade—i.e., to make the trade illegal. However, 2.2 The History of Macao: A Snapshot 29 the licensing system still applied for gambling, prostitution, and opium (trading and smoking), but the government agreed to take tougher measures to check the proliferation of these businesses, especially the importing or re-exporting of opium. Notwithstanding this reversal of policy, the underground coolie trade, gambling, and opium smuggling remained uncontrolled (Cheng 1999 , pp. 30–33; Deng 1999 , pp. 220–243; Wu 2009 , pp. 395–397). The collapse of the Qing dynasty and the establishment of Republic of China in 1912 under the leadership of Sun Yat-sen, who had once practised medicine in the Kiang Wu Hospital in Macao, did not bring much change to Macao’s status. To the surprise and disappointment of many, the real power of the newly founded Republic of China quickly fell into the hands of General Yuan Shih-kai, who later betrayed the revolutionaries by reverting to monarchism. The subsequent Second Revolution to unseat Yuan from the throne and then the May Fourth Movement of 1919 not only reshaped the political map in the mainland but also fanned the fl ames of Chinese nationalism (Hsü 1983). There was a growing call to recover Chinese sov- ereign rights over territories that had been ceded to foreign powers. Although there was friction between China and Portugal over the question of Macao, the problem was fi nally resolved without the need to alter Portuguese control over Macao, as China was wracked by warlordism or, in Montalto de Jesus’s (1984 , p. 451) words, China was in a state of “national pandemonium”. Also in the 1920s, especially after the formation of the League of Nations (1919) and the holding of a series of international conferences in Geneva from 1924 to 1925, opium was categorized as a dangerous drug as result of increased pressure from anti-opium activists (Blue 2000 ; Slack 2001 ). In order to comply with interna- tional resolutions, both the Hong Kong British and the Macao Portuguese govern- ments were required to abolish the opium licensing system. Although both governments agreed to do so, the actual implementation of this promise was, need- less to say, slow, half-hearted, and far from satisfactory. In other words, despite repeated international condemnation, opium trading and smoking remained ram- pant until 1946 (Social Welfare Bureau 2001 , Chapter 2; United Nations Offi ce on Drugs and Crime 2010 ). In the Chinese mainland, shortly after the end of warlordism in the late 1920s, the threat of Japanese invasion escalated. In 1931, Japanese troops invaded northern China and, in 1932, created a puppet state named Manchukuo there. The last Qing emperor Aisin-Gioro Puyi, who had been forced to abdicate by Yuan Shih-kai in 1912, was made the nominal head of state (Hsü 1983, pp. 549, 551). Fearing the expansion of Sino-Japanese hostilities, emigrants from the mainland fl ooded into Hong Kong and Macao seeking refuge. Large amounts of capital were diverted to these places from the mainland as well. Macao’s economy boomed. In 1934, the Macao Portuguese government once again legalized casino gambling, which further boosted the economy (Wu et al. 2009 , p. 2530). The Japanese invasion of China continued. In July 1937, the Second Sino- Japanese War broke out. As the Japanese troops were well trained and well equipped, and the invasion was well planned, many major Chinese cities, such as Beijing, Tianjin, Shanghai, and Nanjing, quickly fell into their hands. In 1938, many of Macao’s 30 2 Macao and Globalization: A Gambling Perspective neighbouring cities and towns, such as Guangzhou, Shenzhen, Zhongshan, and Zhuhai, were also occupied. Although Macao was surrounded by Japanese troops and its residents felt anxious, the city itself remained strangely calm. Both emigrants and capital kept fl ooding in, as the hope remained that Macao itself would not be attacked (Deng 1999 , pp. 100–105). The general perception of Macao’s special status was not unfounded. Before the outbreak of WWII, since the Portuguese government had declared neutrality and Macao had followed in supporting neither the Allied nor the Axis Powers, Japanese troops agreed to spare the local population under their direct occupation. Then, in 1941, when Hong Kong was captured, Macao became the only city in the region that still enjoyed “peace”. As such, even more refugees and money fl ooded into Macao. Offi cial statistics showed that the total population at that time soared to 375,000 (DSEC 1998 , p. 100), while there was extremely active trading activity in all kinds of things, from currencies, commodities, and munitions to secret information (Deng 1999 , p. 105; Deng et al. 2000 , pp. 403–405). Apparently, Macao experienced an extraordinary amount of economic growth, while its immediate neighbours and much of the outside world were tormented by war, turmoil, and starvation. Japan’s defeat in the war provoked another wave of calls for China to take back the Chinese territories of Hong Kong and Macao from the hands of foreigners (Deng 1999 , pp. 122–124; Huang 1999b , p. 493). However, as civil war broke out in China shortly after the end of WWII, and both the nationalists and communists were fully occupied with that internal power struggle, the calls to recover territory quickly died down. As people and money left Macao after WWII, the city became less crowded. The economy cooled down gradually. However, just a few years later, as the civil war in China swept from north to south and then engulfed the whole nation, refugees and capital once again fl ooded back to Macao (Zheng et al. 1994 , pp. 30–31). October 1949 marked the founding of the People’s Republic of China (hereafter PRC) under the leadership of the Chinese Communist Party after the defeat of the Chinese Nationalist Party. Again, the question of reclaiming Hong Kong and Macao was widely circulated, as the communists strongly advocated an anti-colonialist ideology. Notwithstanding the outcry to take back the two territories, no concrete actions were taken. The sudden outbreak of the Korean War, which largely reshaped the international order, was perhaps one explanation for this, as the leadership of the PRC did not have any further energy to expend on the issue of Hong Kong and Macao (Wu et al. 2009 , p. 2763). A pragmatic approach on the part of the new government, which emphasized the benefi ts of co-existence and maintaining the status quo, was another explanation (Lamas 1998 , p. 104). Since some former members of the Chinese Nationalist Party government and army sought refuge in Macao and the Portuguese government had not established diplomatic relations with the newly established PRC, confl icts frequently erupted between the Macao Portuguese government and the Guangdong provincial government (Lamas 1998 , pp. 104–105). A trade embargo on the PRC imposed by the United Nations under the infl uence of the US further forced Hong Kong and Macao to cut off their socio-economic-political connections with the Chinese mainland (Maruya 1999 , p. 126). 2.2 The History of Macao: A Snapshot 31

Although the geo-politics of the Cold War put to an end Macao’s centuries-long East–West trading position, the large-scale infl ux of capital, machinery, and human resources from the late 1940s to the early 1950s set Macao on to the road to indus- trialization (Sit 1991 ). In fact, not only did the economic structure of Macao change steadily since that time, so did its socio-cultural constituents. Of course, during this period, although socio-economic-political connections between Macao and the Chinese mainland were virtually cut off, this did not imply that there were no con- fl icts or disputes between the two places. Two of the most frequently quoted cases are the clash of the People’s Liberation Army with the Portuguese troops at the border in 1952 (called the Guanzha Incident), and the December 3 Incident (also known as the 12.3 Riot) in 1966 that greatly weakened Portuguese governance in Macao (Huang 1999a , pp. 322–324; Hao 2011 , pp. 43–44). In 1971, after repeated diplomatic and political efforts, the PRC successfully won admission to the United Nations. The next year, American President Richard Nixon visited China and shook hands with China’s paramount leader, Mao Zedong. Both events not only altered international diplomatic relations in general but Sino- Portuguese and Sino-British relations in particular, because the PRC’s permanent representative to the United Nations presented a memorandum stating that when the time was ripe, both territories would be reclaimed. Shortly after the memorandum was presented, the so-called Carnation Revolution erupted in Portugal, toppling the Estado Novo dictatorship. As the new Portuguese government considered Taiwan to be a part of China and stated clearly that “the territory of Macau would be subject to negotiations whenever thought appropriate by both governments” (Lamas 1998 , p. 109), Sino- Portuguese relations became less confrontational. Several years later (1979), Portugal declared the establishment of formal diplomatic relations with China. Since then, not only has bilateral trade and investment increased rapidly, socio-cultural exchanges have also grown steadily since the Chinese government’s launching of an open door and economic reform policy under the new leadership of Deng Xiaoping. As such, Macao resumed its previous position as an East–West trading gateway and has made signifi cant contributions to the economic development of the Chinese mainland. China and Portugal began talks on the question of Macao shortly after the prom- ulgation of the Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong (hereafter Sino-British Joint Declaration) in 1984. After repeated negotiations, in April 1987 both sides came to an agreement and signed the Joint Declaration of the Government of the People’s Republic of China and the Government of the Republic of Portugal on the Question of Macao (hereafter Sino-Portuguese Joint Declaration). In this agreement, China would resume sovereignty over Macao on 20 December 1999, while Macao would be established as a Special Administrative Region (hereafter SAR) under the governance of the Basic Law of the Macao Special Administrative Region of the People’s Republic of China (here- after Basic Law). A model referred to as “one country, two systems” promising a “high degree of autonomy” for Macao and “Macao people governing Macao” was enshrined to keep Macao’s capitalist system and way of life unchanged after the handover. With this, Macao entered a “transition period”. 32 2 Macao and Globalization: A Gambling Perspective

Like Hong Kong, during the “transition period” a number of issues had to be addressed without delay. On the one hand, social stability and economic prosperity had to be secured, while on the other hand, parts of the legal, political, and admin- istrative systems that were incompatible with the Basic Law had to be revised. Although the latter could more or less be carried out according to a schedule, the former unexpectedly presented a problem. Not long after the promulgation of the Sino-Portuguese Joint Declaration, Macao’s economy slowed down continuously. Various serious crimes such as larceny, arson, murder, bombings, and stabbings occurred almost every day as different criminal societies fought over territory and interests (Pinto 2008 ; see Chap. 5). Seeing that both the economy and social order were deteriorating, many Macao residents became anxious. They looked forward to the date of handover, expecting that the situation would improve then. On 20 December 1999, the Chinese government resumed sovereignty over Macao. Shortly after the handover, the Macao SAR government declared its inten- tion of liberalizing the gambling industry to bring new impetus, greater competi- tion, and more synergy for development, after carrying out in-depth studies and reviews. As the new policy not only had a positive effect on the economy, but also created a great deal of momentum for expansion, Macao’s economy picked up once again. The large and continuous infl ux of tourists from the Chinese mainland, espe- cially after 2003 (see Chap. 4), further powered Macao’s socio-economic transfor- mation. In no more than 5 years after carrying out its gambling liberalization policy, Macao overtook Las Vegas as the world’s top-ranking casino economy in terms of total annual turnover from gambling (Wiseman 2007 ). From 2007 until the present day, Macao has retained its position as the biggest gambling hub in the world. In terms of per capita GDP, Macao topped all Chinese cities, including Hong Kong and Shanghai (National Bureau of Statistics of China 2011 ).

2.3 Liminality and the “Macao Formula”: A Bridge-cum-“Safety Valve” for China

In The Rites of Passage, the anthropologist Arnold van Gennep (1961 ) invented the concept of liminality to describe or categorize a type of rite that is in between two phases—the rite of separation and the rite of incorporation. Since van Gennep saw this phase as a middle stage, he named it a “transition rite” or “liminal rite”. He also used the passage from “youngsters into adulthood” as example to illustrate that, during this stage, participants seem to live outside their normal environment, as originally accepted social values and mores are often ignored. It is when the partici- pants (youngsters) successfully pass through the liminal rite that they can have a “new birth” (new identity) and will be welcomed (as adults) again by society. Van Gennep’s argument has inspired numerous discussions and follow-up studies not only in religious, cultural, and anthropological studies, but also in the social sciences. The term liminality has been further expanded to include “an in-between situation or 2.3 Liminality and the “Macao Formula”: A Bridge-cum-“Safety Valve” for China 33 condition that is characterized by the dislocation of established structures”. It is also argued that in the unstable and transforming liminal stage (which can be in a temporal or spatial dimension), both constructive and destructive ideas and practices can emerge. Members of the society can choose a way in or a way out of that stage (the liminal ritual) and are well aware of the fact that they will leave the liminal stage sooner or later (Thomassen 2009 ). If we use the concept of liminality to explain the unusual developmental process of Macao, we can have a better understanding of such intriguing and mysterious questions as: Why do various kinds of gamblers fl ock to Macao to gamble? How could gambling have been turned into a lawful business for profi t/income? And, how could gambling have become part of Macao’s culture, society, and way of life? Before mulling the answers to these intertwined questions, let us explore Macao’s background as an East–West trading enclave and designation as a Portuguese settle- ment. According to the internationally renowned Macao historian, Fok Kai-cheong (1978 , 2003 , 2006 ), when the Portuguese came to China in the early 1510s and asked for permission to establish bilateral trading relations, the imperial court repeatedly rejected the request. However, they knew quite well that foreign mari- time trade was highly profi table and that maritime security could be enhanced if the Portuguese could be properly co-opted.3 As we all know, the Confucian-inspired view of the world was that China was the “Middle Kingdom”, which was superior to the surrounding countries. They called the people of these countries “barbarians”, and regarded those states as vassal states. To manage “diplomatic relations” with the vassal states, rulers of China established a tributary system in which envoys from the vassal states came to China to offer homage to the Chinese emperor in exchange for trading rights with China. As the Portuguese saw themselves as vastly superior to the Chinese, they declined to follow the tributary system (Gunn 1996 , pp. 13–33). To a certain extent, the differences between the Chinese and Portuguese points of view and socio-economic-diplomatic concerns could not have been narrowed down without resorting to innovative ideas or measures. The plan to designate Macao— the southern-most peninsula in Chinese territory, with limited natural resources but possessing a harbour—as a place under Sino-Portuguese administration could satisfy Portuguese maritime trade requirements without endangering the tributary system. The plan was obviously a well-thought-out one, and not a product of coincidence or haste. After an in-depth examination of this innovative plan, Fok suggested a “Macao formula” to explain how Sino-Portuguese demands/concerns could be better served/ answered. Fok argued that Ming offi cials understood quite well the huge benefi ts that maritime trade could bring and the importance of co-opting the Portuguese for reasons of coastal security (because the Portuguese came equipped with more

3 In both the Ming and Qing dynasties, the coastal areas of China were frequently attacked by Chinese and Japanese pirates. Hence, any measure that could enhance the defense of these areas seemed to be something that the authorities were willing to consider (Lamas 1998 , p. 19; Hao 2011, p. 65). 34 2 Macao and Globalization: A Gambling Perspective advanced ships and weapons than the Chinese possessed). Although not clearly spelled out in any imperial edicts or official documents, Fok considered that the Ming dynasty probably intentionally devised the plan as a strategy to control foreigners and reap profi ts from maritime trade. By using this formula, the imperial court could confi ne the foreigners to a small area so that it would be easier for the Chinese government to deal with them, as the government could simply close the borders and the foreigners would have to yield to their demands. At the same time, the government could collect tax revenues, as the foreigners could still carry out their business in Macao (Fok 1978 , 2003 , 2006 ). The theory of liminality and the “Macao formula” are similar. Both seem to supplement each other in explaining how and why Macao emerged as a city in Chinese territory but under Portuguese administration, which had a completely different social and value system from that found in the rest of China. As Macao was carved out as a foreign-administered trading enclave—or, as is frequently cited, as a Sino-Portuguese joint administrative region—that largely addressed the trading and settlement demands of the Portuguese without weakening the Ming tributary system, and most Sino-Portuguese confl icts and hostilities that arose were resolved effectively. Inside this place, some social values and mores normally accepted in both cultures were adopted, while others were de-emphasized or ignored. In other words, some kinds of behaviour that were considered beyond the pale in the main- stream Sino-Portuguese cultures could be tolerated or accepted in Macao. After the carving out of Macao as a Portuguese trading enclave, the banner of East–West trade and multi-racial/cultural co-existence was hoisted. Such a philoso- phy or ideology was clearly very different to that of mainstream Confucian culture, which downplayed the status of merchants/barbarians and the values surrounding the making of money. As can be recalled, the Confucian classics put the gentry (shi ) on the top layer of the social hierarchy. Farmers (nong ) and artisans ( gong) in the second and third tiers respectively, and merchants (shang ) at the bottom of society. Also according to Confucian teachings, even though contacts with barbarians were not totally rejected, a racial/cultural demarcation was clear. The gap between Chinese and barbarians was wide indeed. As such, we can see that some of the tra- ditional structures were tweaked, while some new patterns of socio-economic order were formed or created in Macao. As a liminal place that stressed the pragmatic value of making money regardless of race or class, Macao attracted foreign and local people of the same mindset. Because of its lack of natural resources but relative tolerance, Macao became fertile ground for such traditionally frowned-upon socio-economic activities as prostitu- tion, gambling, opium trading/smoking, and human traffi cking, which required lit- tle investment in factors of production. Of course, we should not take an overly romantic view of those early immigrants to Macao. Local people who came from nearby villages were from the grassroots. They included social outcasts who could fi nd no place or no chance for advancement in the conventional social system. Since their reason for coming to Macao was to make money to support themselves and their families, after making a certain amount of money, they generally chose to return to their hometowns. They seldom considered settling in Macao permanently. 2.3 Liminality and the “Macao Formula”: A Bridge-cum-“Safety Valve” for China 35

As such, they did not have any desire to participate in the political process and showed little concern for social injustice. Foreigners, who came from Southeast Asia, India, the Middle East, or Europe, also came to China to make quick money. They, too, did not see Macao as a place of permanent residence. Barrie and Tricker’s (1991 , p. 16) vivid quotation about a European trader’s view on doing business in Hong Kong in the early 1840s gives us some understanding of the mentality of these early immigrants: “We are money- making practical men. Our business is to make money, as much and as fast as we can—and for this end, all modes or means are good which the law permits.” Such a mentality of making quick money was shared by immigrants from different countries and different backgrounds, and at various periods. Barrie and Tricker further cited the following comment made by an under-secretary at the Board of Trade in London about the European traders who came to work in the East in the 1870s: [They are] unscrupulous and reckless adventurers who seek nothing but enormous profi ts on particular transactions and care little for the permanent interests of commerce—still less for the principles of truth and justice. These men always cloak their injustices under the guise of patriotism and civilization. (Barrie and Tricker 1991 , p. 17) As Macao society was fi lled with migrants who had come simply to try their luck and who considered their stay in Macao as only temporary, an attitude or mindset of adventure, opportunism, and the down-to-earth pursuit of short-term interests became widespread. Both Chinese and Portuguese offi cials, who unanimously put aside moral issues to focus on such pragmatic results as pulling in a bigger income, further spurred the growth of the aforementioned non-traditional businesses (Deng et al. 2000 , pp. 618–622). Although many of the business that involved activities traditionally regarded as immoral were turned to lawful or “quasi-lawful” businesses, some were not. As such, they went underground and fell under the control of criminals (i.e., triad societies). Yet criminal control and infl uence was profound even in those lawful “fi lthy businesses” to which the law enforcement authorities paid close attention (Leong 2002 ). In a city fi lled with all sorts of traditionally reviled businesses and transient residents who had come to make quick money, Macao became a hotbed of such crimes as robberies, murders, abductions, kidnappings, piracy, smuggling, and so on. Macao epitomized the “city of sin” (Maxwell 1999 , p. 83). One well-known reformer in the Qing dynasty, Zheng Guanying (1842–1921), who was a locally bred merchant-scholar, bluntly described Macao as a qinshou zhiyu, literally “a place of beasts” (Xia 2009 , p. 31). To borrow more neutral words from Comaroff and Comaroff ( 2001, p. 5), Macao at that time could be described as one of the “liminal places of leisure and/or the haunts of those (aristocrats, profl igates, ‘chancers’) above and beyond honest toil”. Given Macao’s position/function as a gateway for international trade, its vibrant morally dubious businesses could bring a continuous stream of income to both the government and its people, while its unique status ensured that there would be no disruptive effect on the socio-economic-political system in the Chinese mainland. Thus, such a special formula that was applicable only to a liminal place was largely endured and maintained throughout the Ming period. Because of this, when the 36 2 Macao and Globalization: A Gambling Perspective

Manchus toppled the Ming dynasty and imposed a series of draconian measures to force the Han Chinese to accept Manchu rule, Macao was allowed to continue to operate under Portuguese administration. In the heyday of the reigns of the Kangxi, Yongzheng, and Qianlong emperors (1662–1796), a period of tremendous territorial expansion for the Qing dynasty, the Portuguese were likewise not expelled from Macao. Rather, the formula for Macao’s continued operation as a Portuguese enclave remained in effect for pragmatic considerations (Fok 1978 , 2003 ). The unilateral action taken by the Portuguese in the 1840s to seek full autonomy for Macao—i.e., to turn Macao into a Portuguese colony—when the Qing dynasty was in rapid decline did lead to political confrontations and hostilities. However, both sides would invariably come to the conclusion that their economic interests were of far more importance than political or diplomatic bickering, and turn their efforts once again to encouraging entrepreneurial activities in the territory. Also, after the 1840s, the opening of Hong Kong as an international trading port dealt a blow to the role that Macao had fi lled for centuries as a conduit for trade between China and the West. However, Macao’s economy was able to maintain some of its dynamism as the Portuguese government adopted a policy of promoting businesses regarded as morally dubious (Gunn 1996 , pp. 71–91). After the overthrow of the Qing dynasty in 1911, the revolutionists took the same approach that the Ming and Qing governments had followed, and retained the “Macao formula” uninterrupted. They took a pragmatic approach and saw no threat to the socio-economic-political system of the Chinese mainland from the arrange- ment. In other words, the traditionally reviled businesses remained vibrant and money-minded migrants kept pouring in and out. Macao was still seen as a place for adventurers to make quick money (Fok 2003 , p. 19). In periods of heightened nationalism and patriotism (for instance in 1919, 1925, and 1945), the public outcry to abolish the “Macao formula” was by no mean weak. Nevertheless, the Chinese government remained calm and simply decided to shelf the question until “conditions are ripe” (Cohen and Chiu 1974, p. 380). Even when the Communist regime came to power, a pragmatic approach stressing the down-to- earth pursuit of economic interests and facilitating cultural exchanges and racial co-existence was once again followed. Of course, the underlying principle that this model should not pose a threat to the socio-economic-political systems in the Chinese mainland was also regarded as the most important precondition for the adoption and continuation of the model (Chang 1988 ). In the 1980s, as the Chinese government saw that the conditions were ripe for resuming sovereignty over Hong Kong and Macao, bilateral negotiations with the British and Portuguese governments commenced. After a thorough consideration and review, an unprecedented model called the “one country, two systems” formula was put forward to settle the issues presented by the return of two free-market Western-run territories to the sovereignty of China, a country that, at the time, was run largely along command-economy lines. Under this model, not only was the emphasis on “a high degree of autonomy” and “Macao people governing Macao” (or “Hong Kong people governing Hong Kong”), but a pledge was also made to keep the capitalist system, free economy, and way of life of these places unchanged. 2.4 The History of Gambling in China: A Deep-Rooted Culture 37

In other words, after 1999, Macao would remain a capitalist free trading port and a separate customs territory with its own currency. More importantly, or more relevant to the discussion in this book, casino gambling as a legal industry would continue to be permitted in Macao after the handover. If we compare the “Macao formula” side by side with the “one country, two systems” model, we get the clear impression that the Chinese authorities had a good understanding of the past liminal position/status of Macao and Hong Kong. Also, they seemed fully aware of the role played by these two territories as bridges between China and the world, as well as of their direct or less direct contributions to the economic reform and modernization of China. Because of this, when consid- ering Macao and Hong Kong’s future, they adopted a policy based primarily on pragmatism to address historical legacies and accommodate the special need in these places for the harmonious co-existence of various races and the pursuit of economic interests. In sum, for about four centuries as an East–West liminal place, Macao once played a critical role as a bridge between China and the world. Such a place or posi- tion not only demonstrated how multi-cultural exchanges and the harmonious co- existence of races could be possible, but also how traditionally reviled businesses could be kept operating for so long without endangering local and/or national moral standards and social systems. In addition, as a trading enclave, Macao also became a “safety valve” for China, as people from the lower classes, even outcasts, could fi nd a place to gamble or make a living without affecting the social order in the mainland, while the demands of foreigners to trade and settle in Chinese territory could also be fulfi lled without intensifi ed diplomatic pressure. Last, but not least, the “one country, two systems” model seems to be tinged with the “Macao formula”, which not only refl ects the central government’s endorsement of Macao and Hong Kong’s past contributions, but also the expectation that these two SARs will continue to make contributions in the future.

2.4 The History of Gambling in China: A Deep-Rooted Culture

China not only has one of mankind’s oldest civilizations, but also one of the longest histories of gambling in the world and an exceptionally rich gambling culture (Price 1972 ). Various archaeological records on tortoiseshell or bone show that gambling activities appeared in China around 4,000 years ago (McMillen 1996 , p. 6). A num- ber of games of chance such as dice, chess, daisiu , fantan , paikao , weixing , and fi ghts between animals such as crickets, cocks, dogs, thrushes, fi shes, and other games, are either recorded in formal historical documents or mentioned in poems, legends, and stories. Olmsted (1962 , p. 172) described southern China as one of the most intense gambling regions, in terms of tolerance and indulgence of the activity, in the world. “Basically all Chinese have the gambling gene,” said a source in the US casino industry (Casino City 2002 ). An assertion that different kinds of 38 2 Macao and Globalization: A Gambling Perspective gambling were once popular in different epochs seems beyond doubt (Price 1972 ; Guo and Xiao 1995 ). Various historical records show that whenever gambling became popular, a development that probably bred social evils and affected public morality, the state intervened. As early as the Warring States period (476–221 BC), gambling was outlawed in the state of Qi in order to prevent offi cials as well as the common people from becoming addicted to the activity. Shortly after, the state of Wei also followed the practice of punishing those caught engaging in gambling activities. Both states seemed to see gambling as an activity that was harmful to the individual, family, and society. However, in other states such as Yan and Zhao, although gambling was common there is no clear record of measures being used to suppress gambling activities (Luo and Xu 1994 , p. 261). After many years of engaging in wars of conquest, in 221 BC one state, Qin (221–206 BC), fi nally defeated all of the others and brought the various territories under one rule. As the fi rst emperor of the country, Qin Shihuang made gambling illegal and imposed heavy penalties on those found violating the law. This anti- gambling policy was largely followed in the Han dynasty (206 BC–220 AD), and the punishments were more draconian (Guo and Xiao 1995 , pp. 29–30). In the tumultuous Three Kingdoms (220–280) and Two Jins (265–420) periods, the anti-gambling policy was not effectively enforced because wars and political hostilities were frequent. Some provincial governments took some short-term or sporadic measures to control what had become a rampant activity, by trying to crack down on gambling houses or punishing gamblers, but with little success. Then, in the period of the Southern and Northern dynasties (420–589), although some forms of gambling were made legal during certain regimes, for the most part an anti- gambling policy was carried out. Harsher penalties such as imprisonment and ban- ishment for those discovered to have engaged in gambling were not only imposed on ordinary people but also on senior offi cials and members of the nobility. Again, such measures did not yield the expected results (Luo and Xu 1994 , pp. 262–263; Lai 2008 , p. 28). During the Sui (581–618) and Tang (618–907) dynasties, anti-gambling mea- sures were further tightened. Not only were laws and regulations prohibiting differ- ent kinds of gambling spelled out more clearly than before, relevant terms of punishments and imprisonment were also written in detail. Apart from punishing the gamblers, Tang law also clearly stated that casino operators could receive prison sentence, which was rare in previous dynasties. Although anti-gambling measures were strictly carried out in the Sui and Tang dynasties, incidences of underground gambling activity were still recorded (Luo and Xu 1994 , p. 263; Lai 2008 , p. 29). In the subsequent dynasties of the Song (960–1279) and Yuan, in spite of strong state measures aimed at eradicating gambling, the activity could not be effectively suppressed. Indeed, during times of political turbulence and social instability, it even went unchecked. As heavy penalties were imposed on soldiers and govern- ment offi cials caught gambling, a reasonable speculation is that gambling problems were to be found among members of the army and the bureaucracy (Luo and Xu 1994 , pp. 263–265; Guo and Xiao 1995 , pp. 121–125). 2.4 The History of Gambling in China: A Deep-Rooted Culture 39

The harshest anti-gambling measures appeared under the Ming dynasty. An ordinary punishment for those caught gambling was to have their hands chopped off. If the individual was found to be heavily involved in gambling or proven to be addicted to the activity, the death penalty could be imposed (Luo and Xu 1994 , p. 265; Lai 2008 , pp. 30–31). In the Qing dynasty, gambling was still prohibited and topped the list of the so-called “four immoral evils” (Lai 2008 , p. 31), which clearly refl ected the imperial court’s perception of the threat that gambling posed to society (Luo and Xu 1994 , pp. 266–269; Song and Miao 2010 , p. 159). The overthrow of the Qing dynasty in 1911 and the subsequent establishment of a republican form of government in China did not bring much change in the state’s policy on gambling. Gambling was still seen as a threat to the family, work, morality, and the social order, and remained illegal. Likewise, the problem of underground gambling was still left unsolved as the newly established Republic of China was quickly beset by political strife, warlordism, and war (Guo and Xiao 1995 , pp. 358–421). After the formation of the PRC in 1949, under the infl uence of socialism all forms of gambling were strictly forbidden. During intense periods of ideological purifi cation and political purges, it was believed that the government had actually succeeded in eliminating gambling throughout the country. However, after the launching of the open door policy and the introduction of economic reforms in the late 1970s, different kinds of illegal gambling activity quickly resurfaced as market freedom increased and the economy became more dynamic (Yan et al. 2005 , pp. 34–35). According to an unoffi cial report, in 2009 “some 600,000 people were arrested for gambling” (The Telegraph 2010 ). Underground gambling, including illegal online betting, which has recently become popular, is undoubtedly more rampant than before. However, it is still very clear that, for reasons of ideology, the central government cannot allow gambling to be legalized in (Yan et al. 2005 , pp. 243–249). Although gambling was made illegal throughout most of Chinese history, it seemed that lotteries were tolerated, especially in times of inadequate public fund- ing or for fi nancing large construction projects. For instance, in the Han dynasty, when the government wanted to rebuild part of the Great Wall to enhance imperial defenses but lacked the funds to do so, a government-run lottery was launched. Also, in the late Qing period, weixing (an old style of Chinese lottery) was intro- duced in Guangdong, the province where illegal gambling activities were the most rampant, as a way of raising the funds for military expenses and for indemnity pay- ments (Guo and Xiao 1995 , pp. 254–259). Today, in the Chinese mainland, although gambling has been made strictly illegal, caipiao (a new style of Chinese lottery) is allowed, particularly to raise money for promoting sports or supporting charities (Lai 2008 , p. 17). From the above sketch of the history of gambling in China, it is apparent that anti-gambling measures were put into place almost as soon as gambling activities came to the notice of the authorities. Two points can be noted: First, there was a “gambling-phobia” almost in all dynasties, as the ruling class invariably saw gambling as disruptive to social order and social structures. Second, gambling seems to fulfi l a deep human need, as gambling surfaced at every moment in history even when 40 2 Macao and Globalization: A Gambling Perspective heavy punishments were imposed. In this vein, we can infer that this long history of gambling in fact refl ects a deep-rooted culture of gambling in China. Gamblers are here, there, and everywhere. Accepted or not, it seems clear that gambling can never be totally eradicated. Although on paper all forms of gambling were prohibited in almost all dynasties, some small-scale gambling was tolerated in society as a form of entertainment, relaxation, leisure, or social activity (Price 1972 ). For instance, there is a common saying, xiaodu yiqing , which literally means “modest gambling is entertaining”. Also, it was a fairly common practice in the past to promote gambling during impor- tant festivals, especially the Chinese New Year, as part of a big celebration (Cable and French 1927 , p. 98). On such occasions, not only were adult men free to gam- ble, but women and children were also allowed to participate.4 Such a phenomenon indicates that although gambling in general was regarded as a kind of sin or vice, and even declared to be a crime, with the expression dadu baijia (literally meaning “indulgence in gambling will cause the family to collapse”) being frequently heard, some exceptions were tolerated in society, even in the past. To sum up, throughout Chinese history, although gambling was regarded as an immoral vice that was banned in almost every dynasty, illegal gambling was ubiqui- tous. This phenomenon is an illustration of the irrefutable fact that gambling serves certain positive functions, such as entertainment, leisure, and relaxation, but also generates a number of undesirable side effects, such as debt, family strife, and so on. Thus, a policy that either simply legalizes or prohibits gambling does not seem to be the best way of dealing with an activity that simply cannot be eradicated.

2.5 Legalized Gambling in Macao

Although gambling in the Chinese mainland was strictly prohibited in the past and the ban is still in place even today, Macao adopted a completely different policy in the past and this policy is carried out to this day. As mentioned before, shortly after Macao was designated an East–West trading port administered by the Portuguese, gambling activities were rampant in the territory (Liu 2002 ; Wu 2009 ). In their book Gamblers Guide to Macao , Okuley and King-Poole (1979 , p. 5) quoted a visitor’s impression of Macao in the 1860s as follows: “There is trade going on in the streets, but it is of a very languid kind, and the gambling houses or the cathedral are the chief places of resort”. They further mentioned the observation of a scandalized Franciscan friar, Jose de Jesus Maria, who was in Macao from 1742 to 1745, who exclaimed that Macao was dominated by “lechery, robbery, treachery, gambling, drunkenness, brawling, wrangling, cheating, killing and other similar vices”. That also explained why a casino offi cial once asserted that “Macao’s nothing without gambling … and

4 For more examples of “festival gambling”, please refer to such classics of Chinese literature as the Dream of the Red Chamber (Cao 1929 ), Water Margin (Shi 1976 ), and Strange Tales from a Chinese Studio (Pu 2006 ). 2.5 Legalized Gambling in Macao 41 all gamblers are suckers”. Nevertheless, we should bear in mind that before the 1840s, since Macao was under the framework of a Sino-Portuguese joint administration, it more or less followed the anti-gambling directives of the Ming and Qing governments, 5 even though underground gambling was rampant and both governments were fully aware of the situation. In July 1844, the fi rst treaty between China and America, known as the Treaty of Wangxia, was signed in Macao. In January 1847, a Chinese style lottery, baige piao (literally, “pigeon ticket”), was made legal by the Macao Portuguese government in order to raise funds to fi ll coffers depleted by the drastic contraction of trade that occurred after the opening of Hong Kong as another international trading port. 6 Shortly afterwards, the Macao Portuguese government, under the stewardship of the hawkish Governor Amaral, took two drastic steps in 1849 that transformed Macao’s society. First, he seized the opportunity presented by the Qing court’s defeat in the First Opium War to unilaterally declare Macao a colony of Portugal. Second, he introduced a licensing system for fantan gambling houses, in order to boost Macao’s declining economy as well as to raise money to replenish the Macao government’s empty coffers (Wu 2009 , p. 480; Wu et al. 2009 , pp. 1623, 1641, 1644).7 Although Macao’s economy did not rebound immediately after the legalization of gambling, government revenue from the fees collected from issuing licences to gambling houses grew steadily. Under the governorship of Isidoro Francisco Guimarães (r. 1851–1863), more forms of gambling were legalized through the sys- tem of licensing gambling houses. As underground gambling was very widespread in Hong Kong and Guangdong, the gambling business did not immediately prosper as expected (Zhang 2011 ). In 1860, weixing was formally introduced in Guangdong as a means of raising public revenues. It was banned in Guangdong in 1876 (Lai 2008 , pp. 23–24). Thus, gambling operators fl ed to Macao and Hong Kong and set up operations there. In 1867, gambling was made legal in Hong Kong (Wu 2009 , p. 80). Faced with such direct and severe competition, the gambling business in Macao was hit very hard. Some gambling operators even moved their businesses from Macao to Hong Kong in search of better returns.

5 As Portugal was a predominantly Catholic country, gambling had also been made unlawful by the Portuguese government. 6 A Portuguese-style lottery was introduced in Macao in 1810 for the purpose of raising money for charity (Wu et al. 2009 , p. 1319). However, in the beginning, this sort of lottery did not attract many participants. 7 As can be seen, gambling was made legal in Macao under special historical and economic circum- stances. Macao’s economy was in drastic decline after the opening of Hong Kong, so the Portuguese court agreed that the Macao Portuguese government could take the necessary pragmatic measures to rescue the territory from the severe economic downturn that it was experiencing. Nor could the Qing court intervene, as it had lost its control over Macao after China’s defeat in the Opium War. Ultimately, what was introduced as an economic crutch became the pillar of the territory’s economy. The liminal status that Macao enjoyed seemed to be the critical factor that contributed to the continuous growth of its gambling business. 42 2 Macao and Globalization: A Gambling Perspective

However, the policy of legalizing gambling in Hong Kong did not last long. In 1872, gambling was once again outlawed in Hong Kong. At about the same time, the Guangdong government also took stringent measures to eradicate all kinds of underground gambling throughout the province. Because of this, Macao became the sole city in the region where gambling was legal. Gamblers, gambling operators, and gambling capital poured in, and Macao’s gambling industry underwent rapid growth (Ge 2005 , pp. 20–21; Wu 2011 , p. 27). In the subsequent four decades, i.e., from the early 1870s to the late 1910s, the gambling business continued to develop in Macao. Within this period, four aspects of development strengthened Macao’s competitiveness, turning the city into a regional centre for gambling. First, the system for licensing gambling houses was effectively enforced. When the system was fi rst introduced, underground gambling was rampant. This not only ate into the revenues of the government and franchisers, but also made gamblers more vulnerable, as it was common for illegal gambling operators to fail to pay gamblers their winnings. The Macao Portuguese government therefore took the necessary measures to close down gambling houses discovered to be operating illegally. Second, gambling management knowledge and gambling capital steadily accu- mulated. In the beginning, investment in gambling was considered a short-term ven- ture. Therefore, gambling houses were loosely managed and mainly aimed at making quick profi ts. Later, as businessmen saw that the Macao Portuguese govern- ment was giving the gambling industry its full backing, and as the industry continue to grow, more capital with a longer-term investment horizon was injected. As a result, not only did management become more professional, the amount of capital invested in gambling also increased. However, understanding the risky nature of the gambling business, many gambling operators wisely diversifi ed their investments to other businesses and other cities, especially Hong Kong. Third, a gambling economy gradually evolved. After the opening of Hong Kong and a number of coastal trading ports, Macao’s previously unparalleled position as an international trading port was irrevocably lost. The abolition of the coolie trade further weakened Macao’s economic base. Although prostitution and opium trading were still kept as lawful businesses, both declined steadily because of serious com- petition from neighbouring cities. As such, the gambling business became the domi- nant force in Macao’s economy not only in term of revenues generated for the Macao Portuguese government, but also in terms of jobs created, tourists attracted, and income earned by the gambling operators. Fourth, a gambling culture and society that simultaneously emphasized charity and philanthropy slowly emerged. Although gambling was legal in Macao, no one could refute the immorality of the activity. Many gambling operators were well aware of the disruptive effect of gambling on gamblers in particular and on society in general. As a form of “redemption”, whether for the sake of their afterlives or for the well-being of future generations, or simply driven by mercy, many infl uential gambling operators such as Ho Lin-vong, Lou Kau, Xiao Yingzhou, and others became renowned philanthropists. They not only donated large sums of money to build schools and homes for the poor in Macao or in their hometowns on the 2.5 Legalized Gambling in Macao 43 mainland, but also gave aid to people on the mainland during times of famine or fl ooding. In an era when no welfare was provided by the government, without doubt such charity helped to alleviate the suffering of many poor people (Wu 2009 , pp. 461–469). As mentioned earlier, the collapse of the Qing dynasty did not change Macao’s socio-economic-political status. Hence, gambling remained a lawful business and continued to play a pivotal role in the Macao economy. Since China did not enjoy peace and prosperity after the founding of the Republic, with internal military rival- ries and socio-political disturbances erupting more frequently than before, the num- ber of refugees fl eeing to Macao increased steadily.8 Because the city was fi lled with an anxious population, some of whom chose to gamble as a way of temporarily escaping from their worries, the gambling business prospered. In 1930, the Macao Portuguese government introduced an important reform to its system of licensing gambling houses. Instead of issuing a number of licences to different small operators in different places, mainly the Macao Peninsula, Taipa, and Coloane, a single franchise was offered. In other words, since then, the gam- bling business—like the supplying of electricity or water—became a monopoly business in Macao. Under this new scheme, a Chinese syndicate named the Hou Heng Company, headed by Fok Chi-ting, Fan Che-pang, and Ho Shap, successfully obtained the franchise. As the company promoted its business heavily in the region—including in Hong Kong, Zhongshan, and Guangdong, the gambling busi- ness prospered as tourists fl ocked to Macao (Liu 2002 , pp. 18–25; DICJ 2012 ). In 1937, the franchise was up for another round of bidding. This time, the Tai Heng Company, a newly formed syndicate under the leadership of Fu Tak-iong and Kou Ho-neng obtained the monopoly (Song and Miao 2010 , p. 317; DICJ 2012 ). As with the fi rst holders of the monopoly franchise, the new holders also started a series of promotions to entice more tourists to come to Macao. This effort also proved to be successful. As mentioned before, during WWII, since Macao followed Lisbon’s policy of remaining neutral, Macao became the one place that enjoyed peace and prosperity when neighbouring areas fell into chaos and turmoil. Because of this, a huge number of people fl ooded into Macao from neighbouring cities, causing the territory’s total population to soar to an unprecedented high of around 375,000 (DSEC 1998, p. 100). Since there was a simultaneous infl ux of a huge amount of hot money, Macao’s economy boomed. Gambling houses were fi lled with people at almost all times. The Tai Heng Company dominated the Macao gambling business for about two and a half decades (Liu 2002 , p. 58; DICJ 2012 ). In 1949, the PRC was founded. Although there were rumours that the new Chinese government would take back Macao and gambling would no longer be allowed, both proved to be unfounded. As Macao’s socio-economic-political system was again kept unchanged, the gambling business remained the major feature of Macao’s economy and society. In other words, Macao was still the only city in Chinese territory where gambling was legal. Two years later, the trade embargo

8 For example, during the period 1920–1927, the population nearly doubled from 83,984 to 157,175 (DSEC 1998 , p. 101). 44 2 Macao and Globalization: A Gambling Perspective imposed on mainland China by the United Nations after the outbreak of the Korean War was a great blow to Macao’s economy. The number of people coming to Macao plunged (DSEC 1998 , pp. 100–102), and gambling houses experienced a drop in business. Connections between Macao and the Chinese mainland were almost cut off, turning Hong Kong into Macao’s major source of tourists. In 1961, the gambling franchise was put up for a new round of bidding. Although two syndicates submitted bids, it was generally believed that the Tai Heng Company would again land the franchise. However, it was announced that the franchise had been won by a newly established syndicate named the Sociedade de Turismo e Diversões de Macau, S.A. (hereafter STDM), controlled by a group of young elite businessmen, such as Ip Hon, Terry Ip Tak-lei, Henry Fok Ying-tung, and Stanley Ho Hung-sun (DICJ 2012 ). Although some observers viewed the change with some caution, it proved to be the beginning of a new chapter in the history of Macao’s gambling industry. Unlike the previous holders of the franchise, who insisted on an old style of man- agement, the new operator introduced innovative ideas, bringing a new momentum to the development of the business. The STDM injected a huge amount of capital into building the Hotel Lisboa and into buying number of new hydrofoils (a kind of advanced ship that could operate at a reduced cost but at an increased speed) to improve transportation links between Hong Kong and Macao. The company also introduced Western casino gambling games to increase the variety of gambling activities on offer in Macao, while coming up with a marketing strategy to expand their market (DICJ 2012 ). Two much remarked-upon customs came into being at that time: (1) each Chinese New Year, the Governor of Macao would hold the New Year ceremony for the gambling industry, and (2) civil servants, normally prohib- ited from gambling, were allowed to visit casinos for 3 days during the Chinese New Year holiday period and gamble as they liked (Liu 2002 , p. 104). In November to December 1966, a series of protests organized by pro-communist residents erupted in Macao. Since the Macao Portuguese government did not take prompt and effective measures to tackle the problem, the protests escalated into bloodshed. Public sentiment ultimately forced the Macao Portuguese government to bow to public pressure not only to make a public apology and grant compensation to the victims, but also to thereafter seek the consent of the pro-communist Chinese community (i.e., the Chinese government) to any important socio-economic- political decisions before their implementation. In other words, the old system of overlapping authority, i.e., the previous Sino-Portuguese joint administration model, was re-established (Lo 1995 ). Notwithstanding this political U-turn, after a short setback, the gambling industry continued to prosper. Since Macao’s economy (including the gambling business) had become heavily reliant on Hong Kong since the 1950s, and since the circulated widely in Macao and accounted for around one-half of the measured broad money supply in Macao, in 1977 the Macao pataca (hereafter MOP) was de-linked from the Portuguese escudo and pegged to the Hong Kong dollar (hereafter HKD) in order to stabilize Macao’s currency. The exchange rate of MOP to HKD was set at 2.6 Conclusion 45

107.5 to 100 at that time. In 1987, the rate was changed to 103.1 to 100—a rate that is maintained to this day (Krelove et al. 1999 , p. 29). In the mid-1980s, China and Portugal began talks on the so-called “Macao question”. The issue of gambling seems to have been included in their discussions. In 1987, the Sino-Portuguese Joint Declaration was signed. In this Joint Declaration, the Portuguese agreed to return Macao to Chinese sovereignty on 20 December 1999, while China agreed to give Macao special status by applying the “one country, two systems” model that had recently been put forward to settle the “Hong Kong question”. To a certain extent, the “one country, two systems” model was itself reminiscent of the “Macao formula”. Because of this arrangement, Macao’s capitalist system and way of life was preserved after the handover in 1999, while gambling was made legal and kept as a pillar industry. One year before the signing of the Sino-Portuguese Joint Declaration, the Macao Portuguese government offered the gambling franchise to STDM, with an expiry date of 31 December 2001. In summary, looking back to the history of legalized gambling in Macao, three salient points can be noted. First, although Macao was under fi rmer Portuguese control after 1849, the territory still had extremely strong socio-economic connec- tions with the Chinese mainland. Because of this, when there were wars, famines, or political disturbances on the mainland, villagers from southern China would fl ee to Macao for refuge. The warlordism of the 1920s, the outbreak in 1937 of the war of resistance against Japan, the 1941 occupation of Hong Kong by Japanese troops, and the 1946–1949 civil war, are some examples of such occasions. Second, since 1847, gambling was made legal and gradually became Macao’s pillar industry. In over one and a half centuries of the development of the gambling industry, Macao has accumulated a great deal of experience in the fi eld, which is proving to be a valuable asset in the continued development of the territory. Third, the development of the gambling industry in Macao was very much related to the gambling policies of its neighbours. Clearly, Macao’s gambling business prospered when gambling was outlawed in neighbouring areas, and vice versa.

2.6 Conclusion

A tiny place situated in the southern-most margin of Chinese territory, Macao was carved out as a liminal place for Portuguese settlement. It adopted a different socio- economic- political system from that of China—emphasizing Sino-Portuguese joint administration, pro-business/trade policies, and the harmonious co-existence of people of many races. Although this liminal place was described negatively by the early British inhabitants of Hong Kong as “an unrecognized and unpermitted, but unchallenged squatting, on an undefi ned portion of Chinese territory” (Maxwell 1999, p. 74), Macao in fact played an unparalleled role as a bridge between China and the world for about four centuries. 46 2 Macao and Globalization: A Gambling Perspective

The unilateral action taken by Governor Amaral in 1849 to turn Macao into a Portuguese colony and gambling into a legal business transformed Macao. Whatever else might be said about these actions, an irrefutable fact is that the paradoxical and Janus-faced nature of gambling seems to fi t quite well into Macao’s East–West liminal position. The gambling business has since prospered in Macao without much detriment to its neighbours. Despite its long history, gambling in Macao remains an under-studied subject, which is what has motivated us to focus our research on this area.

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Sit VFS (1991) Evolution of Macau’s economy and its export-oriented industries. Copenhagen Pap East Southeast Asian Stud 6:63–88 Slack ER Jr (2001) Opium, state, and society: China’s narco-economy and the Guomindang, 1924–1937. University of Hawaii Press, Honolulu Social Welfare Bureau (2001) Report on drug control in Macao (1991–2000). (In Chinese) http:// www.ias.gov.mo/stat/dptt_relatorio/relatorio.htm . Accessed 23 Oct 2012 Song H, Miao X (2010) A history of game culture in China. Social Sciences Academic Press, Beijing (In Chinese) The Telegraph (2010) China’s secret gambling problem, January 9. http://www.telegraph.co.uk/news/ worldnews/asia/china/6942975/Chinas-secret-gambling-problem.html . Accessed 23 Oct 2012 Thomassen B (2009) The uses and meanings of liminality. Int Polit Anthropol 2(1):5–27 United Nations Offi ce on Drugs and Crime (2010) A century of international drug control. United Nations Offi ce on Drugs and Crime, Vienna van Gennep A (1961) The rites of passage (trans: Vizedom MB, Caffee GL). University of Chicago Press, Chicago Willis C (ed) (2002) China and Macau. Ashgate, Aldershot Wiseman P (2007) Macau leads Las Vegas in gambling. USA Today, January 22. http://usatoday30. usatoday.com/travel/destinations/2007-01-22-macau-1a-usat_x.htm . Accessed 23 Oct 2012 Wu K (2009) Contemporary history of gambling in Macao. Guangdong People’s Publishing House, Guangzhou (In Chinese) Wu K (2011) The gambling industry in the early period of Macao. Joint Publishing (Hong Kong) Company Limited and Macao Foundation, Hong Kong (In Chinese) Wu Z, Tang K, Jin G (2009) Chronicle of Macao. Guangdong People’s Publishing House, Guangzhou (In Chinese) Xia D (ed) (2009) The chronicle of Zheng Guanying. Shanghai Jiao Tong University Press, Shanghai (In Chinese) Yan Y, Chen B, Zhang L, Chen D (2005) China says “no” to gambling. China Youth Publishing Group, Beijing (In Chinese) Zhang T (2011) A study of the monopoly on fantan gambling in Macao during the late Qing dynasty. Jinan University Press, Guangzhou (In Chinese) Zheng T, Huang J, Zhang G, Deng H (1994) Macao population. Macao Foundation, Macao (In Chinese) Chapter 3 The Return to Chinese Sovereignty: A Historical Turning Point

3.1 Introduction

In Macao’s history, three important years—1557, 1849, and 1999—should not be forgotten. These years signify three historical turning points. The year 1557 marked the beginning of Portuguese settlement in Macao with the consent of the Ming court and the development of Macao as an international maritime trading port. Around three centuries later, in 1849, Macao was seized as a Portuguese colony, and gambling was made legal (in 1847) to generate income for the government as well as to boost the local economy. One and a half centuries later, Macao returned to the motherland as a SAR of China under the framework of “one country, two systems”, involving “a high degree of autonomy” and “Macao people governing Macao”. In other words, Macao’s previous capitalist system and way of life—with a legalized gambling industry as the pillar of the economy—remained unchanged after the return of sovereignty. Shortly after the founding of the SAR, the gambling industry was liberalized by introducing more competition and capital investment. In the beginning, although both local and international investors were cautious or doubtful about the potential for the development of this industry, the decision was later proven to be correct, as the policy to expand the industry was a tremendous spur to economic growth. In this chapter, the environment for the development of the gambling industry and its socio-economic milieu in the pre-handover period will be examined. The discussion will then turn to an exploration of various matters that were taken into consideration for reforming the gambling business after the handover. A brief account of the rapid economic growth that was stimulated by the policy of liberalizing gambling will also be given. Finally, the interplay of the gambling business with socio- economic-political developments and local/national strategies in the context of the rise of China and globalization will be discussed.

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 49 DOI 10.1007/978-3-642-40749-9_3, © Springer-Verlag Berlin Heidelberg 2014 50 3 The Return to Chinese Sovereignty: A Historical Turning Point

3.2 From Colony to Special Administrative Region

Although Macao is often mentioned in conjunction with Hong Kong, and both are now SARs of China under the “one country, two systems” model, there are a number of differences between the two places. Because of its smaller territory and economy, Macao was less visible internationally than Hong Kong before the return to Chinese sovereignty and had a much lower international standing. Yet, as mentioned in the previous two chapters, Macao has a far longer history as an international port. In Hong Kong, although it is still legal to bet on horse races and football matches, and to gamble at games in licensed houses of entertainment, casino gambling is prohibited. However, in Macao, not only have various forms of gambling— including casino gambling and gambling—been made lawful, but gambling has developed into an industry that dominates nearly the whole economy. With regard to the culture of the two places, Hong Kong’s is a Sino-Anglo- Saxon blend, while Macao’s is a Sino-Portuguese-Latin mixture. Despite their obvious differences, both cities went through a similar path of decolonization—not a search for independence but a return to Chinese sovereignty. Why was the actual process of decolonization in these two cities so different? What were the major considerations for ensuring a smooth transition, social stability, and economic prosperity? How prominent was the issue of gambling in the agenda of the Sino-Portuguese negotiations? Below, the critical concerns from colony to SAR are examined. As mentioned in Chap. 2, prior to 1979 the Lisbon government had not acknowledged the international status of the PRC. Therefore, no diplomatic relations had been established between Portugal and China. In February 1979, after about 2 years of bilateral discussions, a Joint Communiqué on the Establishment of the Sino-Portuguese Diplomatic Relations (hereafter Joint Communiqué) was signed in Paris (CRIENGLISH.com 2005 ). Although the issue of Macao was not mentioned in the Joint Communiqué, Portugal and China concluded a secret agreement defi ning Macao as Chinese territory under Portuguese administration.1 In other words, the Portuguese government fully understood that Macao is part of China and the Chinese government could take back Macao at a suitable time.

3.2.1 Settling the Hong Kong Question

In fact, since the early 1970s, as the British government knew quite well that many of the land leases being sold or franchises being offered in Hong Kong touched upon the question of Hong Kong’s sovereignty after 1997, a great deal of diplomatic effort had been made to secure some level of certainty over Hong Kong’s future

1 The contents of this February 1979 Paris agreement were kept secret until the signing of the Sino- Portuguese joint agreement over Macao in April 1987 (Edmonds 1993 , p. 879). 3.2 From Colony to Special Administrative Region 51

(Cottrell 1993 ; Foreign Affairs Committee 1994). One month after the signing of the Joint Communiqué in Paris, the Hong Kong governor, Murray MacLehose, visited Beijing and met China’s paramount leader, Deng Xiaoping. In the meeting, although Deng informed MacLehose that the Chinese government could take back Hong Kong after 1997, no concrete plans were discussed on how this was to be done. As such, on his return to Hong Kong, MacLehose only relayed the oft-quoted message to the public from Deng “to tell the business people they ‘can rest their hearts at ease’” (Chung 2001 , p. 31). Historical evidence showed that when Deng put forward the idea of taking back Hong Kong (and Macao) for the fi rst time in the late 1970s, the local and interna- tional communities were surprised. Two key concerns were frequently cited at that time. First, the mainland Chinese government had just declared the launch of an economic reform policy, and the success of this policy was still unknown. Second, the socialist system was still being upheld in mainland China, while the capitalist system held sway in Hong Kong and Macao. Because of this, the issue of China’s resumption of sovereignty over Hong Kong and Macao aroused great anxiety among the residents of these places. Some, feeling a lack of confi dence in their post- handover future, chose to migrate to Western countries. Some investors, seeking to reduce business risks, also decided to change their company’s place of domicile (Bottomley 1989; Skeldon 1994; Wang and Wong 1995; Zheng and Wong 2006 , pp. 448–455). Knowing how thorny the Hong Kong question was, the Beijing government put extra care and resources into dealing with it. After MacLehose’s visit, some contacts to test the waters were made by both sides. Then, in September 1982, British Prime Minister Margaret Thatcher travelled to Beijing for direct discussions on the issue with Deng Xiaoping. As expected, Thatcher demanded that Hong Kong remain under British administration after 1997, citing in support of her argument three trea- ties: the Treaty of Nanking (1842), the Convention of Peking (1860), and the Convention for the Extension of Hong Kong Territory (1898). In response, Deng reminded Thatcher that these treaties had been signed under duress and on an unequal footing. He further asserted that China would take back Hong Kong when- ever the Chinese government decided was an appropriate time and with whatever means they considered necessary to use. No solid conclusions were drawn from the fi rst meeting. While making her way down the stairs outside the Great Hall of the People after the historic talks were held, Thatcher tripped. This stumble was inter- preted by Hong Kong Chinese observers as a bad omen for the British diplomatic initiative (Chung 2001 , p. 56). Shortly after Thatcher’s return to London, formal negotiations began between China and Britain over the Hong Kong question. In the beginning the two sides clashed fi ercely, since both stuck to their positions. In order to ensure the continua- tion of British control over Hong Kong after 1997, a number of proposals, including the highly controversial “exchanging sovereignty for administration model” and the “co-administration model”, were raised by the British. However, all were rejected by the Chinese representatives. The Chinese reiterated that the issue of sovereignty over Hong Kong and Macao was non-negotiable, but that these two places could be 52 3 The Return to Chinese Sovereignty: A Historical Turning Point accorded a special status in pragmatic consideration of their unique history and socio-economic background. As both the Chinese and British governments insisted on their own stance, the talks came to a stalemate. This further deepened the crisis of confi dence in Hong Kong, especially in late 1983 (Biddulph 1983 ; Cheng 1984 ; Beijing Review 1985 , 1991 ; Chung 2001 , pp. 56–76). To put a stop to this war of words, the Chinese government issued an ultimatum to the British to give up hope for a continuation of their administration after handover and return to the negotiating table, or the Chinese government would take unilateral action to recover sovereignty over Hong Kong. Understanding that the latter option would be disastrous not only to the Hong Kong people, but also to British national interests, the British government became realistic and agreed to make concessions. As such, in subsequent rounds of talks, a consensus on a number of fundamental issues was reached. The British government agreed to terminate their administration over Hong Kong after June 1997, while the Chinese government promised to keep Hong Kong’s capitalist system and way of life unchanged (Cradock 1994 ; Brown and Foot 1997 ; Buckley 1997 ; Hook 1997 ). Then, on 19 December 1984, the Sino-British Joint Declaration was signed in Beijing, and later registered at the United Nations. According to this agreement, after China’s resumption of sovereignty over Hong Kong, the territory would be set up as an SAR under the unprecedented framework of “one country, two systems”. Hong Kong people would not only enjoy the special privileges of “a high degree of autonomy” and “Hong Kong people governing Hong Kong”, but also retain their capitalist system and way of life. Although sceptics cast doubt on whether the agreement would actually be implemented, most Hong Kong residents considered it to be a reasonable offer as long as the promises were honoured (Assessment Offi ce 1984 ). With this agreement, Hong Kong entered a period of transition.

3.2.2 Settling the Macao Question

The residents of Macao knew that they faced the same destiny as Hong Kong residents, whose levels of anxiety rose or fell according to the state of the Sino- British talks. In fact, from 1979 to 1984, because the Ministry of Foreign Affairs and the Hong Kong and Macao Affairs Offi ce of the PRC were fully absorbed with the repeated rounds of negotiations with Britain, no extra time or resources could be spared to settle the Macao question. It was believed that the Chinese leaders considered that once the model for settling the Hong Kong question was established, the issue of Macao would be easy to resolve. This later proved to be exactly the case. As predicted, after the normalization of relations between China and Portugal, trade and cultural exchanges between the two countries increased dramatically. Macao’s unparalleled position as a conduit between mainland China and Lusophone countries was also re-established. Although China and Portugal had had uninterrupted contacts since 1979, no formal talks on how to settle the Macao question had been 3.2 From Colony to Special Administrative Region 53 arranged. Nevertheless, Macao’s liminal position and its unique role in modern Chinese history seem to have been taken into consideration. Shortly after the signing of the Sino-British Joint Declaration, the Beijing government informed the Lisbon government in March 1985 that the “one country, two systems” model would be applied equally to Macao. Sino-Portuguese talks on how to settle the Macao question then began in May 1985 (Gunn 1996 ; Shipp 1997 ; Huang 1999 ). The negotiations between China and Portugal proceeded in a far more relaxed and friendly manner than those between China and Britain for the following reasons. First, the Portuguese government did not consider the possibility of extending its administration in Macao after the handover. Second, on the day that China and Portugal established diplomatic relations, there was a mutual understanding between the two countries that China would resume sovereignty over Macao at a suitable time. Third, the “Hong Kong model” existed for reference. As such, the major effort in settling the issue of Macao was placed on how to ensure a smooth and peaceful handover. The key challenge was about how to keep the capitalist system and way of life in Macao unchanged, especially the policy of legalized casino gambling (Fang 1997 ; Edmonds and Yee 1999 ; Huang 1999 ; Luke 2000 ). As previously mentioned, although Macao has a smaller population, territory, and economy than Hong Kong, it has played an equally signifi cant role in modern history as a bridge between China and the world. The prolonged application of the “Macao formula”, which stressed economic pragmatism and multi-racial/cultural co-existence proved to have worked very well in Macao. Putting all of one’s efforts into making money instead of advocating political development was regarded as a mainstream value of the society. Therefore, keeping such a formula basically unchanged was invariably considered benefi cial by both sides, not only to Macao, but also to China and the world. Because of their common view of Macao’s future and also the existence of mutual trust, the Sino-Portuguese negotiations on Macao went more smoothly than might perhaps have been expected. About one and a half years after the start of the negotiations, both sides came to an agreement and signed a draft declaration. On 13 April 1987, the Sino-Portuguese Joint Declaration was formally signed in Beijing. As with Hong Kong, after the resumption of sovereignty Macao would be set up as an SAR under the framework of “one country, two systems”. Macao would enjoy similar special privileges of “a high degree of autonomy” and “Macao people gov- erning Macao”. The capitalist system and way of life would also be retained for 50 years after the handover. With this agreement, Macao entered its period of transition. According to the Sino-Portuguese Joint Declaration, during the transition period, although Macao was still under Portuguese administration, prior consent must be sought from the Chinese government for any vital policy that would extend beyond the date of handover, i.e., 20 December 1999. For the Macao people and the Chinese government, apart from such necessary tasks as establishing relevant bodies and procedures for ensuring a smooth handover, the most critical undertaking seemed to be the drafting of the Basic Law—the mini-constitution that would govern the Macao SAR—in order to put the “one country, two systems” framework into reality. 54 3 The Return to Chinese Sovereignty: A Historical Turning Point

Towards this end, a drafting committee comprised of legal experts, senior members of the Hong Kong and Macao Affairs Offi ce, and representatives from Macao, was formed in September 1988. After over 4 years of repeated meetings, the work of drafting the Basic Law was completed in January 1993. After its endorsement by the National People’s Congress—the highest state body and the only legislative house in the PRC—the Basic Law was promulgated in March of that year. According to this mini- constitution, after the return to Chinese sovereignty, the Macao SAR would be directly under the authority of the Chinese central government, and be given a high degree of autonomy except in the areas of foreign affairs and defense. In the eyes of most people, gambling is the lifeblood of Macao’s economy and the key feature of its capitalist way of life. Is there any section or clause in the Basic Law that specifi es that legalized gambling activities would still be allowed? Reading through the whole mini-constitution, although the sensitive word of “gambling” or “gaming” does not appear, the implications are still clear. Article 118 of the Basic Law reads, “The Macao Special Administrative Region shall, on its own, make poli- cies on tourism and recreation in the light of its overall interests”.2 Viewed from this angle, we argue that the Macao SAR government has been given the power to make any policies on “tourism and recreation” for the welfare of the people. Of course, such a promise is by no means clear and therefore should not be interpreted as a constitutional guarantee. On 19 December 1999, as the Portuguese fl ag was lowered over the Governor’s House, over four centuries Portuguese administration in Macao was brought to an end. That evening, at the Cultural Centre of Macao Garden, a ceremony to signify the historic transfer of sovereignty was held, which ended at dawn of 20 December. Since then, with the formal establishment of the Macao SAR under the stewardship of Edmund H. W. Ho, the fi rst Chief Executive (Chefe do Executivo) of the Macao SAR, the Basic Law has been in force. For most Chinese people, Macao’s return to the embrace of the motherland shortly after Hong Kong’s reunifi cation with China in 1997 was surely another great day (Zheng 2000 ). The general performance of the economy during the last decade of Portuguese rule is presented in Table 3.1 . Looking back, Macao went through an uncommon path in modern history from an insignifi cant fi shing village on the southwestern margins of the China coast to an important East-West trading enclave under Portuguese administration, and then to an SAR under the framework of “one country, two systems” with a high degree of autonomy. Today, although Macao is no longer ruled by foreigners but is a world city run by the Macao people themselves, its liminal position as a bridge between China and the world is still distinctive and irreplaceable. To a certain extent, the “Macao formula” or, rather, the “one country, two systems formula”, still upholds

2 Both in the rhetoric of the era of the Portuguese administration and in the terminology of the current SAR government, gambling is categorized as a form of entertainment or a leisure activity. Therefore, although it is not clearly spelled out that “gambling” is allowed after the handover, no one doubts that this is the case. Even gambling operators take it for granted that gambling will continue to be the pillar industry of Macao’s economy (Leng 2009 , p. 194). 3.2 From Colony to Special Administrative Region 55 0 ) 2012 ); World Bank ( ); World 7.83 7.75 8.15 7.00 6.95 7.44 a various years various 5.99 a ); DSECa ( b , 6.22 a 2012a , 2010 , 6.08 a 1997 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 , 1996 ow) as percent of GDP (%) 0.02 0.31 −0.43 −0.07 0.06 0.03 0.09 0.03 −0.29 0.16 Major economic and gambling indicators, 1990–1999 Major economic and gambling indicators, 1990–1999 Figures are visitor arrivals by sea by sea Figures are visitor arrivals

GDP (at current prices, billion MOP) Per capita GDP (at current FDI (net infl prices, MOP) Value-added contribution from gambling (%) Unemployment rate (%) 25.46 76,010 – (million) arrivals Visitor 83,868 29.49 104,122 38.62 – 115,464 124,558 44.34 135,392 – 135,657 49.42 135,547 5.94 – 55.42 124,462 – 117,62 56.31 – 56.56 – 2.2 52.56 27.17 50.27 2.1 26.35 2.5 26.14 22.51 3.6 22.26 4.2 3.2 4.6 6.3 Table Table 3.1 a Sources: Calculations are based on DSEC ( 56 3 The Return to Chinese Sovereignty: A Historical Turning Point the values of pragmatism, the legacy of history, and multi-racial/cultural co- existence. Keeping casino gambling lawful can be seen as a sign of pragmatism. Of course, there is a common saying that the “one country, two systems” model was specially tailored not for Hong Kong and Macao, but for settling the problem of Taiwan. This is true in some sense, but it is not the whole story. As mentioned earlier, for over four centuries Macao has had a socio-economic-political system that is completely different from that of mainland China, and one that has proven to be successful. China’s central government is fully aware of this situation and considers that such an arrangement could be advantageous to Macao as well as to the whole country. In other words, although China’s leaders may consider the design of “one country, two systems” to be equally applicable to Taiwan, it seems to us that their fi rst concern at the time was reclaim sovereignty over Hong Kong and Macao. They very logically believed that by giving full consideration to the special historical background of Hong Kong and Macao, these two cities could continue to contribute to the country’s development and modernization after again becoming part of China.

3.3 Challenges in the New Millennium

Eleven days after the handover, the world entered the new millennium. For the Macao people, both dates were unforgettable and were worth celebrating. However, after these two big celebrations, many Macao people came to realize that a recovery from the prolonged economic recession could not be achieved overnight. Although public security had improved, it was still diffi cult for people to make a living. Five months later, on 7 May 2000,3 the fi rst large-scale spontaneous demonstration following the return of Macao to Chinese sovereignty broke out. Hundreds of unemployed construction workers marched on the streets to ask for jobs and government assistance ( 8 May 2000b ). Although the government agreed to speed up some construction projects and to lower eligibility requirements for public assistance, no prompt measures were taken. As such, 2 months later, the increasingly impatient unemployed construction workers again demonstrated on the streets to apply more pressure on the government. Violence erupted over a disagreement between the protestors and the police on the arrangement of the protest route. The police used tear gas to force the protestors to disperse and arrested eight of them, who were subsequently accused of violating public order (Macao Daily News 3 July 2000a ).

3 According to Ng Kuok-cheong, an elected Legislative Councillor, the demonstration was organized around the end of April by unemployed workers. Originally, they scheduled the demonstration to be held on the next day—International Workers’ Day. But Ng informed them that, according to Macao’s Law No. 2/93/M (amended by Law No. 16/2008) that regulates the right to hold public meetings and to demonstrate (Macao Government 1993; Macao SAR Government 2008 ), the Head of the Civic and Municipal Affairs Bureau (Instituto para os Assuntos Cívicos e Municipais) must receive advance notice before any demonstrations are held. Because of this, the law-abiding unemployed workers agreed to postpone the demonstration for one week in order to comply with the law (personal interview on 8 November 2011). 3.3 Challenges in the New Millennium 57

3.3.1 Economic Downturn

Unlike the situation in Hong Kong, before the handover many Macao residents looked forward to the change in sovereignty because of the lengthy economic downturn and deteriorating public order in Macao. After the promulgation of the Basic Law in 1993, Macao’s GDP growth rate in real terms dropped continuously. That year, the growth rate was 5.2 %, dropping to 4.3 % in 1994 and 3.3 % in 1995. After 1995, Macao’s economy recorded negative growth, at −0.4 % in 1996, −0.3 % in 1997, −4.6 % in 1998, and −2.4 % in 1999 (DSEC 2012a , p. 56). The drop in revenue from tourists was alarmingly rapid for an economy dominated by tourism. The 1997–1998 Asian fi nancial crisis, which caused a sharp drop in the number of “high rollers” from Asia coming to Macao, was believed to be one of the factors behind the decline. When an economy contracts, the unemployment rate usually rises. In 1993 and 1994, the unemployment rate in Macao was a mere 2.1 and 2.5 %, respectively. Then in 1995 and 1996, it jumped to 3.6 and 4.2 %, respectively. In 1997, because of the restructuring of a government training scheme, the offi cial unemployment rate declined to 3.2 %. 4 However, such a decline was largely due to a short-term accounting measure, as some of the unemployed workers were admitted to training centres to undergo retraining. Because of this, in 1998 and 1999, the unemployment rate shot up to 4.6 and 6.3 %, respectively (Table 3.1). As in Hong Kong, before the handover public assistance to the needy in Macao was always criticized as insuffi - cient. The government has remained at a “minimal state of intervention” (Hui and Lai 2008 , p. 165). As such, when a family’s breadwinner became unemployed, the whole family would fall into great hardship.

3.3.2 Crime Wave

Along with the prolonged economic recession and the rise in unemployment was a marked increase in criminal activity. Since the Macao Portuguese government did not disclose much information about the crime rate in the transition period, it is diffi cult to get a clear picture about the deterioration in public order. However, if we examine the day-to-day news reports of that time, there is clearly a sense of an increase in threats to society. The breaking up of the so-called “triad (secret) societies’ cartel” that led to a fi ght for territory or leadership among underground elements was one of the explanations for the rise in social disorder, as was the seizing of profi ts from casino VIP-room operations. The continuing contraction of the economy, which caused the unemployment rate to keep rising and the dwindling profi ts of such key revenue- generating operations as casinos, was also regarded as a contributing factor.

4 Under this scheme, a large number of unemployed workers who joined training programmes were counted as “students” instead of unemployed workers. As such, the number of adult students that were enrolled increased rapidly from 38,506 in 1995/96 to 46,879 in 1996/97, i.e., a big jump of 21.7 %, thereupon levelling off until 1999 (DSECa various years). 58 3 The Return to Chinese Sovereignty: A Historical Turning Point

Before 1993, although all kinds of crimes such as arson, murder, and gang fi ghts were common and the Macao Portuguese government showed a high degree of tolerance towards these matters, the government at least seemed to have the skill to balance the interests of all sectors of society so as to achieve general social stability. However, after 1993, the Macao Portuguese government seemed to have gradually lost the will and authority to impose a basic level of order. How much worse had public order become? From 1993 to 1996, although there were more frequent reports of gangs fi ghting over territory, it seemed to the public that the situation was not out of control. However, as the handover approached, the incidence of all sorts of crimes shot up to such an extent that it was increasingly clear that the government was losing its grip on public order. The head of the triad society—the dailou (literally, “big brother” or “gang boss”)—went so far as to openly challenge the government’s authority by bombing the car belonging to the head of Macao’s police department (Pinto 2008 , p. 15). In 1997—the year that Hong Kong returned to Chinese sovereignty—criminal activities of all sorts seemed to have increased in frequency in Macao. For instance, on 4 May, three senior members of the 14K, a local triad society, were killed as they drove along Macao’s main avenue. In response, Macao’s Secretary for Security assured the public that Macao’s streets were safe, because he thought that the perpetrators of the attacks were “professional killers who never miss their targets” (The Independent 1997). One month later, journalists received anonymous letters warning them not to report any news in relation to the 14K. On 30 July, gunmen with automatic weapons opened fi re at the newly opened New Century Hotel casino, wounding two workmen. One and a half months later, on 26 October, a senior 14K member was shot dead fol- lowing a gun battle outside the Hyatt Hotel (Pinto 2008 , p. 15). At the beginning of 1998, public security in Macao showed no signs of improvement. The following is a summary of some of the serious crimes that were committed in Macao that year (Pinto 2008 , p. 15):

24 March Senior gambling inspector F. Amaral was shot dead just metres from security headquarters 16 April The chauffeur of B. M. S. Monge, the Under-Secretary for Security, was shot dead as he left home to pick up his boss 1 May Police Chief A. M. Baptista’s car was destroyed by a bomb. Wan Kuok-koi was arrested 12 h later 13 August Yip Wai-tong, 46, the grandson of gambling tycoon Ip Hon, was shot in the stomach but returned fi re on the gunmen who were attempting to kidnap him 14 August Public Prosecutor L. Nogueiro and his pregnant wife were gunned down in a motorcycle drive-by shooting. Both survived 8 September Five policemen and ten journalists were hurt when two bombs exploded in the same area within 20 min. Governor R. Vieira described the attack as a “terrorist act” 3 October Former Judiciary Police Inspector A. Calderon and other suspected members of 14K were arrested and questioned about the bombings 14 December A Portuguese prison offi cer was assassinated and another wounded at a sidewalk café 3.3 Challenges in the New Millennium 59

Seeing public security worsen and having reviewed the Macao Portuguese government’s efforts to fi ght crime, a former Judiciary Police director, Mendonça de Freitas, made the following comments: In the mid-1990s, the Portuguese administration “was confused with the countdown to its own end” and had lost “the authority needed to keep the delicate balances within the community…. Police forces turned to some form of self-management, pursuing interests that had nothing to do with their mission, and which eventually were even illegal” (Pinto 2008 , p. 15). Less than 1 month before the handover, the “gang boss” of the 14K, Wan Kuok- koi, was convicted for criminal association, loan-sharking, and illegal gambling and was sentenced to 15 years in prison (BBC News 1999 ). Although local residents and law-enforcement bodies both felt a sense of relief, this did not mean that the triads had lost all of their infl uence, and that public order would promptly improve. It was generally believed that if Macao’s economy kept declining and unemployment kept rising, fi ghts over diminishing resources would continue to mount (Wu and Chen 2000 ; Pinto 2008 ).

3.3.3 Business Competition

In 1998, gambling accounted for 60 % of government revenues and contributed about one-third of Macao’s GDP (Krelove et al. 1999 , p. 63). Such data reveals the irrefutable fact that gambling is the leading, or “dragon-head”, industry in Macao. In other words, if the gambling industry caught a cold, the Macao economy would also get sick. Unfortunately for Macao, from the mid-1990s onwards, a recession affecting many parts of the world, especially developed economies, was coupled with intensifying competition in the gambling business. That the two developments were linked was due to the spread of the liberal view that gambling was a form of entertainment and that making gambling a lawful business would not only help to stimulate economic growth but generate attractive revenues for the public and private sectors (see Chap. 1 ). As such, not only did many state governments in the US eventually move to legalize gambling, many European governments also followed suit. An era of casinos was ignited around the world (Thompson 2010 ). In Asia, following the outbreak of the Asian fi nancial crisis, some Asian govern- ments also began to consider legalizing casino gambling as an important way of pulling their country’s economy out of the quagmire. Examples include Singapore, South Korea, Taiwan, Laos, and the Philippines (Hsu 2006 ; Culpan 2007 ; PricewaterhouseCoopers 2011 , pp. 16–19). In fact, since the mid-1990s, fl oating casinos or gambling cruises have proliferated in the South China Sea, especially in the mouth of the Pearl River (Leng 2009 , pp. 196–197; Wang 2011 ). Hence, at the turn of the new millennium, Macao was facing increasing competition not only from the Western world, but also from its neighbours. If Macao did not move to develop its gambling industry, its market share would soon be eaten up (Wang 2005 ). If so, not only would the economy and government revenues decline further, all sorts of social problems would also worsen. 60 3 The Return to Chinese Sovereignty: A Historical Turning Point

In fact, entering the era of the “global village”, it is rare to fi nd any industry in any corner of the globe that has not been affected by new technology, the Internet, and the new economic order. As the pillar industry of the economy, the gambling industry in Macao is also facing mounting challenges. The competitiveness (or vulnerability) of this industry is not only determined by its own management and marketing strategies, but also by competition from its neighbours, whether near or far. More importantly, at the turn of the new millennium, since Macao’s economy was still in the doldrums, mired in unemployment and social discontent, social pressure to stimulate the econ- omy was mounting. Rampant criminal activities further drove the central and local governments to ponder the deep-rooted problems that conceivably originated from the old structure of the gambling business. Knowing that all of the problems were interrelated, and that gambling lay at the heart of the matter, 5 the newly established SAR government decided to take decisive action in connection with the gambling franchise granted to STDM, which was to expire on 31 March 2002.

3.4 Deregulation as a Multi-goal Strategy

Since the mid-1990s, many Western governments had taken the drastic measure of deregulating casino gambling as a key means for boosting a declining economy as well as for generating income, especially to fi ll depleted government coffers. To a certain extent, when the Macao government planned to restructure the gambling business by opening it up, it was grappling with some of the same problems faced by most Western societies in the late twentieth century. However, after once again coming under the jurisdiction of China, Macao’s potential, capacity, and capability to solve such problems changed. Not only were suggestions on how to stimulate the local economy put forward, consideration was also given as to how Macao could best contribute to the country’s continued growth.

3.4.1 National Interests

When discussing the policy to deregulate gambling that was implemented at the dawn of the new millennium, many analysts have focused only on local interests. There has been little attention paid to the issue from the perspective of national interests. As discussed in Chaps. 1 and 2 , although gambling was traditionally seen as an evil activity in China and some of the harshest measures to eradicate it were taken soon after the founding of the new China by the Chinese Communist Party in 1949, it could not be totally uprooted. With the launching of the open door and economic reform policies, underground gambling activities resurfaced, becoming rampant by the turn of the new century (The Telegraph 2010 ).

5 The perceptions that the STDM had too much power over the government and it was not improving its facilities as it should were also regarded as major factors leading to the liberalization (Leng 2009 , pp. 203–206; Godinho 2010 ). 3.4 Deregulation as a Multi-goal Strategy 61

From the 1990s, as the Chinese economy continued to grow, affl uent mainland Chinese began to travel abroad. Because of its long suppression on the mainland, gambling was one form of entertainment that these tourists were eager to try out. Gambling is usually categorized as a kind of invisible export. When mainland Chinese began to make more frequent trips outside of the country to engage in gam- bling, the monetary value of these invisible exports also rose drastically. More importantly, two main problems were associated with this development—a drain of capital and a lack of proper monitoring. One unoffi cial estimate is that the annual amount of capital drained from the country due to gambling reached RMB600 billion at the fi rst decade of the new millennium, i.e., about 2.5 % of the GDP in 2007 (Lai 2008 , p. 542; New Epoch Weekly 2008 ). The Procuratorial Daily , the offi cial newspaper of the country’s prosecution services, reported many cases that demonstrate the links between gambling and corruption and money laundering, and the involvement of government offi cials in these activities. Since most of those gambling activities took place overseas, it was extremely diffi cult for the Chinese government to determine the exact extent of the problem. Also, as the world ceased to be gripped by the ideological warfare of the Cold War, some types of activities that had previously been condemned as “toxic or poisonous” and strictly prohibited in socialist countries now could be tolerated. Gambling was one of these activities. Legalizing some lotteries for the purpose of raising charitable funds or for the promotion of sports was a refl ection of this more tolerant attitude. Although many socialist countries could still not completely accept the Western lib- eral view that gambling is a form of entertainment or leisure, they tended to regard it as an activity that, if controlled, could yield benefi ts. As such, if Macao could play the role of a “safety valve” by releasing pressure in mainland China relating to the activity of gambling, without at the same time endangering the ruling ideology, and while also reducing the number of mainland Chinese going overseas to gamble, this role was certain to receive the blessing of the central government. In fact, since Macao is situated at the southwestern edge of coastal China and has adopted the model of “one country, two systems”, although the gambling business in Macao had become more open, it posed no danger to the ruling ideology in main- land China. More importantly, diverting mainland Chinese gamblers or tourists from overseas to Macao had other advantages, such as greater ease of regulation of problems arising from gambling (e.g., money laundering and corruption) as well as the ability to “keep the goodies within the family”. In other words, viewed from the commanding heights of national interest, the liberalization of the gambling business in Macao was a case of killing several birds with one stone.

3.4.2 Local Interests

Putting national considerations aside and simply focusing on Macao, the need to reform the gambling industry to bring criminal activities under control and to pull the Macao economy out the quagmire into which it had fallen was apparent. In societies where gambling had previously been prohibited by law, the process of 62 3 The Return to Chinese Sovereignty: A Historical Turning Point deregulation has often led to the emergence of a number of unexpected socio- economic problems. Macao, however, has a long history of legalized gambling and, thus, had accumulated a considerable amount of expertise, know-how, and connections in the industry. More importantly, as the only city in Chinese territory to allow casino gambling, the potential demand for the territory’s gambling services was viewed as being unlimited should the central government decide to adopt policies or actions in support of Macao. Since the question of how to restructure the gambling business had implications for people of all walks of life in Macao and also touched upon national strategies, the fi rst Chief Executive of the Macao SAR, Edmund H. W. Ho, fl ew to Beijing in March 2000 to seek advice on how to proceed on the issue. In his meeting with then Chinese Vice-Premier Qian Qichen, Ho received the central government’s consent to take the necessary measures to strengthen and expand the gambling industry in Macao (Jornal do Cidadão 6 March 2000 ). Since reforming the industry implied a reassignment of the gambling franchise and since running casinos was regarded as a highly profi table business, some of the state and semi-state enterprises with branches in Macao also wanted a share of the pie. They went to great efforts to lobby senior government offi cials towards that end. However, after deep consideration, on 8 March 2000 Jiang Zemin, then General Secretary of the Chinese Communist Party and the President of the State, sent a clear message to the public that “no state-related enterprises would be allowed to participate in the Macao gambling business”. In addition, Jiang reiterated that no triad societies operating in Macao would be allowed to receive support in the mainland (Leng 2009 , p. 210). Having received the support of the central government, the Macao government began to make solid plans to reorganize the gambling business. In July of that year, the Macao Gaming Committee was set up, with the Chief Executive as the chair- man. Shortly afterwards, Arthur Andersen Worldwide, a consultancy company, was assigned to conduct in-depth research on the future development of the gambling industry (DICJ 2012 ). As expected, after studying the development of gambling in Western societies, in their report Arthur Andersen Worldwide suggested the freeing up of the Macao gambling industry. Based on this report, in his 2001 policy address the Chief Executive sketched out a blueprint to bring new competition and new momentum to the industry to support continuous economic growth in Macao. Since then, Macao has been in the international spotlight, and has especially attracted the attention of casino giants in the US, who have long hungered for a part of the Chinese market. In order to pave the way for the proposed landmark shift in policy, a revised law on the gambling industry entitled Legal Framework for the Operations of Casino Games of Fortune (Law No. 16/2001 of 24 September 2001) was enacted in 2001 to set up the regulatory framework for the industry. The framework included provisions on the operating requirements, eligibility of major shareholders, management of the casinos, and the submission of gambling taxes. The revised law contained two fundamental changes. First, three gambling concessions would be issued instead of 3.4 Deregulation as a Multi-goal Strategy 63 one. Second, the tax imposed on gross income from gambling business was raised to a maximum of 40 %, with 35 % basic tax rate, a contribution of up to 2 % to a public charitable foundation (presently, the Macao Foundation), and a contribution of up to 3 % earmarked for “developing urban construction, promoting tourism, and providing social security in Macao” (Article 27 (1 and 2) and Article 22 (7 and 8) of Law No. 16/2001) (Macao SAR Government 2001a ).6 In October 2001, an Administrative Regulation (No. 26/2001) entitled Stipulating the Open Bidding for the Operation of Casino Games of Fortune and the Eligibility and Financial Capability of the Companies that Participated in the Tendering Process was issued by the Chief Executive (Macao SAR Government 2001b ). An eight-member Casino Concessions Committee was formed under the Executive’s Order to coordinate all of the work relating to this tendering process (DICJ 2012 ). The tendering process was formally launched on 2 November 2001 and ended on 7 December 2001. A total of 21 proposals were received, with bidders coming not only from Macao and Hong Kong, but also from Australia, Malaysia, Taiwan, the US, and the UK. After repeatedly reviewing the proposals, on 8 February 2002, the Macao government announced that the three gaming concessions would be granted to the following companies: Sociedade de Jogos de Macau, S.A. (hereafter SJM, a subsidiary of STDM), Galaxy Casino, S.A. (hereafter Galaxy, a Hong Kong-based company under the direct control of property tycoon Lui Che-woo), and Wynn Resorts (Macau), S.A. (hereafter Wynn, a subsidiary of the US-based casino giant Wynn Resorts Limited that is under the direct control of Stephen A. Wynn) (DICJ 2012 ). However, not long afterwards, on 19 December 2002, a gaming sub-concession was created by Galaxy and spun off to the Venetian Macau, S.A. (hereafter Venetian, a subsidiary of another US-based casino giant Las Vegas Sands Corporation), 7 as the

6 In addition to tax and contributions, concessionaires and sub-concessionaires are required to pay annual premiums of fi xed and variable amounts to the government. See Articles 47, 48, and 49 of the gaming concession contracts. Gambling taxation in Macao is considerably heavier than in most gambling jurisdictions (Pessanha 2008 , p. 348). See also Fig. 4.3 . 7 Information that later became available showed that the central government played some role in helping Venetian obtain the sub-concession. On 26 May 2008, the South China Morning Post reported that “a Las Vegas court has awarded US$43.8 million to Hong Kong businessman Richard Suen Chi-tat as compensation for his efforts to help casino developer Las Vegas Sands win a Macau gaming licence [sub-concession] in 2002”. It further revealed that Suen had used his personal connections to arrange meetings between the chairman of the casino fi rm, Sheldon Adelson, and top Chinese government leaders—Qian Qichen and Liu Qi (then Mayor of Beijing) “to discuss the central government’s vision for Macau”. In return for Suen’s help in setting up these meetings, the casino “promised a US$5 million success fee and 2 % of net profi ts for the 20-year life of the gaming licence from the fi rm’s Macau operations if the bid proved successful”. Although the Las Vegas Sands fi nally obtained a gaming sub-concession, it refused to accept that Suen had helped the fi rm to achieve its goal, and therefore declined to pay him the “success fee”. As a result, a lawsuit was fi led and, after lengthy argument, the jury voted to award compensation to Suen in recognition of his contribution to helping the casino fi rm win the gaming sub-concession. A court hearing further revealed that the chairman of the Las Vegas Sands once helped the Chinese government lobby the US Republican Senator, Tom Delay, to bar a Congressional resolution aimed at weakening Beijing’s chances of winning the bid to host the 2008 Olympic Games (Gough 2008 ; Vegas Chinese News 24 April 2008 ; Kwong 2010, pp. 36–39). 64 3 The Return to Chinese Sovereignty: A Historical Turning Point

Macao Government

Concessionaire

SJM Galaxy Wynn 1 April 2002– 27 June 2002– 27 June 2002– 31 March 2020 26 June 2022 26 June 2022 (No. of casinos: 20) (No. of casinos: 6) (No. of casinos: 1)

Sub-concessionaire

MGM Venetian Melco 19 April 2005– 19 December 2002– 8 September 2006– 31 March 2020 26 June 2022 26 June 2022 (No. of casinos: 1) (No. of casinos: 4) (No. of casinos: 3)

Fig. 3.1 Duration of concession contracts and number of casinos in 2012

latter held shares in the former during the bidding process. Since the sub-concession was accepted by the Macao government, the two other syndicates quickly duplicated the formula. SJM sold a sub-concession to the MGM Grand Paradise, S.A. (hereafter MGM, a joint-venture between the MGM Mirage—a US-based casino giant—and Pansy Ho, daughter of Stanley Ho) on 19 April 2005, and Wynn sold a sub-concession to the Melco PBL Jogos (Macau), S.A. (renamed Melco Crown Gaming (Macau) Limited in June 2008, hereafter Melco, a company co-owned by the PBL (demerged its gambling business to Crown Limited in December 2007)—an Australian-based company—and Lawrence Ho, son of Stanley Ho) on 8 September 2006 (DICJ 2012 ; Fig. 3.1 ). The six casino operators offi cially formed the Chamber of Macau Casino Gaming Concessionaires and Sub- concessionaires on 28 July 2009. Thus, the three concessions that the Macao government had granted to bidders became six because of the so-called “innovative” practice of “sub-concessions” (Wang 2005 ; McCartney 2006 ). Although Venetian, MGM, and Melco hold sub- concessions, their right to run a gambling business in Macao in no way differs from that of the holders of the three concessions, i.e., SJM, Galaxy, and Wynn. Since fi ve of the six holders of concessions/sub-concessions—Galaxy, Wynn, Venetian, MGM, and Melco—are believed to have a sizable amount of non-local capital, the criticism arose that such a decision would lead to a draining away of local earnings. Nevertheless, viewed more broadly, it is clear that the gambling liberalization policy not only laid the foundations for Macao’s next stage of impressive development, but was also consistent with national interests and synchronized with the central government’s development strategy. Both achievements would not have been possible— or the impact would not have been so large—had Macao not returned to Chinese sovereignty and the “one country, two systems” arrangement not been implemented. 3.5 Rapid Economic Growth After Liberalization 65

3.5 Rapid Economic Growth After Liberalization

In the beginning, some local and international commentators questioned whether the gambling liberalization policy would be positive for Macao. The path to economic growth during the time of the implementation of this policy was not always smooth. From 2002 onwards, as capital fl ooded in from around the globe after the confi rma- tion of the policy of liberalization, construction sites sprouted like mushrooms. However, around that time, an epidemic of severe acute respiratory syndrome (hereafter SARS) suddenly broke out in November 2002 in Guangdong province of mainland China. It quickly spread to Hong Kong, Taiwan, Canada, Singapore, Vietnam, Macao, and other places, causing hundreds of deaths and leading to global panic (Lee and Warner 2008 ). This threat of a pandemic devastated the tourist industry. Because of a fear of becoming infected at an airport or by being in a large crowd, many potential tourists simply opted to stay home (Tarlow 2009 ). Macao’s tourist industry, including its casino gambling industry, was badly hit. As the number of visitors plunged and hotel occupancy rates plummeted, Macao’s red-hot economy cooled drastically.

3.5.1 National Policy Support

With the gradual passing of the SARS epidemic, the central government took prompt action to help its two SARs emerge from the economic doldrums brought about by the SARS crisis by announcing the Closer Economic Partnership Arrangement (hereafter CEPA) and the Individual Visit Scheme in mid-2003. If the CEPA policy is regarded as an effort to open markets in the mainland for Macao and Hong Kong-based fi rms to “go north”, the Individual Visit Scheme can be seen as a move to open the Macao and Hong Kong tourist markets for mainland Chinese to “come south”. Prior to the Individual Visit Scheme, people from the mainland who wanted to travel to either of these two SARs were required to either apply for a business visa or join a group tour. Both options were obviously rather restrictive and costly. Under the new arrangement, residents of selected mainland cities were allowed to visit Macao and Hong Kong on an individual basis.8 Soon after the fi rst batch of tourists from mainland China to come under the Individual Visit Scheme arrived in Macao on 28 July 2003, Macao’s streets were once again fi lled with hustle and bustle. The speeding up of various construction projects after a delay of several months due to the SARS crisis further spurred on the Macao economy. However, as the number of imported labourers and illegal labourers (also called “black labour”) soared, local workers become increasingly resentful. The drastic increase in rents and property prices that came with the infl ux of capital was also a source of public concern.

8 The Individual Visit Scheme was fi rst introduced in four Guangdong cities. It is now implemented in 21 provinces and 49 cities. As of April 2012, a total of 48.32 million mainland visitors travelled to Macao under this scheme (Macao Economic Services 2012 , p. 13). 66 3 The Return to Chinese Sovereignty: A Historical Turning Point

3.5.2 Casinos and Tourist Attractions

Putting aside all of these negative effects and focusing on the pick-up in the economy that came with the implementation of the policy to expand the gambling industry, it can be said that the policy was a runaway success in creating a robust economy. For instance, shortly afterwards, on 18 May 2004, Sands Macao, Venetian’s fi rst casino, opened its doors; likewise Galaxy Wardo, the fi rst casino run by Galaxy, 2 months later (on 4 July 2004). Around 2 years later (on 5 September 2006), Wynn Macau, the fi rst casino of Wynn, joined the party. The following year, on 9 May 2007, Crown Macau, Melco’s fi rst casino, also opened. Shortly afterwards, on 28 August 2007, the Cotai Strip—a strip of reclaimed land situated between Taipa and Coloane earmarked for casino and tourism businesses—was launched. Around 3 months later, on 18 December 2007, the MGM Grand Macau opened for business. In 2006, Macao superseded Las Vegas as the world’s premiere gambling destination in terms of total annual turnover from gambling (Wiseman 2007 ). In other words, in no more than 5 years, a number of glamorous hotels and other structures were erected on the Macao peninsula and Taipa. Among the attractions on offer were canals with boats, a fi shing pier, a grand stage with a waterfall, and theme parks. These were built not only to attract gamblers but accompanying family members or friends. Today, most of these sites are listed in guidebooks as must-see attractions. In addition, because of intense competition, especially with the presence of experienced casino giants from the US and Australia, lavishly appointed gambling facilities were introduced, and gambling itself was advertised as a trendy and fashionable activity. Gone were the musty old-style casinos, with their shabby gambling halls, rooms, and tables ( The Economist 2011 ). As tourists from around the globe poured in, the gambling industry boomed and shops, hotels, and restaurants were packed. As the economy prospered, average wages and salaries rose. Government revenues likewise soared. Moreover, signifi - cant improvements to the territory’s infrastructure enhanced Macao’s links with its neighbours and the world. The deregulation of the gambling business in Macao did indeed simulate local economic growth in terms of capital formation, job creation, and income generation (see Chap. 4 ). With assistance from the central government and also as a result of great efforts on the part of the Macao SAR government itself, in 2005, the old town in Macao was designated a “Historic Centre” by the United Nations Educational, Scientifi c and Cultural Organization (hereafter UNESCO) under the World Heritage Site scheme. According to the review, Macao’s unique cultural heritage, which blends elements of Western culture and Chinese civilization, was what made the place stand out (UNESCO 2012 ). Tourists are attracted to Macao not only because of its gambling facilities but also because of the city’s extraordinary history, culture, and way of life. In a word, Macao “is not just a gambling paradise” (Loi and Kim 2010 , p. 270). Three years after Macao’s old town received the UNESCO honour, the global fi nancial crisis broke out in October 2008. As many fi nancial institutions in the US and elsewhere collapsed or ran into diffi culties, and many economies in the world 3.5 Rapid Economic Growth After Liberalization 67 were affected, many analysts predicted that Macao’s economy would also enter a period of downturn because of a sudden contraction in the casino gambling business. Some US-based casino operators such as Venetian and MGM were forced to shelve some of their construction projects in Macao because of liquidity problems (Macao Daily News 14 November 2008a , 22 November 2008b ). Most construction workers were asked to leave or to accept lower wages. Since the labour market had become less attractive, some migrant workers, especially those from Hong Kong, began to pack up and leave (Sing Tao Daily 17 November 2008 ). An atmosphere of anxiety pervaded Macao society. However, around 16 months later, even as the US and European economies continued to struggle painfully, Macao’s gambling industry experienced an impressive rebound, as tourists returned and per capita expenditure rose. Macao’s labour market improved gradually, in parallel with the pick-up in the economy. Entering the second decade of the new millennium, the central government seems to be increasingly concerned about the lack of industry diversification in Macao or, to be specifi c, about the over-reliance on the gambling industry. Also, as the Hong Kong–Zhuhai–Macao Bridge will soon be built and inter-regional trade and socio-economic interaction will be enhanced, how to effectively integrate the economies of different cities to achieve sustainable growth under the framework of CEPA has become a major strategic state policy. With the goal of synchronizing the economies of Guangdong, Hong Kong, and Macao, on 14 July 2011 the State Council declared Hengqin a strategic economic area,9 following the models of Pudong in Shanghai and Binhai in Tianjin. The focus will be on promoting service industries, the entertainment industry, education, and technological research and development with investment from Macao and Hong Kong through favour- able tax and land policies (Macao Daily News 22 August 2011b , 17 September 2011a ; Wen Wei Po 23 August 2011). If this project is successfully implemented, Macao’s socio-economic “comprehensive power” will undoubtedly be further strengthened. Noticing the impressive economic returns to Macao brought about by the policy to liberalize gambling, the Singapore government moved to legalize gambling in Singapore in 2005. The results there were also satisfactory (PricewaterhouseCoopers 2011 ).10 The governments of the Philippines, South Korea, Taiwan, Thailand, and Vietnam are now considering the feasibility of setting up their own gambling indus- tries as a major impetus for boosting economic growth and generating more income for the government. As the world economic outlook darkens, with rising unemploy- ment and public expenditures, the pressure to turn gambling into a lawful business in many economies will strengthen, not weaken.

9 The island is currently under the administration of Zhuhai. It is adjacent to Taipa and Coloane and has a total population of around 7,000 in a territory three times bigger than Macao. 10 Singapore has become a major casino destination in just its fi rst year of operation. Given that only two licences have been issued, Singapore’s casinos, on a property-by-property basis, have higher margins than Macao’s (PricewaterhouseCoopers 2011 , p. 17). 68 3 The Return to Chinese Sovereignty: A Historical Turning Point

3.6 Conclusion

In conclusion, two salient facts should be reiterated. First, the gambling industry should not be seen as one that is driven purely by economics, but also by policy— and not only local policies, but also policies in neighbouring areas, countries, and the whole region. Since gambling is strictly prohibited in mainland China but under- ground gambling cannot be eradicated, while overseas gambling could lead to a “capital drain” and other problems, promoting Macao as “China’s gaming play- ground” (Loi and Kim 2010 , p. 268) under the framework of “one country, two systems” seems to be a good way of addressing various complex and intertwined issues. In times of trouble, the central government would be able to take measures to help Macao through its diffi culties, while in times when Macao is in danger of over-heating, the central government could employ appropriate policies to cool down the economy. Examples of such measures are CEPA, the Individual Visit Scheme, and Hengqin as a strategic economic area. In short, the liberalization and further development of the gambling industry and economy in Macao is fundamen- tally reliant on policy—not merely local policy, but state policy. Second, the remarkable economic growth recorded in Macao following the liberalization of the gambling industry does not mean that other economies could simply copy the “formula” and expect similar returns. To a certain extent, Macao’s economic great leap forward is due to a certain important absolute advantage. For instance, since Macao is the only city in China where casino gambling is legally permitted, it is generally regarded as the top gambling destination for China’s 1.3 billion people. Therefore, the demand for what Macao has to offer is potentially unlimited. Moreover, since the gambling business has been legalized in Macao for over a 100 years, Macao not only possesses the requisite know-how, facilities, and connections to run a gambling industry, but also a supportive socio-cultural-legal structure. In short, whether from the policy-driven perspective or from the perspective of absolute advantage, Macao’s unparalleled status in the gambling industry is arguably not easily duplicated by any economy.

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Biddulph J (1983) Hong Kong in turmoil: The Biddulph report 1983. Heinemann Asia, Hong Kong Bottomley DT (1989) In Hong Kong even the ghosts want to migrate. Int J Publ Opin Res 1(3):258–263 Brown JM, Foot R (1997) Hong Kong’s transitions, 1842–1997. St. Martin’s Press, New York Buckley R (1997) Hong Kong: the road to 1997. Cambridge University Press, New York Cheng JYS (ed) (1984) Hong Kong: in search of a future. Oxford University Press, Hong Kong Chung SY (2001) Hong Kong’s journey to reunifi cation: memoirs of Sze-yuen Chung. The Chinese University Press, Hong Kong Cottrell R (1993) The end of Hong Kong: the secret diplomacy of imperial retreat. John Murray, London Cradock P (1994) Experiences of China. John Murray, London CRIENGLISH.com (2005) Sino-Portuguese ties, December 2. http://english.cri.cn/2238/2005-12- 5/[email protected] . Accessed 23 Oct 2012 Culpan T (2007) Taiwan casinos may generate US$3 bil. in revenue: magnate. The China Post, November 24. http://www.chinapost.com.tw/business/2007/11/24/132190/Taiwan-casinos.htm . Accessed 23 Oct 2012 DICJ (2012) Macao gaming history. http://www.dicj.gov.mo/web/en/history/index.html . Accessed 23 Oct 2012 DSEC (1996) Tourism statistics: 1995. DSEC, Macao DSEC (1997) Tourism statistics: 1996. DSEC, Macao DSEC (2010) Major revision of gross domestic product. DSEC, Macao DSEC (2012a) Gross domestic product: 2011. DSEC, Macao DSEC (2012b) Statistics database. http://www.dsec.gov.mo/TimeSeriesDatabase.aspx . Accessed 23 Oct 2012 DSECa (Various years) Yearbook of statistics. DSEC, Macao Edmonds RL (1993) Macau and greater China. China Q 136:878–906 Edmonds RL, Yee HS (1999) Macau: from Portuguese autonomous territory to Chinese special administrative region. China Q 160:801–817 Fang Y (1997) The origin of Macao question. Culture and Art Publishing House, Beijing (In Chinese) Foreign Affairs Committee, House of Commons, Parliament, Great Britain (1994) Relations between the United Kingdom and China in the period up to and beyond 1997. HMSO, London Godinho JAF (2010) Macao casino and regulation: at a turning point? http://papers. ssrn.com/sol3/papers.cfm?abstract_id=1490604 . Accessed 23 Oct 2012 Gough N (2008) US$43m award over casino row. South China Morning Post, May 26. http://www. scmp.com/article/639110/us43m-award-over-casino-row . Accessed 23 Oct 2012 Gunn GC (1996) Encountering Macau: a Portuguese city-state on the periphery of China, 1557– 1999. Westview Press, Boulder Hook B (1997) From repossession to retrocession: British policy towards Hong Kong 1945–1997. In: Li PK (ed) Political order and power transition in Hong Kong. The Chinese University Press, Hong Kong, pp 1–29 Hsu CHC (ed) (2006) Casino industry in Asia Pacifi c: development, operation, impact. Haworth Hospitality Press, Binghamton Huang Q (1999) General history of Macao. Guangdong Education Publishing House, Guangzhou (In Chinese) Hui SY, Lai D (2008) Social welfare in Macau: a state of transition. In: Aspalter C, Aldosary AS, Dashkina A, Singh S (eds) The state of social welfare in Asia. Casa Verde Publishing, Taoyuen, pp 153–176 Joint Declaration of the Government of the People’s Republic of China and the Government of the Republic of Portugal on the Question of Macao. http://bo.io.gov.mo/bo/i/88/23/dc/en/ . Accessed 23 Oct 2012 Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong. http:// www.cmab.gov.hk/en/issues/jd2.htm . Accessed 23 Oct 2012 70 3 The Return to Chinese Sovereignty: A Historical Turning Point

Jornal do Cidadão (2000) Qian Qichen: the development of the gaming industry depends on good management, March 6. (In Chinese) http://library.umac.mo/html/e_resources/newsclipping/ news_result.asp?page=6425 . Accessed 23 Oct 2012 Krelove R, Uranbileg J, Basanti R (1999) Portugal—Macau: recent economic developments. International Monetary Fund, Washington, DC Kwong KK (2010) The relationship between the gambling industry and Macao’s politics. In: Leung KF, Lo SH (eds) Casino development and its impact on China’s Macao SAR. City University of Hong Kong Press, Hong Kong, pp 33–53 (In Chinese) Lai C (2008) Historical analysis and regulation on gambling. China Commerce and Trade Press, Beijing (In Chinese) Lee GOM, Warner M (2008) The political economy of the SARS epidemic: the impact on human resources in East Asia. Routledge, London Leng X (2009) A view on Macao: a review and refl ection on the Macao SAR in its fi rst decade. Celebrity Press, Hong Kong (In Chinese) Loi KI, Kim WG (2010) Macao’s casino industry: reinventing Las Vegas in Asia. Cornell Hosp Q 51(2):268–283 Luke FM (2000) The imminent threat to China’s intervention in Macau’s autonomy: using Hong Kong’s past to secure Macau’s future. Am Univ Int Law Rev 15(3):717–756 Macao Daily News (2000a) Anti-unemployment march; confl ict over route change; police fi re tear gas, July 3. (In Chinese) http://library.umac.mo/html/e_resources/newsclipping/news_result. asp?page=6747 . Accessed 23 Oct 2012 Macao Daily News (2000b) Unemployed construction workers march in protest, May 8. (In Chinese) http://library.umac.mo/html/e_resources/newsclipping/news_result.asp?page=6597 . Accessed 23 Oct 2012 Macao Daily News (2008a) Suspension of Cotai Strip project affects 11,000 construction workers; Sands Macao fi res 9,000 foreign workers to retain local workers, November 14, p A06 (In Chinese) Macao Daily News (2008b) The fourth in two weeks; MGM suspends Cotai project, November 22, p A10 (In Chinese) Macao Daily News (2011a) Guangdong introduces Hengqin innovation policy; two Hong Kong companies sign two projects in Zhuhai worth 30.8 billion, September 17, p B01, (In Chinese) Macao Daily News (2011b) Huang Huahua and Chui Sai on attend and act as chair; Guangdong and Macao introduce Hengqin innovation policy, August 22, p A03 (In Chinese) Macao Economic Services (2012) Signing of supplement IX to the Mainland and Macao closer economic partnership arrangement (Press release), August 24. http://www.economia.gov.mo/ servlet/ShowContent/cms/NC_WN/2012-08-24?locale=en_US . Accessed 23 Oct 2012 Macao Government (1993) Law no. 2/93/M. (In Chinese) http://bo.io.gov.mo/bo/i/93/20/lei02_ cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2001a) Legal framework for the operations of casino games of fortune (Law no. 16/2001). (In Chinese) http://bo.io.gov.mo/bo/i/2001/39/lei16_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2001b) Stipulating the open bidding for the operation of casino games of fortune and the eligibility and fi nancial capability of the companies that participated in the tendering process (Administrative regulation no. 26/2001). (In Chinese) http://bo.io.gov.mo/ bo/i/2001/44/regadm26_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2008) Law no. 16/2008. (In Chinese) http://bo.io.gov.mo/bo/i/2008/52/ lei16_cn.asp . Accessed 23 Oct 2012 McCartney G (2006) Casino gambling in Macao: through legalization to liberalization. In: Hsu CHC (ed) Casino industry in Asia Pacifi c: development, operation, and impact. Haworth Hospitality Press, Binghamton, pp 37–58 New Epoch Weekly (2008) China’s annual capital drain due to gambling reached RMB600 billion, February 15. (In Chinese) http://mag.epochtimes.com/b5/070/4685.htm . Accessed 23 Oct 2012 Pessanha L (2008) Gaming taxation in Macau. Gaming Law Rev Econ 12(4):344–348 Pinto R (2008) Macau’s war on terror. Macau Closer, May:12–17 References 71

PricewaterhouseCoopers (2011) Global gaming outlook: the casino and online gaming market to 2015. http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming- outlook.pdf . Accessed 23 Oct 2012 Shipp S (1997) Macau, China: a political history of the Portuguese colony’s transition to Chinese rule. MacFarland, Jefferson Sing Tao Daily (2008) Cheung Kin-chung willing to help Hong Kong workers returning from Macao; construction industry urges government to launch ten major infrastructure projects, November 17, p A06 (In Chinese) Skeldon R (ed) (1994) Reluctant exiles? Migration from Hong Kong and the new overseas Chinese. M. E. Sharpe, Armonk Tarlow PE (2009) How the next pandemic may impact the world’s tourism industry. Tour Rev Online Magazine, October:37–38 The Economist (2011) Chinese gambling: the high-roller’s guide to the Galaxy—why does Macau have no mainland Chinese rivals? May 19. http://www.economist.com/node/18712445 . Accessed 23 Oct 2012 The Independent (1997) China ends triad war in Macau, May 25. http://www.independent.co.uk/ news/world/china-ends-triad-war-in-macau-1263450.html . Accessed 23 Oct 2012 The Telegraph (2010) China’s secret gambling problem, January 9. http://www.telegraph. co.uk/news/worldnews/asia/china/6942975/Chinas-secret-gambling-problem.html . Accessed 23 Oct 2012 Thompson WN (2010) The international encyclopedia of gambling. Praeger, Santa Barbara UNESCO (2012) Historic centre of Macao. http://whc.unesco.org/en/list/1110 . Accessed 23 Oct 2012 Vegas Chinese News (2008) Olympic games involve Macao; gambling tycoon involved in gaming licence, April 24. (In Chinese) http://www.vcnonline.net/web/news_details.php?sid= 1761708393. Accessed 23 Oct 2012 Wang W (2005) Rethinking the gambling system after liberalization. Macao Polytechnic Institute, Macao (In Chinese) Wang W (2011) Macau gaming during bombing of Asia gaming. In: Hao Y, Wu Z (eds) Annual report on economy and society of Macau (2010–2011). Social Sciences Academic Press, Beijing, pp 58–75 (In Chinese) Wang G, Wong SL (eds) (1995) Hong Kong’s transition: a decade after the deal. Oxford University Press, Hong Kong Wen Wei Po (2011) Hengqin: new height in special economic regions in 21st century China, August 23, p A24 (In Chinese) Wiseman P (2007) Macau leads Las Vegas in gambling. USA Today, January 22. http://usatoday30. usatoday.com/travel/destinations/2007-01-22-macau-1a-usat_x.htm . Accessed 23 Oct 2012 World Bank (2012) Foreign direct investment, net infl ows (% of GDP). http://data.worldbank.org/ indicator/BX.KLT.DINV.WD.GD.ZS . Accessed 23 Oct 2012 Wu Z, Chen X (2000) Political and social studies in Macao. Association for Adult Education, Macao (In Chinese) Zheng YS (2000) Macao chronicle, 1972–1999. Macao Foundation, Macao (In Chinese) Zheng V, Wong SL (2006) A stock market 1841–1997. Joint Publishing (Hong Kong) Company Limited, Hong Kong (In Chinese) Chapter 4 Gambling Expansion and Economic Growth

4.1 Introduction

Having reviewed the theoretical background to gambling and also the history and development of Macao’s casino industry, in the subsequent chapters attention will shift to addressing the socio-economic-political impact of gambling after the implementation of the liberalization policy in 2002. In the past, objective indicators were overwhelmingly used to illustrate socio-economic-political developments. However, in the last decades, both academics and policy-makers have come to believe that social progress instead of economic growth should be the ultimate policy concern; that information concerning the state of affairs and social needs plays a vital role in societal monitoring, social accounting, and social planning; that offi cial information and statistics need to be checked and enriched by information from alternative sources; and that the complexity of a society needs to be understood through a systematic and longitudinal examination of the inter-relationships among social phenomena. Various types of subjective data have been gathered and have proven to be of use in the formulation, implementation, and evaluation of public policy, by identifying unintended policy impacts, measuring social costs, and discovering how these costs are distributed. Such research-based information also helps to enhance social consensus on the diffi cult trade-offs to be made under resource constraints and multiple demands, and assists policy-makers in establishing development priorities. Therefore, in order to obtain a comprehensive view of recent developments in gambling, both objective and subjective indicators will be cited for reference in the subsequent four chapters.1

1 To recap, subjective indicators quoted for discussion primarily come from a series of subjective social indicator surveys conducted by us since 2005.

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 73 DOI 10.1007/978-3-642-40749-9_4, © Springer-Verlag Berlin Heidelberg 2014 74 4 Gambling Expansion and Economic Growth

4.2 Casinos Mushroomed

Unlike other jurisdictions in the world, Macao licenses only the operators but not casinos (Rose 2010 , p. 457). Before liberalization in 2002, there was only one concessionaire (STDM), which operated 11 casinos, 339 gambling tables, and 808 slot machines. After liberalization, the number of concessionaires rose to three and shortly afterwards to six, while the number of casinos, gambling tables, and slot machines also grew rapidly. For instance, in 2003 there were 11 casinos, 424 gambling tables, and 814 slot machines. In 2005, 2007, and 2009, the number of casinos increased to 17, 28, and 33, respectively. After 2009, as the government stopped granting new casino licences and stopped approving land for the building of new casinos in 2008 (Xinhuanet 2008 ), the number of casinos was stagnant. In 2011, only one new casino was opened, bringing the total number to 34 (Table 4.1 ). Compared to the number of casinos, the growth in the number of gambling tables was far more impressive, soaring from 424 in 2003 to 1,388 in 2005, and 4,375 in 2007. In 2008, in order to ensure the “proper and orderly development” of the gambling industry, or to prevent the industry from overheating, the Secretary for Economy and Finance (Secretário para a Economia e Finanças) announced a cap on the number of gambling tables, namely, that they were not to exceed 5,500 within a 3-year period. In 2010, the Secretary reiterated that the 5,500 ceiling would be retained until the end of 2012. The government would limit the annual rate of growth in the number of gambling tables to between 3 and 5 % (MacauNews 2010 ). Therefore, in 2009 and 2011, the number of gambling tables was kept at 4,770 and 5,302, respectively. If we look at the number of slot machines, we likewise see rapid growth. For instance, the number of slot machines shot up from 814 in 2003 to 3,421 in 2005, 13,267 in 2007, and then to 14,363 in 2009. In 2011, the number even reached 16,056 (Table 4.1). In short, Macao’s gambling industry underwent exponential growth in less than a decade. The government has to take measures to control the expansion of gambling facilities at a healthy level.

Table 4.1 Number of casinos, gambling tables, and slot machines, 2002–2011 Year Casinos Gambling tables Slot machines 2002 11 339 808 2003 11 424 814 2004 15 1,092 2,254 2005 17 1,388 3,421 2006 24 2,762 6,546 2007 28 4,375 13,267 2008 31 4,017 11,856 2009 33 4,770 14,363 2010 33 4,791 14,050 2011 34 5,302 16,056 Sources: DICJa (various years ) 4.3 Economic Invigoration as Tourists Pour In 75

4.3 Economic Invigoration as Tourists Pour In

For almost all governments, the foremost consideration in deregulating gambling activities is to stimulate continuous economic growth and to generate recurrent revenue. The development of gambling and related tourism industries is the centre piece of the Macao government’s policy to transform the city, which had been described as a place without political or economic standing in the international stage (Porter 1993 , pp. 7–8), into a Las Vegas-like gambling, convention, and family-oriented holiday destination. On 8 February 2002, Macao ended the 40-year gambling monopoly held by the STDM and awarded two of three gambling concessions to companies with US interests. As stated in the 2002 United States – Macau Policy Act Report , “foreign involvement in the gambling and tourism industries is expected to alter fundamentally the economic landscape in Macau and provide a signifi cant boost to investment and employment” (US Department of State 2002 ). Judging from various objective economic indicators such as GDP and per capita GDP growth rates, the number of inbound tourists, public revenue from taxes on gambling, as well as underemployment and unemployment rates, such goals were clearly achieved with the opening up of the gambling market. This move even marked another stage of economic “take-off” in Macao.

4.3.1 Gross Domestic Product

Before the transfer of sovereignty, Macao’s economy had been languishing and had recorded four consecutive years of negative growth of GDP since 1996: –0.4, –0.3, –4.6, and –3.0 % (DSEC 2001 , p. 7). In 1999, the GDP at current prices was MOP50.27 billion and the per capita GDP MOP117,620 (US$14,718). After the handover, as the economy was still affected by the Asian fi nancial crisis, GDP and per capita GDP growth rates were low. However, after the announcement that the casino gambling monopoly would be abolished, both GDP and per capita GDP surged, achieving double-digit growth from 2003 to 2008. In 2009, when the world economy was hit heavily by the global fi nancial crisis, Macao’s GDP and per capita GDP growth rates also fell. However, the drop only meant slight growth of 2.4 and 3.1 % respectively, in contrast to the recessions experienced in many Western societies. Since then, with the rapid pick-up in the economy, both GDP and per capita GDP in Macao have increased remarkably by around 30 % per annum. Macao’s economy has grown nearly sixfold in 13 years, to achieve a GDP of MOP292.09 billion in 2011 (Table 4.2 ). At MOP531,723 (US$66,311), Macao ranked sixth in the world in per capita GDP at current prices in 2011, trailing only Luxembourg, Qatar, Norway, Switzerland, and Australia (International Monetary Fund 2012 ). The respective fi gures for selected Asian societies were: Singapore US$49,271; Japan US$45,870; Hong Kong US$34,259; South Korea US$22,424; Taiwan US$20,083; Shanghai US$11,238 (in 2010) (Fig. 4.1 ). Over the past decade, the Macao economy has outperformed most, if not all, other economies in the world. 76 4 Gambling Expansion and Economic Growth

Table 4.2 GDP and per capita GDP (at current prices), 1999–2011 GDP Per capita GDP Value-added contribution Year Million MOP % change from gambling (%) MOP % change 1999 50,272.2 – 22.3 117,620 – 2000 51,629.8 2.7 25.9 119,911 1.9 2001 52,332.4 1.4 27.4 120,555 0.5 2002 56,298.5 7.6 28.9 128,433 6.5 2003 63,578.0 12.9 31.8 142,851 11.2 2004 82,294.0 29.4 34.0 180,108 26.1 2005 94,457.3 14.8 30.8 198,378 10.1 2006 116,563.4 23.4 27.7 234,109 18.0 2007 145,141.3 24.5 29.8 278,648 19.0 2008 166,235.2 14.5 29.4 307,861 10.5 2009 170,161.4 2.4 32.1 317,557 3.1 2010 226,218.8 32.9 40.9 421,312 32.7 2011 292,090.5 29.1 – 531,723 26.2 Source: Calculations are based on DSEC (2012b , pp. 50–53, 110–111)

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Macao Hong Kong Japan Shanghai Singapore South Korea Taiwan

Fig. 4.1 Per capita GDP of Macao and selected Asian economies (at current prices), 1999–2011 (US$) (Sources: DSEC 2012b, p. 50; International Monetary Fund 2012 ; Shanghai Municipal Statistics Bureau 2011 ) 4.3 Economic Invigoration as Tourists Pour In 77

4.3.2 Inbound Tourists

The astounding economic expansion in Macao would have been impossible without the large infl ux of mainland visitors, particularly after the introduction of the Individual Visit Scheme in 2003 for mainland Chinese tourists travelling to Macao.2 After the reunifi cation of Macao with China, although the number of tourists from the Chinese mainland increased from 1.65 million in 1999 to 3.01 million in 2001, the absolute number of increase was not particularly impressive. The total number of tourists from the mainland was like a drop in the ocean compared to China’s population of 1.3 billion. The “travel control policy” restricting the number of tourists allowed to travel from the mainland to Macao is frequently mentioned as the reason for such limited growth in tourist numbers from the mainland. As for per capita spending by tourists (excluding gambling expenses), which fl uctuated slightly at below MOP1,400 during the period from 1999 to 2001, this showed no growth to speak of (Table 4.3). The economic recession in the region is usually cited as an explanation for this; however, the most important reason seems to have been the monopolization of the gambling market. After the opening up of the gambling industry, the introduction of the Individual Visit Scheme, and also the ending of the SARS epidemic, the total number of tourists visiting Macao exploded to 16.7 million in 2004, or a 40.2 % increase over the previous year. The corresponding fi gures for tourists from mainland China were 9.5 million and 66.0 %. Per capita spending also rose. In 2006, the total number of visitors to Macao reached 22 million, while per capita spending increased to MOP1,610 (Table 4.3 ). That year, Macao surged ahead of Las Vegas in total money gambled and was expected to become the global leader in the gambling industry (Bradsher 2007). The sudden eruption of the fi nancial tsunami in 2008 also affected Macao’s economy. The number of visitors from the Chinese mainland and elsewhere dropped signifi cantly in 2008 (22.9 million) and 2009 (21.8 million), but began to rise again in 2010 (25.0 million). In 2011, Macao’s tourism sector showed its strength in coun- tering the global recession. The number of total inbound tourists and mainland tour- ists reached record highs of 28.0 million and 16.2 million respectively, for a respective increase of 142.8 and 281.2 % over the past 10 years.3 The per capita spending of visitors rebounded to MOP1,619, up 6.7 % year-on-year. Tourists are spending more time in Macao, as the average length of stay at local hotels and guest

2 In his testimony at court, casino magnate Sheldon Adelson stated that he had been warned not to broach the subject of gambling during his audience with Vice-Premier Qian Qichen in Beijing in July 2001. Adelson spoke about his success in the hotel and convention business, and Qian said that he wanted to do the same in Macao. Qian then raised the subject of casinos and asked how many hotel rooms Adelson could build in Macao. Their conversation went as follows: “How many you want me to build?” “Well, how many can you?” “Well, that all depends how many people can come there.” “How many do you want?” (Bruck 2008 , pp. 44–45; see also Note 6 of Chap. 3 ). 3 If we divide the total number of visitors by 365 days, this amounts to 76,719 visitors each day. If we multiply this fi gure with the average length of stay (1.53 days) of the visitors and add the number of imported workers (94,028 people) (DSEC 2012d , pp. 5, 9), this means that each day an astonishing 37.9 % of the people walking on the streets or in public places were tourists or imported workers. 78 4 Gambling Expansion and Economic Growth Average Average length of stay (night) Per capita spending (MOP) Americas Europe Others Kong Taiwan Taiwan Hong Kong ); DSECd (1999, p. 180) Mainland China various years various Visitor arrivals and per capita spending, 1999–2011 (thousand, MOP) and per capita spending, 1999–2011 (thousand, MOP) arrivals Visitor Overall Asia Table Table 4.3 Note: Per capita spending does not include gambling expenses Note: Per capita spending does not include gambling expenses Year Year Number % change Total 1999 2000 7,443.9 2001 9,162.2 2002 – 10,279.0 2003 11,530.8 2004 23.1 12.2 11,887.9 2005 12.2 16,672.6 2006 18,711.2 2007 3.1 7,170.4 8,891.1 10,012.6 40.2 21,998.1 2008 11,258.6 12.2 26,993.0 2009 1,645.2 2,274.7 3,005.7 17.6 22,933.2 11,679.2 2010 4,240.4 16,346.1 22.7 21,752.8 4,229.8 4,954.6 2011 −15.0 5,196.1 18,283.5 24,965.4 Sources: Calculations are based on DSECc ( 5,742.0 5,101.4 9,529.7 21,486.0 −5.1 1,311.0 28,002.3 1,451.8 10,463.0 984.8 26,257.6 4,623.2 14.8 1,532.9 22,161.7 11,985.6 5,051.1 108.6 109.0 12.2 5,614.9 14,866.4 97.0 1,022.8 21,085.0 115.4 11,613.2 6,940.7 1,286.9 24,273.4 1,482.5 8,174.1 120.9 10,989.5 114.6 86.7 7,016.5 143.6 27,287.1 1,437.8 137.4 13,229.1 182.8 113.2 1,444.1 6,727.8 1,315.9 16,162.7 219.6 41.6 42.7 7,466.1 306.3 125.3 85.2 1,292.6 39.1 312.6 43.7 7,582.9 162.6 1,367 1,292.7 1,389 191.0 278.7 1,373 1,215.2 1,454 57.6 257.3 36.8 297.1 82.4 272.2 101.5 310.6 1.33 1.35 1,633 1,518 235.7 171.8 1.43 1,523 1.28 186.6 1,610 244.5 1,637 251.7 153.4 1,729 1.22 1.26 150.4 1.22 1.21 1,616 152.9 1.34 1,518 1.44 1,619 1.50 1.54 1.53 4.3 Economic Invigoration as Tourists Pour In 79

30 2,000 1,729 1,633 1,637 1,616 1,619 25 1,610 1,454 1,600 1,367 1,518 1,523 1,518 20 1,373 1,389 11.8 1,200 12.1 15 11.7 10.0

11.3 (MOP) (million) 8.2 10.8 7.1 800 10 7.3 6.1 6.9 7.3 400 5 5.8 1.6 2.3 3.0 4.2 5.7 9.5 10.5 12.0 14.9 11.6 11.0 13.2 16.2 0 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mainland China Others Per capita spending

Fig. 4.2 Visitor arrivals and per capita spending, 1999–2011 (million, MOP) (Sources: Calculations are based on DSECc various years ; DSECd various years , p. 180)

houses increased from 1.43 nights in 1999 or 1.28 nights in 2002 to 1.53 nights in 2011 (Table 4.3 ; Fig. 4.2 ). Obviously, in this regard Macao still lags behind other tourist destinations, with the comparable fi gures being 3.9 nights in Singapore, and 3.6 nights in both Las Vegas and Hong Kong in 2010 (Macao Daily Times 14 December 2011 ) .

4.3.3 Tax Revenue

Gambling taxation in Macao is considerably heavier than in most gambling juris- dictions (Pessanha 2008 , p. 348). As specifi ed in Articles 22 (7 and 8) and 27 (1 and 2) of the Legal Framework for the Operations of Casino Games of Fortune (Law No. 16/2001) (Macao SAR Government 2001 ), the maximum tax burden for casino operators is 40 % of their gross gaming revenue (hereafter GGR). The contractual tax arrangements for the six casino operators are summarized in Table 4.4 . Following the policy of deregulation, not only did the scale and number of casinos grow continuously, the resulting revenue received by the Macao government also increased rapidly. For instance, in 1999, 2000, 2001, and 2002, the respective tax revenue from gambling were only MOP4.8 billion, 5.6 billion, 6.3 billion, and 7.8 billion. In 2003, 2006, 2009, and 2011, they surged to MOP10.6 billion, 20.7 billion, 45.7 billion, and 99.7 billion, respectively (Fig. 4.3 ). 80 4 Gambling Expansion and Economic Growth

Table 4.4 Gambling tax and levies for each concessionaire and sub-concessionaire SJM Galaxy Wynn MGM Venetian Melco Basic tax rate 35 % of GGR Annual premium Fixed premium: MOP30 million For each gambling table dedicated to special gambling: MOP300,000 For each gambling table not dedicated to special gambling: MOP150,000 For each electric or mechanical gambling machine: MOP1,000 Contribution to 1.6 % of GGR a public foundation Contribution to 1.4 % of GGRa 2.4 % of GGR the government Source: Based on DICJ (2012 ) aThe SJM is under an additional contractual obligation to make certain contributions in kind, e.g., dredging and necessary marine operations (Article 100 of the concession contract of SJM)

140 90 77.7 81.0 80 120 63.8 69.4 65.4 23.3 70 61.4 100 57.6 59.4 51.0 55.8 60

80 40.2 19.7 50 36.8 40 (%) 60 28.1 24.2 19.1 (Billion MOP) 30 40 16.4 21.8 10.9 20 7.8 8.6 20 9.7 9.3 7.5 10 12.2 10.6 15.2 17.3 20.7 31.9 43.2 45.7 68.8 99.7 0 4.8 5.6 6.3 7.8 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Gambling Others Gambling

Fig. 4.3 Amount and share of gambling tax revenue, 1999–2011 (billion MOP, %) (Sources: Calculations are based on DSECd various years )

In the past decade, tax revenue from the gambling sector grew more than 12-fold. Its contribution to government revenue increased remarkably from 28.1 % in 1999 to 57.6 % in 2003, and then to a historic high of 81.0 % in 2011 (Fig. 4.3 ). In contrast to most Western governments, which have run up heavy debts or are on the brink of bankruptcy after years of defi cit spending, the Macao government has enjoyed enviable surpluses following the introduction of the gambling liberalization policy. If based on the above data, the gambling liberalizing policy has clearly been a great success. Not only has GDP increased tremendously, so has government revenue. The most critical factor in revving up Macao’s economy seems to have been the 4.4 Employment Growth with an Infl ux of Foreign Workers 81 exponential rise in the number of tourists from mainland China, especially after the introduction of the Individual Visit Scheme. Because of the impressive economic growth that has taken place there in the past decade, Macao has become an object of envy around the globe. However, it is not only government offi cials who understand that there is no defi nite connection between wealth creation and wealth distribution, ordinary people also know very well that it is not possible for each member of society to benefi t equally from Macao’s stunning economic growth.

4.4 Employment Growth with an Infl ux of Foreign Workers

4.4.1 Employment in the Gambling Industry

Macao’s labour force grew from 209,400 people to 336,300 people in 2011, representing an increase of 60.6 % over 1999 (DSECc 2010 , p. 88, 2012, p. 80). Prior to the open- ing up of the gambling industry, employment in this sector occupied less than one- tenth of total employment opportunities in Macao (for example, 6.4 % in 1999 and 7.1 % in 2001). After liberalization and the resulting steady infl ow of investment, the gambling industry’s share of the total employed population grew simultaneously. In 2004, 2006, and 2008, the fi gure increased to 10.5, 16.1, and 20.6 %, respectively. From 2009 to 2011, as the economy cooled down somewhat and then rebounded, the proportion dropped slightly to 19.7 % in 2009, but quickly rose to 21.4 % in 2011 (Fig. 4.4 ). Obviously, not only did government revenue from the gambling

350 25 21.4 20.6 300 19.5 19.7 19.9 20 250 16.1

13.0 15 200 10.5 257.5 150 252.0 (%) 7.1 7.0 7.6 10 (Thousands) 6.4 6.8 241.7 250.3 100 221.6 256.4 206.7 5 50 182.1 186.5 196.2 183.6 190.4 187.2 42.6 58.7 66.6 61.6 62.8 70.1 15.4 22.9 30.8 0 12.5 13.2 14.6 14.1 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Gambling Others Gambling

Fig. 4.4 Number and share of employed persons in the gambling industry, 1999–2011 (thousand, %) (Sources: Calculations are based on DSECb 2003, 2004 ; DSECd various years ) 82 4 Gambling Expansion and Economic Growth industry increase rapidly after the policy to expand the industry, employment in the industry also grew remarkably. The gradual increase in employment in the gambling industry indicates that the Macao government was moving along the track of “build- ing a world-class gaming industry … enhancing the industry’s competitiveness and the dominant role it plays in Macao’s economy”, as stated by the Chief Executive in his 2003 policy address (Ho 2002 ).

4.4.2 Unemployment and Underemployment

Compared to the rapid growth rates in GDP, number of inbound tourists, and government revenue, although the improvement in employment is less astonishing, growth in that area has clearly been strong and persistent. In 2001, before the opening up of the gambling industry, unemployment and underemployment rates reached a high of 6.4 and 3.6 %, respectively. Stimulated by the policy to expand the gambling industry, the unemployment rate dropped steadily to 6.0 % in 2003, 4.1 % in 2005, and 3.2 % in 2007, while the corresponding underemployment rate was 2.7, 1.4, and 1.0 %. As Macao’s economy was also affected by the rapid cooling down of the global economy, both unemployment and underemployment rates started to rise from their previous low levels. In 2009, unemployment went up to 3.5 % while underemployment increased to 1.8 %. However, as the economy quickly rebounded, the unemployment rate fell to its lowest level since the handover of 2.6 % in 2011 and the underemployment rate dropped to 1.1 % (Fig. 4.5 ).

4.4.3 Non-resident Workers

Although the labour market showed persistent improvement, local workers— particularly semi-skilled and unskilled workers—frequently voiced grievances. The main reason for their discontent was that the government and casino operators were importing outside workers (mainly from Hong Kong and mainland China) to fi ll labour shortages, citing a lack of skilled local workers. Looking at Fig. 4.6 , we see that before 2002 the number of non-resident workers was on the decline. From 2003 onwards, a drastic increase was seen in the number of such workers, to 92,161 at the end of 2008 (or 28.5 % of the total employed population and 16.8 % of the total population) (DSECd 2009 , pp. 61, 73, 89). In 2009, although after the global fi nancial crisis the government had tightened procedures for the importation of labour, there were still a total of 74,905 non-resident workers in Macao. In 2011, as the economy quickly picked up, the number of non-local workers also increased drastically to 94,028 (or 28.7 % of the total employed population and 16.9 % of the total population) (DSECd 2012 , pp. 61, 68, 81). 4.4 Employment Growth with an Infl ux of Foreign Workers 83

8 74 72.3 72.5 6.8 72 7 6.4 6.3 70.6 6.3 69.2 72.0 6.0 70 6 68 4.9 65.7 5 65.5 65.0 66 64.3 4.1 3.8 4 62.3 3.5 64 62.2 3.2 60.9 63.4 3.0 2.8 3 62 3.6 3.4 2.6 2.9 60 2 2.7 58 1.9 1 1.3 1.6 1.8 1.7 1.4 1.1 56 1.0 1.0 0 54 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Unemployment rate Underemployment rate Labour force participation rate

Fig. 4.5 Unemployment rate, underemployment rate, and labour force participation rate, 1999– 2011 (%) (Sources: DSECd various years )

100 35.0 90 29.7 28.4 30.0 80 70 25.0 60 20.0 50 (%) 15.0 40

(Thousands) 11.6 10.3 10.4 8.0 30 11.0 7.1 10.0 20 2.3 5.0 10 32.2 27.2 25.9 23.525.0 27.7 39.4 64.7 85.2 92.2 74.9 75.8 94.0 0 0.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total non-resident workers Gambling

Fig. 4.6 Number and share of non-resident workers in the gambling industry, 1999–2011 (thousand, %) (Sources: Calculations are based on DSECa various years ; DSECd various years ) 84 4 Gambling Expansion and Economic Growth

After liberalization, the gambling industry’s share of total non-resident workers increased dramatically from 2.3 % in 2003 to a historic high of 28.4 % in 2006, the year that thousands of local workers took to the streets on International Labour Day and Macao SAR Foundation Day demanding that the government take immediate steps to prevent legal and illegal workers from fl ooding into Macao (see Chap. 6 ).4 In 2007, the fi gure rose further to 29.7 %. In 2008, the fi nancial crisis brought a halt to building projects in the territory.5 The government also stopped granting new casino licences, and stopped approving land for the building of new casinos (Xinhuanet 2008 ). The proportion of non-residents workers in the gambling industry plummeted to 11.6 % in 2008. Since then, the fi gure has fl uctuated between 7.1 and 10.4 % (Fig. 4.6 ). Apart from the large number of legal workers, the total number of illegal workers is also believed to be quite signifi cant. Since the DSEC does not keep records on this matter, we cannot obtain a full picture of this aspect of the labour situation in Macao. However, most semi-skilled and unskilled local workers generally believe that non-resident workers not only steal their jobs but also pull down their salaries and wages. They have also accused the SAR government of colluding with the tycoons by turning a blind eye to what they see as a very obvious problem. In other words, many local workers think that the SAR government has not taken any real measures to solve the problem because of strong pressure from heavy-weight capitalists (Loi and Kim 2010 , pp. 277–278; Wong 2010 ).

4.4.4 Employment Earnings

One major argument in favour of the policy to deregulate gambling was that the move would create more jobs with better remuneration. In nominal terms, if we examine the offi cial data on median monthly employment earnings, we fi nd some solid support for this. Before the opening up of the gambling industry, the overall median monthly employment earnings decreased from MOP4,920 in 1999 to MOP4,672 in 2002—a drop of 5.0 %. Nearly all industries suffered during the recession, except for the fi nancial industry. Since then, the overall median monthly employment earnings has increased consecutively from MOP4,801 in 2003 to MOP10,000 in 2011—an increase of 108.3 % in 9 years. Although employees in the manufacturing, wholesale and retail trade, and hotel and restaurant industries also received a substantial increase in earnings, their median monthly employment earn- ings in 2011, MOP6,500, 8,000, and 7,500, respectively, still lagged far behind that of those engaged in the public administration industry (MOP20,700) (Table 4.5 ).

4 The share of those employed by the gambling industry included construction workers directly employed by the gambling companies. In 2006, among the 18,378 non-resident workers engaged in the gambling industry, 14,622 (79.6 %) were construction workers (DSECd 2012 , p. 92). 5 For example, Sands suspended its development of parcels fi ve and six of the Cotai Strip and dismissed up to 11,000, mostly non-resident, construction workers ( The Standard 14 November 2008). 4.4 Employment Growth with an Infl ux of Foreign Workers 85 ods; Hotels and restaurants ods; Hotels and restaurants Public administration Services Gambling restaurants Financial Hotels and restaurants Wholesale and retail ) nancial intermediation; Public administration = public administration, defence, and compulsory social various years various 108.3 % 128.9 % 120.1 % 83.7 % 84.0 % 38.7 % 47.1 % 100.6 % 90.3 % Median monthly employment earnings in selected industries, 1999–2011 (MOP) earnings in selected industries, 1999–2011 (MOP) Median monthly employment 2003–2011 Sources: Calculations are based on DSECd ( Year Year 1999 2000 2001 2002 Overall 2003 4,920 Manufacturing 2004 4,822 2005 Construction 2,921 4,658 2006 2,960 4,672 2007 2,758 4,801 2008 2,766 5,167 2009 2,840 5,773 2010 4,660 2,983 7,000 2011 4,351 3,101 7,800 % change 4,300 3,400 8,000 4,142 4,000 8,500 4,711 4,589 4,000 9,000 4,533 4,967 10,000 5,000 4,445 5,922 5,700 4,443 4,430 6,500 7,600 4,099 4,354 8,500 4,005 10,000 4,550 4,050 4,888 7,549 9,000 4,075 6,000 7,726 9,500 10,100 4,272 6,000 7,696 13,767 7,000 4,468 7,941 13,742 5,000 7,000 8,652 13,805 5,500 7,500 8,159 8,000 13,749 6,100 8,691 14,075 6,494 6,500 9,000 13,895 6,156 7,000 9,800 7,500 14,521 11,000 6,187 – 15,000 5,974 – 12,000 14,900 6,481 18,000 – 13,000 12,000 7,080 – 19,500 7,837 19,500 7,200 10,000 20,700 7,804 11,600 12,000 9,504 10,000 12,000 12,000 13,000 12,000 13,000 12,000 13,000 13,700 Table Table 4.5 Notes: Wholesale and retail = wholesale and retail trade; repair of motor vehicles, motorcycles, and personal household go motorcycles, Notes: Wholesale and retail = wholesale trade; repair of motor vehicles, Financial = fi = hotels, restaurants, and similar activities; security; Services = recreational, cultural, gaming, and other services 86 4 Gambling Expansion and Economic Growth

Casinos offer many employment opportunities, as they need to hire croupiers, dealers, junket agents, desk-helpers, attendants, cage cashiers, customer offi cers, surveillance operators, and so on. Since some positions, such as dealers and cage cashiers, can only be offered to local residents, salaries and benefi ts in these jobs are usually relatively attractive when compared to other jobs. After liberalization, the median monthly employment earnings of those in the gambling industry climbed from MOP7,200 to 12,000 in 2007 and then to 13,700 in 2011, representing an increase of 90.3 % over 2003. Yet the most signifi cant increase was in 2007 (20.0 % year-on-year). Since then, the fi gure has generally fl uctuated between MOP12,000 and 13,000 (Table 4.5 ).

4.5 Increasing Dependence on the Gambling Industry and Fine-Tuning Policies

In sum, judging from a number of objective indicators such as GDP, unemployment and underemployment rates, the number of inbound visitors, and tax revenue from gambling, the strong and persistently positive impact on Macao’s economy follow- ing the opening up of the gambling industry is clear. Due to a sudden change in the global economic climate, Macao’s economy paused for breath in 2008 and 2009 but then leapt forward again dramatically. Notwithstanding its quick rebound and the positive outlook for growth, concerns have been raised about such underlying prob- lems as the heavy dependence of public revenue on the gambling industry (from 28.1 % in 1999 to 51.0 % in 2002 and a record high of 81.0 % in 2011) (Fig. 4.3 ); the over-expansion of the gambling industry (its value-added contribution to GDP rose from 22.3 % in 1999 to 40.9 % in 2010 (Table 4.2 ), and its share of employ- ment expanded from 6.4 % in 1999 to 21.4 % in 2011) (Fig. 4.4 ); and the gambling industry’s increasingly salient cannibalizing effect on other industries—for exam- ple, the contribution of manufacturing to GDP shrank from 9.3 % in 1999 to 0.9 % in 2010 (DSEC 2012b , p. 100) and its share of employment plunged from 21.8 % in 1999 to 3.9 % in 2011 (DSEC 2012a , c ). 6 When the fi nancial crisis was at its most severe, society began to cast doubt on the single-pillar economic structure based on gambling and to worry about its sustainability (Macao Daily News 21 November 2008 ). We should bear in mind that the companies that were being cannibalized generally belonged to old, small-scale, less effi ciently managed or less popular businesses. The owners and employees of these businesses were usually less edu- cated and older than those of the new businesses. Fuelled by the continuous infl ux of legal and illegal workers that has stirred discontent among local workers, the displacement of businesses and jobs might led to an increase in social grievances and anti-government feelings if not handled effectively and satisfactorily.

6 See also Chap. 7 for the concentration of FDI in the gambling industry. 4.6 Classifi cation and Profi le of the Respondents 87

In view of such impending risks, the Chinese government stated for the fi rst time in March 2006 in its eleventh 5-year national plan (2006–2010) that the central government would “support Macao in developing its tourism industry and promot- ing adequate diversifi cation of its economy” (National Development and Reform Commission 2006 , Chapter 48). In October 2010, the Chinese government further specifi ed in its twelfth 5-year national plan (2011–2015) that the central government will “support Macao in developing into a world tourism and leisure centre and expe- diting its development as the service platform for business and trade cooperation between China and the Lusophone countries” as well as “support Macao in promot- ing the adequate diversifi cation of its economy and accelerating the development of its leisure tourism, convention and exhibition business, Chinese medicine, educa- tion services, cultural and creative industries” (National Development and Reform Commission 2011 , Chapter 57). In response to the central government’s policy directives, the Macao government immediately identifi ed “adequate diversifi cation in a vertical manner” as one of its development goals in its 2007 policy address and detailed its strategies in subsequent annual policy addresses (see Chap. 8 ).

4.6 Classifi cation and Profi le of the Respondents

Although the aforementioned objective indicators paint a rosy picture of the opening up of the gambling industry, subjective indicators may tell a different story. In order to obtain a better understanding of the socio-economic-political impact of the expansionary gambling policy, our longitudinal data obtained in 2005, 2007, and 2009 from a territory-wide household survey will be used for a systematic analysis. Since the major focus of this book is the casino deregulation policy, we narrowed our research attention to those respondents with full-time and/or part-time paid jobs. There is a perception among the public that residents working in the casino gam- bling sector have benefi ted greatly from the deregulation, while residents working in sectors not related to gambling have gained far less or nothing. We sub-divided working respondents into three groups. The fi rst group consisted of those engaged in the cultural, recreational, casino gambling, and entertainment industries (similar to the DSEC categorization of “recreational, cultural, gaming and other services” industry), which we simply called the gambling and entertainment industries (here- after GEI). The second group was made up of those working in fi nance, tourism, construction, the wholesale and retail trade, hotels, and restaurants, which we cate- gorized as gambling-related industries (hereafter GRI). The third group was com- prised of those working in community services, government, fi shing, farming, manufacturing, and electricity, gas, and water supply, a category we called gam- bling non-related industries (hereafter GNI). Figure 4.7 shows the distribution of the three groups of respondents. If we compare the survey results to offi cial statistics, we see that the percentages of our respondents engaging in GEI in 2005 (13.3 %) and 2007 (21.9 %) were lower than the DSEC’s fi gure of 17.2 and 23.0 %, and the 88 4 Gambling Expansion and Economic Growth

100

31.7 80 38.9 37.6

60

42.1 40.6 40 47.8

20 21.9 26.2 13.3 0 2005 2007 2009 (n=1,414) (n=1,478) (n=1,430)

GEI GRI GNI

Fig. 4.7 Distribution of the GEI, GRI, and GNI groups, 2005–2009 (%)

corresponding percentage in 2009 (26.2 %) was higher than that of the DSEC (23.6 %) (DSECd 2010, 2011 , 2012 ). Although there were certain discrepancies between offi cial statistics and our survey data, they unanimously showed that after the deregulation of the casino gambling industry, GEI was expanding while GRI and GNI were contracting. If we cross-tabulate these three groups of respondents by sex, age, place of birth, educational level, occupation, and occupational income, we get a general idea of their specifi c socio-demographic profi le (Table 4.6 ). On the whole, more males engaged in formal employment than females. A closer examination reveals that more females worked in GEI while more males worked in GNI, with the imbalance between the sexes being quite pronounced in the latter group. The sex distribution was more or less equal in GRI. In 2009, the imbalance between the sexes in GNI became less acute than it had been in 2007. Around one-fi fth of working respondents were 18–29 years of age, while around one-tenth were 55 and above. The remaining respondents were aged 30–54. Over the years, the percentage of younger and older respondents both rose steadily, while there was an obvious decrease in the percentage of middle-aged respondents. In comparison, more than double the number of young respondents were working in GEI than were working in GRI and GNI. In the past few years, the number of young respondents working in GEI declined. However, the number of middle-aged respondents working in GEI rose, but those in GRI and GNI fell. It is not diffi cult to see that, with respect to age, a subtle change in the labour market had taken place. If judged from the fi gure that less than half of the total population is locally born, Macao can still be called an “immigrant society”. Briefl y speaking, less than two- fi fths of the working respondents were locally born and less than one-tenth of them 4.6 Classifi cation and Profi le of the Respondents 89

Table 4.6 Socio-demographic comparison among the GEI, GRI, and GNI groups (%) Year Overall GEI GRI GNI χ 2 test Sex 2005 Male 52.0 46.3 51.6 54.4 n.s. Female 48.0 53.7 48.4 45.6 2007 Male 52.4 48.9 48.8 58.2 ** Female 47.6 51.1 51.2 41.8 2009 Male 51.7 47.2 50.3 57.2 * Female 48.3 52.8 49.7 42.8 Age 2005 18–29 18.0 41.2 15.9 12.7 *** 30–54 72.3 54.0 73.6 76.9 55 and above 9.7 4.8 10.5 10.4 2007 18–29 21.3 38.0 15.2 18.1 *** 30–54 67.9 58.3 70.7 70.5 55 and above 10.8 3.7 14.0 11.4 2009 18–29 21.7 34.7 16.5 17.9 *** 30–54 65.9 61.6 64.3 71.5 55 and above 12.4 3.7 19.2 10.6 Place of birth 2005 Macao 35.7 45.2 32.7 36.2 * Mainland China 56.6 45.2 59.6 56.9 Others 7.6 9.6 7.7 6.9 2007 Macao 37.0 40.9 32.8 39.3 ** Mainland China 55.7 55.1 58.2 53.3 Others 7.3 4.0 9.0 7.4 2009 Macao 38.1 37.3 33.9 44.2 * Mainland China 53.3 54.4 56.9 47.5 Others 8.7 8.3 9.2 8.4 Educational level 2005 Primary 26.2 18.1 29.6 24.7 *** Secondary 55.3 68.6 59.8 45.3 Tertiary 18.5 13.3 10.7 30.0 2007 Primary 21.9 11.1 28.0 21.6 *** Secondary 56.2 78.6 57.7 41.4 Tertiary 21.9 10.2 14.3 36.9 2009 Primary 19.2 12.0 25.2 17.0 *** Secondary 57.6 71.5 59.1 44.2 Tertiary 23.2 16.5 15.6 38.9 Occupation 2005 Managers/professionals 25.9 13.1 24.6 32.0 *** Clerks/sales/services 40.1 75.4 42.7 24.3 Manual workers 34.1 11.5 32.7 43.7 (continued) 90 4 Gambling Expansion and Economic Growth

Table 4.6 (continued) Year Overall GEI GRI GNI χ2 test 2007 Managers/professionals 29.2 19.0 27.2 37.4 *** Clerks/sales/services 40.2 66.7 36.7 28.6 Manual workers 30.6 14.3 36.1 34.1 2009 Managers/professionals 32.0 21.0 25.0 50.4 *** Clerks/sales/services 43.2 67.1 46.3 19.4 Manual workers 24.8 11.9 28.8 30.1 Occupational income (MOP) 2005 Under 6,500 47.0 28.3 58.3 39.6 *** 6,500–12,999 35.7 49.5 32.8 34.6 13,000 and above 17.3 22.3 8.9 25.8 2007 Under 6,500 32.4 16.6 47.5 25.4 *** 6,500–12,999 35.6 31.7 36.3 37.3 13,000 and above 32.0 51.7 16.2 37.3 2009 Under 6,500 23.1 10.2 35.9 17.0 *** 6,500–12,999 38.0 32.3 42.6 36.6 13,000 and above 39.0 57.4 21.6 46.4 * p < 0.05; ** p < 0.01; *** p < 0.001 were born outside of Macao, excluding mainland China. The remainder, over half of the population, were born in mainland China. Over the years, the percentage of locally born respondents rose steadily, while the percentage of mainland-born respondents fell. There was little change in the percentage of those born elsewhere. Those who were locally born tended to engage in GEI but at a diminishing rate, while the mainland born tended to engage in GRI and GNI, and also to a diminish- ing degree. A person’s level of education is considered one of the key factors determining that individual’s career path and lifestyle. Generally, in the past few years, around one-fi fth of the working respondents only had a primary education, but this percent- age has fallen steadily. More than a half of the respondents had attained a secondary education, and the proportion has remained nearly unchanged. Around one-fi fth of the respondents had tertiary qualifi cations, and their percentage has been rising. Relatively speaking, respondents working in GRI had the lowest educational attain- ment. A higher proportion of the respondents engaged in GNI had received a tertiary education than those in other groups. Among those working in GEI, nearly three- fourths had a secondary education and only around one-tenth had obtained a tertiary education. Occupational patterns among the three groups of respondents clearly differed. On the whole, around one-fourth of the working respondents were managers/ professionals. Two-fi fths were white-collar workers in the service sector. The remaining one-third were manual workers. Over the years, the percentage of those working as managers or professionals rose steadily, while the percentage of those employed as manual workers fell. The proportion of those working in the service sector 4.6 Classifi cation and Profi le of the Respondents 91 remained relatively stable. Looking closer, we see that the overwhelming majority of the working respondents in GEI were clerks, salespeople, or service providers. The proportion of managers and professionals rose steadily from around one-eighth to over one-fi fth. More than one-third of the GNI respondents were managers or professionals, and the proportions in the past few years have increased signifi cantly. In contrast, the proportion of GNI respondents working in manual jobs contracted rapidly in the survey periods. In all types of occupations, the percentage of GRI respondents generally fell between the two groups of GEI and GNI. After the introduction of the policy to liberalize gambling, the surveyed data on occupational income showed a signifi cant improvement. On the whole, the percent- age of working respondents who earned less than MOP6,500 a month dropped from 47.0 % in 2005 to 23.1 % in 2009. In contrast, the percentage of those who earned MOP13,000 or more soared from 17.3 % in 2005 to 39.0 % in 2009. Cross-tabulated data illustrated that GEI respondents had a higher monthly income than those in the other two groups, while GRI respondents clearly earned the least among the three groups. Furthermore, although all three groups of working respondents had earned more in the past few years, the occupational income of GRI respondents still lags far behind those working in GEI and GNI. For example, in 2009, when 57.4 and 46.4 % of GEI and GNI respondents, respectively, belonged to the highest income group, only 21.6 % of GRI respondents had that level of occupational income. In sum, GEI respondents earned an above-average income while GRI respon- dents earned less than the average income. GNI respondents fell in the middle. As the proportions of those in the three groups who earned a higher occupational income rose steadily in the past few years, it can be said that the positive spillover effect from the gambling sector to the non-gambling sector is obvious and signifi - cant. This fi nding is consistent with the objective indicator showing that per capita GDP and median monthly employment earnings across different industries rose steadily after the end of the gambling monopoly. Such a result is clearly contrary to that suggested by many opponents of gambling (see Chap. 1). Notwithstanding the obvious spillover effect, we should be cautious about interpreting the data with too great a degree of optimism. Our survey data suggested that the economic benefi ts that were generated went disproportionately to those who were young, female, and had at least a secondary level of education. These people were usually concentrated in GEI, and thus could earn a higher income than those engaged in the other sectors, except for the public sector. This phenomenon is consistent with the public’s perceptions of the impact of gambling just after the end of the gambling monopoly—those who were married, in senior management, professionals, skilled workers, and students were more opti- mistic than other groups, while those who were single, clerical staff, technical staff, unemployed, and self-employed were less optimistic (guardedly optimistic) than other groups about the opening up of the gambling industry. The study further showed that the former could easily perceive that liberalization would lead to more chances for new employment opportunities and a subsequent increase in income, while the latter could be more vulnerable to gambling addiction and related problems (Vong and McCartney 2005 ). 92 4 Gambling Expansion and Economic Growth

4.7 Improvements in Fringe Benefi ts and Job Prospects

In order to better understand how the economic boom brought direct and indirect benefi ts to the working population, we asked a number of questions relating to job fringe benefi ts apart from salaries and wages. We also added a series of questions to evaluate indirect and non-pecuniary rewards such as job security, chances for pro- motion, and the potential of fi nding a job with a similar salary in the labour market. As expected, although some of the respondents felt that there had not been much of a change in the labour market following the policy to deregulate gambling, a major- ity of them gave positive and favourable responses (Table 4.7 ).

4.7.1 Job Fringe Benefi ts

First, when the respondents were asked if their current job offered various benefi ts such as a pension, paid sick leave, a housing allowance, and medical care, approxi- mately a half gave a negative reply. On the whole, very few employers offered a housing allowance (ranging from 14.5 % in 2009 to 15.7 % in 2005), but paid sick leave was more common (ranging from 53.2 % in 2005 to 65.4 % in 2009). Although an increasing number of respondents told us that their jobs came with welfare ben- efi ts in the past few years, a large minority were still not entitled to such benefi ts as a pension, paid sick leave, and medical care—43.4, 34.6, and 44.7 %, respectively, in 2009. Clearly, benefi ts were increasing far more slowly than the pace of local economic growth.

Table 4.7 Job fringe benefi ts provided by employers (% replying “yes”) Year Overall GEI GRI GNI χ 2 test Pension 2005 49.7 60.7 43.1 53.2 *** 2007 55.2 79.0 39.1 58.1 *** 2009 56.6 73.9 42.3 61.6 *** Paid sick leave 2005 53.2 40.9 52.7 58.2 *** 2007 58.4 65.4 51.8 61.0 *** 2009 65.4 82.5 57.1 62.4 *** Housing allowance 2005 15.7 5.9 6.0 29.8 *** 2007 15.1 2.2 7.2 31.1 *** 2009 14.5 3.2 6.7 34.1 *** Medical care 2005 44.4 47.3 39.9 48.4 * 2007 49.9 62.6 41.2 51.5 *** 2009 55.3 75.4 43.6 54.0 *** * p < 0.05; *** p < 0.001 4.7 Improvements in Fringe Benefi ts and Job Prospects 93

With the exception of a housing allowance, the respondents who worked in GEI were better protected, while those engaged in GRI were the least protected. GNI respondents generally occupied the middle ground, but a signifi cantly greater percentage of them than in the other two groups were receiving a housing allow- ance. GNI respondents received better protection in this respect because many of them worked in the area of government and community services. We can observe that GEI respondents not only received better benefi ts such as a pension, paid sick leave, and medical care, but that the coverage of such benefi ts was growing faster for this group than for the other two groups. For instance, in 2005, only 40.9 and 47.3 % of the GEI respondents were offered paid sick leave and medical care benefi ts, respectively. In 2009, the corresponding percentages shot up to 82.5 and 75.4 %. However, for respondents working in GRI, increases of no more than fi ve percentage points were seen for those being offered these two types of fringe benefi ts. In general, although not all respondents could benefi t equally from the policy to expand the gambling industry, continuous general improvement could be identifi ed. Of course, those respondents working in GEI saw more improvements while those working in GRI received less favourable rewards, both pecuniary and non-pecuniary.

4.7.2 Job Stability and Prospects

In addition to fringe benefi ts, we also asked our respondents to comment on their job stability and prospects. When the respondents were asked to review their job stability, two-fi fths of them indicated that their job was stable, one-fourth that it was neither stable nor unstable, and around one-third that it was not stable. Although there were some changes in perception about job stability in the past few years along with changes in the economic environment, the overall pattern showed little modifi cation (Table 4.8 ). A closer scrutiny revealed that GEI respondents felt their job to be less stable, while GRI and GNI respondents considered their job to be more stable. For exam- ple, in 2005, 34.6 % of GEI respondents indicated that their job was stable, while 44.9 % of GRI respondents and 39.1 % of GNI respondents gave the same answer. In 2007 and 2009, those GEI respondents who thought that their job was stable fell to 32.8 and 19.8 %, respectively. The corresponding percentages for GRI respon- dents were 40.9 and 40.1 %, while for GNI respondents the fi gures rose to 47.2 and 50.4 %. Interestingly, although GEI respondents were perceived to be the fi rst group to have benefi ted in a big way from the fl ourishing gambling industry, they were the group showing the least job security. When the respondents were asked to assess the possibility of getting a job pro- motion or salary increase, nearly half of them did not think that the prospects would be positive. Only one quarter were optimistic, while another one quarter were uncertain. Only in 2007 did more GEI respondents think that they had a chance of a job promotion or salary increase than GRI and GNI respondents (Table 4.8 ). 94 4 Gambling Expansion and Economic Growth

Table 4.8 Perceptions of job stability and prospects (%) Year Overall GEI GRI GNI χ 2 test Job is stable 2005 Positive 41.0 34.6 44.9 39.1 * Neutral 26.1 33.5 25.4 24.2 Negative 32.9 31.9 29.7 36.6 2007 Positive 41.5 32.8 40.9 47.2 *** Neutral 30.3 36.9 32.8 23.8 Negative 28.2 30.3 26.3 29.1 2009 Positive 38.0 19.8 40.1 50.4 *** Neutral 26.6 31.4 28.6 20.0 Negative 35.4 48.8 31.3 29.6 Have a chance of promotion or salary increase 2005 Positive 27.7 27.9 28.7 26.4 n.s. Neutral 20.4 19.7 20.6 20.5 Negative 51.9 52.5 50.6 53.1 2007 Positive 29.7 34.6 27.8 28.9 *** Neutral 25.5 31.4 23.3 24.3 Negative 44.8 34.0 48.9 46.8 2009 Positive 22.9 21.3 23.2 24.1 n.s. Neutral 25.5 28.9 24.6 23.8 Negative 51.5 49.9 52.2 52.1 * p < 0.05; *** p < 0.001

A frequently cited reason for the lingering pessimistic perceptions about job prospects across different industries was the large infl ux of non-local labour—legal or illegal (see the discussion on this subject in other chapters).

4.7.3 Fairness of Occupational Income

Although larger percentages of respondents thought that fringe benefi ts had advanced in the past few years, equally large numbers of respondents considered the possibility of a job promotion or salary increase very limited. While competition from non-local labour was considered to be one of the major factors behind this, the lack of skilled or professional qualifi cations among the local labour force was seen as another factor inhibiting them from advancing in their career. In the three sur- veys, when our respondents were asked to review the fairness or reasonableness of their occupational income in comparison to the effort that they expended on the job, most of them took a neutral position (around 40–45 %). About one-fourth thought their income was unreasonable. Over the time, although neutral and positive percep- tions concerning job remuneration fl uctuated, negative feelings declined steadily (Table 4.9 ). In other words, more members of the local labour force had recently 4.7 Improvements in Fringe Benefi ts and Job Prospects 95

Table 4.9 Self-perceived reasonableness of occupational income (%) Year Overall GEI GRI GNI χ 2 test 2005 Reasonable 33.0 31.9 31.2 35.4 n.s. Neutral 38.6 43.1 37.9 38.0 Unreasonable 28.4 25.0 30.9 26.6 2007 Reasonable 30.5 40.2 27.5 28.2 *** Neutral 45.1 42.1 45.1 47.0 Unreasonable 24.3 17.8 27.5 24.8 2009 Reasonable 38.1 45.2 32.6 39.5 ** Neutral 44.1 41.4 47.1 42.4 Unreasonable 17.8 13.4 20.3 18.2 ** p < 0.01; ***p < 0.001

come to the realization that their remuneration could be considered reasonable for the work that they were doing. In 2005, the three groups of respondents differed slightly in their views on the reasonableness of personal occupational income. Since then, respondents engaged in GEI had been more inclined to agree that their occupational income was reason- able when compared to their work effort (40.2 % in 2007 and 45.2 % in 2009). Respondents working in GRI, however, showed the lowest agreement in response to this question (27.5 % in 2007 and 32.6 % in 2009). On the whole, there was a steady decrease in the percentage of those indicating dissatisfaction among the three groups in the surveyed period, implying an improvement in the self-perceived reasonable- ness of occupational income.

4.7.4 Career Move

“Can you easily fi nd another job in the market that is remunerated with a similar salary and benefi ts?” was another hypothetical question that we raised in the sur- veys. Around half of the respondents gave a negative answer. Approximately one quarter took the middle position, while around one-fi fth agreed that they could potentially fi nd a job with a similar salary and benefi ts in the labour market. In com- parison, public sentiment in 2009 was the most pessimistic, and 2007 the most optimistic. Furthermore, there was no signifi cant difference among the three groups of respondents in 2005. However, in 2007 and 2009, respondents working in GRI and GNI indicated a higher likelihood of fi nding a job with a similar salary and benefi ts (38.0 and 20.1 % for the former, and 30.9 and 20.1 % for the latter) than those engaged in GEI (25.2 and 10.2 %) (Table 4.10 ). Again, although there was reportedly a serious labour shortage, local workers did not feel that it was any easier than before to fi nd a job with better remuneration or prospects. Once again, compe- tition from non-local workers was cited as the key factor. 96 4 Gambling Expansion and Economic Growth

Table 4.10 Potential of fi nding a job with a similar salary and benefi ts in the labour market (%) Year Overall GEI GRI GNI χ 2 test 2005 Positive 20.5 17.5 21.8 19.8 n.s. Neutral 31.4 34.4 32.0 29.7 Negative 48.1 48.1 46.2 50.5 2007 Positive 32.5 25.2 38.0 30.9 ** Neutral 23.7 26.8 21.4 24.4 Negative 43.7 47.9 40.6 44.7 2009 Positive 17.5 10.2 20.1 20.1 *** Neutral 23.6 24.7 23.0 23.5 Negative 58.9 65.1 56.9 56.4 ** p < 0.01; *** p < 0.001

If we put the aforementioned perceptions side by side with objective indicators like per capita GDP, median monthly employment earnings, and unemployment rate, it is clear that there was a signifi cant improvement not only in direct pecuniary remuneration, but also in indirect and non-pecuniary rewards like the expanding coverage of pension, paid sick leave, and medical care. On the whole, although GEI respondents seemed to have been able to obtain greater benefi ts from the policy to liberalize gambling than the other groups, they had the lowest sense of job stability. As such, one should not jump to the conclusion that the current labour market in Macao is without risk and worry.

4.8 Improvements in Household Economic Condition and Outlook

In Chinese societies, a household is still the basic unit of reproduction, distribution, and consumption. Whether it can play these roles well not only determines a society’s stability but also its sustainability. As such, how economically sound a household is refl ects both its potentiality or capability with regard to reproduction and distribution, and its propensity in terms of consumption. Understanding that the economic status of households affects various parts or sectors of a society, we have designed a number of questions in our surveys to gauge data on this topic in order to examine the impact of the policy to deregulate gambling.

4.8.1 Household Budget

First is the self-evaluation of the household budget. When the respondents were asked whether their monthly household income was suffi cient for expenditure, in 2005, 35.2 % answered that it was suffi cient, 39.0 % told us that they could make 4.8 Improvements in Household Economic Condition and Outlook 97

Table 4.11 Self-perceived suffi ciency of monthly household income for expenditure (%) Year Overall GEI GRI GNI χ 2 test 2005 Suffi cient 35.2 43.1 29.2 39.8 *** Balanced 39.0 38.3 42.1 35.4 Insuffi cient 25.9 18.6 28.7 24.8 2007 Suffi cient 36.5 40.9 33.8 36.7 ** Balanced 41.2 35.0 41.0 44.8 Insuffi cient 22.4 24.1 25.1 18.4 2009 Suffi cient 41.6 41.9 38.2 45.9 n.s. Balanced 38.1 37.4 39.9 36.4 Insuffi cient 20.3 20.7 21.9 17.7 ** p < 0.01; *** p < 0.001 ends meet, and the remaining 25.9 % found that their monthly income was not suffi cient for expenditure. In 2007 and 2009, those respondents who indicated that their monthly income was suffi cient for expenditure grew steadily to 36.5 and 41.6 %, respectively, while those who revealed that it was insuffi cient diminished gradually to 22.4 and 20.3 %, respectively (Table 4.11 ). Clearly, as Macao’s economy grew rapidly, more respondents found that the economic condition of their house- hold improved. It is noteworthy that GEI respondents seemed to be the fi rst group to benefi t in a large way from the gambling boom—43.1 % considered their monthly income to be suffi cient for expenditure, as compared with 29.2 % of GRI respondents and 39.8 % of GNI respondents in 2005. However, in the subsequent surveys, GEI respondents were less optimistic in this regard, and there was an increase in those who acknowl- edged that their income was insuffi cient for expenditure (from 18.6 to 24.1 % in 2007 and 20.7 % in 2009). The situation with the household budget of GRI and GNI respondents was quite different from that of GEI respondents. For both groups, on the one hand, there was a clear trend of an increase in those who felt that their household budget had become more manageable—from 29.2 to 38.2 % for GRI respondents, and from 39.8 to 45.9 % for GNI respondents. On the other hand, there was also a decrease in those who considered that it was scanty—from 28.7 to 21.9 % for GRI respondents, and from 24.8 to 17.7 % for GNI respondents. Viewed from this angle, respondents working in related and non-related industries both benefi ted from the opening up of the gambling industry.

4.8.2 Changes in Household Economic Condition

Second is the perception of current household economic condition in comparison to the past. When the respondents were asked to compare their current household eco- nomic condition to that of 3 years ago, around two-fi fths answered that their current condition was better while another two-fi fths responded “the same” or “no change”. The remaining one-fi fth considered their current economic condition to be worse 98 4 Gambling Expansion and Economic Growth

Table 4.12 Household economic condition when compared to 3 years ago (%) Year Overall GEI GRI GNI χ 2 test 2005 Better than 3 years ago 38.5 37.2 36.3 41.5 n.s. The same 42.0 39.4 42.6 42.0 Worse than 3 years ago 19.6 23.4 21.1 16.5 2007 Better than 3 years ago 42.2 48.1 43.3 37.7 * The same 41.6 39.1 39.4 45.5 Worse than 3 years ago 16.1 12.7 17.3 16.8 2009 Better than 3 years ago 35.5 35.7 34.8 36.2 n.s. The same 40.1 42.7 39.0 39.5 Worse than 3 years ago 24.4 21.6 26.2 24.3 * p < 0.05 than 3 years ago (Table 4.12 ). On the whole, two points are salient. First, those who considered that their household economic condition had improved comprised a greater percentage than those who thought the opposite. Second, the public’s per- ception of their household economic condition changed as the fortunes of the gam- bling business fl uctuated. Our data further demonstrated that the perceptions of both GEI and GRI respon- dents fl uctuated more than those of GNI respondents. For example, in 2005, more GNI respondents (41.5 %) thought that their household economic condition had improved compared to 3 years ago than both GEI and GRI respondents (37.2 and 36.3 %, respectively). Then, in 2007, while the latter two groups who thought that their household economic condition was better shot up by around ten percentage points, the percentage of GNI respondents who took a similar view fell, albeit to a lesser extent. In 2009, as the gambling business contracted suddenly after the fi nan- cial tsunami, most Macao people also became less optimistic about their situation. As such, the percentage of GEI and GRI respondents who considered their house- hold economic condition to be better than it had been 3 years ago plummeted (to 35.7 and 34.8 %, respectively), but the proportion of GNI respondents who felt the same way remained rather stable (36.2 %).

4.8.3 Expected Changes in Household Economic Condition

Third is the perception of current household economic condition in comparison with anticipation for the future. When the respondents were asked to predict their house- hold economic condition 3 years from now, more optimistic views were expressed in 2005 and 2007—nearly two-fi fths predicted that their household economic condition would be better, while less than one-fi fth took the opposite view. However, in 2009, as the fi nancial tsunami was still much in evidence, the public’s views became more conservative—the percentage of optimists fell by ten percentage points, while those who were pessimistic increased by a corresponding percentage (Table 4.13 ). Clearly, as the external and internal economic environments became more turbulent that year, people also became cautious about their outlook for the future. 4.9 Conclusion 99

Table 4.13 Household economic condition when compared to 3 years later (%) Year Overall GEI GRI GNI χ 2 test 2005 Better than present 37.3 31.8 42.9 32.1 ** The same 44.1 51.0 39.5 47.5 Worse than present 18.6 17.2 17.6 20.4 2007 Better than present 37.8 34.5 39.9 37.7 n.s. The same 43.6 49.2 42.6 41.4 Worse than present 18.5 16.3 17.5 20.9 2009 Better than present 27.9 22.0 31.8 27.6 ** The same 45.0 48.5 39.6 48.9 Worse than present 27.1 29.5 28.6 23.4 ** p < 0.01

GRI respondents were more optimistic about their future household economic condition than GEI respondents. In 2005, 42.9 % of GRI respondents predicted that their household economic condition 3 years later could be better than their current condition. Only 31.8 % of GEI respondents and 32.1 % of GNI respondents shared this view. In 2007, GRI respondents who were optimistic in this respect dropped slightly to 39.9 %, while there was a moderate rise in the percentage of GEI and GNI respondents who took this stance, to 34.5 and 37.7 % respectively. In other words, the differences between the three groups on this question had narrowed. Then, in 2009, the percentage of GRI respondents who were optimistic further dropped to 31.8 %. However, those GEI and GNI respondents who shared such a view plummeted to 22.0 and 27.6 %, respectively. It is evident that GEI respondents seemed more pessimistic while GRI respondents seemed more optimistic. Of course, compared to the 2005 and 2007 survey data, all of the respondents became more cautious about their household economic condition, which in fact refl ected their increasingly conservative attitude towards the future of Macao. On the whole, viewed from the angle of household economic condition, we can see that there has been clear improvement in the past few years. The improvement is apparent from the declining percentage of households that always found their income insuffi cient to meet their daily expenditures. It can also been seen from the fact that over one-third of the respondents considered their household economic condition to be better than it had been 3 years before. Also, only a minority of respondents expressed pessimism about their future household economic condition. As the gambling business fl ourished, it is clear that more households were enjoying greater prosperity.

4.9 Conclusion

Having duly evaluated various objective and subjective indicators of economic development after the gambling liberalization policy, we see the following two salient features. First, a highly favourable investment environment has caused Macao’s gambling industry to fl ourish since 2002 and has brought signifi cant 100 4 Gambling Expansion and Economic Growth economic progress. Not only have GDP and tax revenue grown rapidly, but tourism and related industries like the hotel, restaurant, and entertainment industries have also fl ourished. However, the Macao government should not feel complacent, as subjective indicators do not always support the view that economic development will ultimately improve the quality of life of ordinary citizens. For instance, if we look at the list of licensed gambling operators, we see that the majority of them— Galaxy, Wynn, MGM, Venetian, and Melco—are primarily transnational corpora- tions. Also, if we refer to the trade statistics of recent years, which indicate that various goods and services are imported from adjacent cities or around the globe (DSECd various years ; see also Chap. 7 ), we may further fi nd that in order to support the development of the gambling business in Macao, a great deal of money has been spent on other economies. All of this indicates that the income generated from casinos may largely be going to outsiders (i.e., an “earnings drain”), and the cannibalizing effect on non-gambling businesses is equally obvious. Such develop- ments at least partially refute the ideal predictions of the gambling promoters, which were discussed in Chap. 1 . Second, without a doubt, the employment environment has improved and nomi- nal wages have increased since the deregulation of the gambling industry. But, in a parallel development, the dissatisfaction of ordinary people and the grievances of displaced local workers have also accumulated. The purchasing power of money has weakened with the continuous rise in the real prices of property and daily necessi- ties, eating away at regular incomes.7 The importation of huge numbers of non- resident workers (legal and illegal) has also taken away promising employment opportunities from local workers. In other words, if the Macao government takes both objective and subjective indicators into full consideration, they have no reason to be smug about their achievements. In order to correct the lopsided development in Macao, an effective policy of wealth redistribution should be carried out to narrow the growing wealth gap. According to DSEC (2009 , p. 114), Macao’s Gini coeffi cient dropped from 0.44 in 2002/03 to 0.38 in 2007/2008, the latest available offi cial fi gure. However, as a local social work professor said, “This seems a feel good story, but in fact the disparity between rich and poor is widening. That’s something we see everyday, without the need for statistics.” A professor of economics attributed the reason for the improved Gini to the calculation of that index on the basis of households. As long as one mem- ber of a household is working in a casino, the aggregate income of the household could increase and narrow the measured income gap (Leung and Azevedo 2011). Since the unprecedented surge in property prices has been the major factor in the decreasing purchasing power of the local population, more effective policies should be introduced to control speculative investments in housing and to increase the supply of public and subsidized housing units. Strong action should also be taken to

7 The average transaction price of residential units in Macao soared from MOP8,259 per square metre in 2004 (the earliest publicly available offi cial data) to MOP41,433 in 2011, an upsurge of 401.7 % in 8 years. The Composite Consumer Price Index also increased from 85.32 in 1999 to 110.30 in 2011 (DSECd 2010, p. 115, 2012, pp. 103, 293). References 101 stop the rampant problem of illegal workers and necessary measures should be taken to protect local workers, such as giving them priority in employment, better job benefi ts, and more on-the-job training. Last, but not least, the government should spend more on social welfare and social security to ensure that the needy and under- privileged live a decent life. Measured by various objective indicators, the stunning growth of Macao’s econ- omy after the opening up of the gambling industry has undeniably attracted interna- tional attention. Seeing wealth fl ow into Macao, as well as Singapore’s success, countries such as Japan, South Korea, Thailand, and Vietnam also seek to create or expand their share of the Asia-Pacifi c casino gambling market. As new casinos enter the market, the growth surge in the region will eventually level off. More impor- tantly, the impressive economic growth resulting from the deregulation of gambling in Macao is an exceptional case. Because Macao is the only city in China where casino gambling is legally permitted, it has become the top gambling destination for the mainland’s newly affl uent people. In other words, Macao is facing a nearly unlimited demand for gambling goods and services, a circumstance that may not apply to other economies. Macao’s success cannot be easily achieved to the same degree by other economies. To sum up, although the opening up of the gambling industry has led to a number of promising objective statistics indicating progress in the economy, we should be very careful when interpreting such data. On the one hand, we should bear in mind the statistical trap of objective indices and should pay due attention to the intricacy of subjective indicators. On the other hand, we should beware of unbalanced devel- opment and should not underestimate some of the costs of such development, espe- cially the social cost, which is not easily calculable or which cannot be fully refl ected or absorbed into the economic decision-making process. In this sense, an integrative approach that makes use of both objective and subjective indicators should be adopted to enable us to have a better understanding of the perceptions of local resi- dents about recent developments. If the government takes a one-sided view or only relies on one type of indicator, it will not have a full grasp of the various compli- cated or intertwined problems that beset Macao. If so, it will not be able to take the necessary initiative to correct the distortions, allowing grievances, discontent, and discord from aggrieved residents to fester. If so, the social fabric will become increasingly fragile, ultimately jeopardizing the social stability of Macao.

References

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DICJa (Various years) Statistics. http://www.dicj.gov.mo/web/en/information/DadosEstat/index. html . Accessed 23 Oct 2012 DSEC (2001) Estimates of gross domestic product: 2000. DSEC, Macao DSEC (2009) Household budget survey: 2007/2008. DSEC, Macao DSEC (2012a) Employed population by industry. http://www.dsec.gov.mo/Predefi nedReport. aspx?ReportID=10 . Accessed 23 Oct 2012 DSEC (2012b) Gross domestic product: 2011. DSEC, Macao DSEC (2012c) Labour force, employed population and unemployed population by sex. http://www. dsec.gov.mo/Predefi nedReport.aspx?ReportID=6 . Accessed 23 Oct 2012 DSEC (2012d) Macao in fi gures: 2012. DSEC, Macao DSECa (Various years) Demographic statistics. DSEC, Macao DSECb (Various years) Employment survey. DSEC, Macao DSECc (Various years) Tourism statistics. DSEC, Macao DSECd (Various years) Yearbook of statistics. DSEC, Macao Ho EHW (2002) Policy address for the fi scal year 2003 of the Macao Special Administrative Region (MSAR) of the People’s Republic of China. http://bo.io.gov.mo/edicoes/en/raem/ lag2003/Default.asp . Accessed 23 Oct 2012 International Monetary Fund (2012) World economic outlook database, October 2012. http:// www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx . Accessed 23 Oct 2012 Leung N, Azevedo T (2011) Macau losing the battle against inequality. Macau Daily Times, March 30. http://www.macaudailytimes.com.mo/macau/23741-Macau-losing-the-battle-against-inequal- ity.html . Accessed 23 Oct 2012 Loi KI, Kim WG (2010) Macao’s casino industry: reinventing Las Vegas in Asia. Cornell Hosp Q 51(2):268–283 Macao Daily News (2008) Economy faces decline council becomes increasingly worried, p A10, 21 November (In Chinese) Macau Daily Times (2011) Tourists spending more time in Macau, December 14. http://www. macaudailytimes.com.mo/macau/32364-Tourists-spending-more-time-Macau.html . Accessed 23 Oct 2012 Macao SAR Government (2001) Legal framework for the operations of casino games of fortune (Law no. 16/2001). (In Chinese) http://bo.io.gov.mo/bo/i/2001/39/lei16_cn.asp . Accessed 23 Oct 2012 MacauNews (2010) Government to limit growth of gaming tables in casinos. November 16. http:// www.macaunews.com.mo/content/view/1105/13/lang,english/ . Accessed 23 Oct 2012 National Development and Reform Commission, PRC (2006) The outline of the eleventh fi ve-year plan for national economic and social development of the People’s Republic of China. (In Chinese) http://www.gov.cn/ztzl/2006-03/16/content_228841.htm . Accessed 23 Oct 2012 National Development and Reform Commission, PRC (2011) The outline of the twelfth fi ve-year plan for national economic and social development of the People’s Republic of China. (In Chinese) http://www.ndrc.gov.cn/fzgh/ghwb/gjjh/P020110919592208575015.pdf . Accessed 23 Oct 2012 Pessanha L (2008) Gaming taxation in Macau. Gaming Law Rev Econ 12(4):344–348 Porter J (1993) The transformation of Macau. Pac Aff 66(1):7–20 Rose IN (2010) Does Macau create legal risks for American operators? Gaming Law Rev Econ 14(6):457–462 Shanghai Municipal Statistics Bureau (2011) Shanghai statistical yearbook: 2011. China Statistics Press, Beijing US Department of State (2002) U.S.–Macau policy report. http://2001-2009.state.gov/p/eap/rls/ rpt/9308.htm . Accessed 23 Oct 2012 Vong FCK, McCartney G (2005) Mapping resident perceptions of gaming impact. J Travel Res 44(2):177–187 Wong HS (2010) A report on the problem of illegal migrant workers in Macao. Macao Daily News, p. C09, April 29 (In Chinese) Xinhuanet (2008) Macao chief says no new casinos for near future, April 23. http://news.xinhuanet. com/english/2008-04/23/content_8031629.htm . Accessed 23 Oct 2012 Chapter 5 Gambling Expansion and Social Change

5.1 Introduction

In the past and even today, as the general public believes that casinos are inherently pernicious, legalizing gambling is usually criticized as a move that will aggravate all kinds of social evils such as crime, prostitution, money laundering, pathological gambling, family strife, alcoholism, drug abuse, triad activity, corruption, juvenile delinquency, and so on. Since Macao had made gambling legal for over one and a half centuries, few protested when the Macao SAR government voiced plans to liberalize the industry by introducing competition. Later, however, when the liberalization policy was put into practice and casinos sprang up like mushrooms, worries were expressed that social stability could be undermined. However, the issue that has attracted the greatest public attention and concern is why some people have received less, or why other people have gained more, than others. From the Marxist perspective, the economic basis of society is formed by the forces of production and the social relationships of production. If follow this view, as the amount of casino capital injected into the economy increased and the economic structure became increasingly lopsided with the domination of the gambling industry, social relationships of production would also change. To what extent has the rapid economic growth that occurred after the implementation of the gambling liberalization policy brought positive social effects or harmed social relationships? How can such effects be measured? Below, these intertwined questions are discussed.

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 103 DOI 10.1007/978-3-642-40749-9_5, © Springer-Verlag Berlin Heidelberg 2014 104 5 Gambling Expansion and Social Change

5.2 Social Evils Became More Complex

5.2.1 Crime Rate

The mushrooming of casinos, gambling tables, and slot machines, and also the rapid upsurge in the number of tourists (many of them gamblers) inevitably led to worries about social order and public security. As mentioned in Chap. 3 , before the hando- ver Macao was beset by rampant criminal activities. Kidnappings, bomb attacks, gang fi ghting, arson, and attempted assassinations were constantly occurring (Pinto 2008). After the handover, as the Macao government moved to take strong measures to restore public security, all sorts of criminal activities quickly receded. As such, when the government announced its intention to liberalize the gambling market and more casinos were opened, there was speculation that public security would worsen ( Jornal do Cidadão 27 January 2005 ) . If we take the overall crime rate for illustration, the argument of some proponents of gambling that making gambling lawful (or more liberalized) do not necessary lead to a large increase of crime seems valid in some sense (Rephann et al. 1997 ; Stitt 2000 ). As shown in Table 5.1 and Fig. 5.1, the overall trend was fl uctuating, not spiking upward. Specifi cally, in the fi rst 2 years after the handover, the number of reported crimes per 100,000 population dropped from 2,156 in 1999 to 2,038 in 2000 and 2,039 in 2001. The year that casino gambling was liberalized, the overall crime rate went up, at fi rst slightly but later sharply. For instance, from 2002 to 2006, the rate ranged between 2,058 and 2,221. In 2007 and 2008, it jumped to 2,430 and

Table 5.1 Rates of criminal offences, 1999–2011 Type of offence Overall Crime against Crime against Crime against Crime against Year crime rate person property the territory life in society Others 1999 2,156.0 365.2 1,281.0 182.3 169.2 158.3 2000 2,038.1 406.0 1,090.9 152.3 189.8 199.1 2001 2,039.2 430.7 1,074.7 131.9 168.8 233.1 2002 2,057.8 460.6 1,098.0 136.5 151.7 211.0 2003 2,220.7 528.1 1,218.9 159.4 132.3 182.0 2004 2,115.4 504.5 1,078.0 179.6 176.4 176.8 2005 2,159.0 486.8 1,170.9 143.8 191.6 165.9 2006 2,128.8 494.2 1,079.8 137.7 250.6 166.5 2007 2,429.7 519.0 1,285.3 167.0 267.0 191.4 2008 2,552.8 498.4 1,422.9 162.6 167.4 301.4 2009 2,326.3 469.7 1,211.7 187.5 126.6 330.8 2010 2,154.8 457.3 1,127.5 160.4 122.3 287.5 2011 2,244.7 435.6 1,270.2 171.3 120.2 247.4 Sources: Calculations are based on DSEC (2012 ); DSECa (various years ) Note: Crime rate = Crimes per 100,000 population (year-end) 5.2 Social Evils Became More Complex 105

3,000 3,000 2,552.8 2,500 2,500 2,156.0 2,220.7 2,159.0 2,429.7 2,244.7 2,039.2 2,326.3 2,154.8 2,000 2,057.8 2,115.4 2,128.8 2,000 2,038.1 2,028

1,500 1,601 1,655 1,500 1,506

1,093 (Number) 1,279 1,000 1,000 823 979 (Per 100,000 population) 500 500 414

0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Overall crime rate Number of gambling-related crimes

Fig. 5.1 Overall crime rate and number of gambling-related crimes, 1999–2011 (Sources: Calculations are based on DSEC 2012 ; DSECa various years ; Judiciary Police various years )

2,553, respectively. Then, from 2009 to 2011, it dropped notably to 2,326, 2,155, and 2,245, respectively. Comparatively speaking, although the latest overall crime rates were still higher than those before the opening up of the gambling industry, the Macao government concluded that “Macao is a peaceful, safe city with a much lower crime rate than many other cities around the world” (Government Information Bureau 2010 , p. 305). Although the overall crime rate seems to indicate that there were no enduring negative effects on crime after the deregulation of the gambling industry, there was a drastic and continuous increase in criminal activities relating to gambling as more casinos opened after 2002. For instance, according to the Macao criminal investiga- tion department, the Judiciary Police (Polícia Judiciária), in 2003 there were 414 reported cases of crime related to gambling.1 However, in 2004 the number doubled to 823 and then rose further to 1,093 in 2005. In 2006, the fi gure dropped a little, but in subsequent years it rose more rapidly. In 2011, gambling-related crimes totalled 2,028, an increase of 390 % in less than a decade (Fig. 5.1 ). From this data, it can be said without doubt that crimes related to gambling rose continuously after the implementation of the gambling liberalization policy.

1 The Judiciary Police has set up a Gaming-related Crimes Division (Divisão de Investigação de Crimes relacionados com o Jogo) to prevent and investigate crimes with an unknown culprit liable to a maximum term of imprisonment exceeding 3 years, crimes committed inside casinos and other gaming venues, or gambling-related crimes committed around those facilities. For details, see the Judiciary Police’s webpage on organizational structure. 106 5 Gambling Expansion and Social Change

As the economy is heavily reliant on the gambling industry, with most tourists arriving for gambling entertainment, it would seem predictable and inevitable that criminal activities relating to gambling should become more frequent. What the public truly feared, however, was the possible exacerbation of other gambling- related evils. Among others, the following questions were asked: Will there be a great deal of money laundering? Will corruption become uncontrollable? Will family strife worsen? Will juvenile delinquency become rampant? Will the number of pathological gamblers increase? As rampant corruption could undermine public governance, and increasing divorce rates, juvenile crime rates, and pathological gambling could endanger the family, thus shaking the foundation of a society, we examine the data on these problems for further analysis.

5.2.2 Suspicious Transaction Reports

Massive fl ows of gambling money have made Macao a target for illicit money laun- dering. Efforts to combat money laundering and terrorist fi nancing by authorizing the government to confi scate assets or proceeds derived from criminal activities can be traced back to the early 1990s. The Decree-Law No. 24/98/M of 1998 further stipulated that reporting is mandatory when suspicious transactions are detected (Macao Government 1998 ). In 2006, Macao passed anti-money laundering and counter-terrorist fi nancing legislation,2 and established the Financial Intelligence Offi ce (Gabinete de Informação Financeira, hereafter GIF) to collect, analyze, and disseminate information on suspicious transactions that might point to money laundering and terrorist fi nancing.3 The total number of suspicious transaction reports (hereafter STRs) received by the GIF as well as the share of STRs reported by gambling operators are summarized in Fig. 5.2 . Both the rising trend of reported STRs and the increasing proportion of gambling-related STRs are obvious. During the period 2006–2011, while the total number of STRs tripled from 541 to 1,563, the percentage of gambling-related STRs also soared from 15.5 to 69.2 %. In 2011, a total of 190 STRs were sent to the Public Prosecutions Offi ce (Ministério Público) for further investigation (GIF 2012 , p. 1). Whether such increases refl ect a worsening situation or increasing success in reporting illegal activity has yet to be examined. According to an allegedly leaked

2 For details, see Law No. 2/2006 entitled Prevention and Suppression of the Crime of Money Laundering and Law No. 3/2006 Prevention and Suppression of the Crimes of Terrorism (Macao SAR Government 2006a , b ). 3 In 2005, the US Department of the Treasury ( 2005 ) designated Banco Delta Asia as a “primary money laundering concern” under the Patriot Act. This Macao-based bank was deemed to be a tool for the North Korean regime to transfer illicit funds. It is believed that this move led the Macao government to tighten its control over fi nancial transactions and join international anti-money laundering organizations. 5.2 Social Evils Became More Complex 107

1,800 80 69.2 66.3 66.7 1,600

1,400 51.6 52.9 481 60 1,200 406 1,000 389 40 800 (%) (Number) 395 600 351 20 400 15.5

200 457 374 443 767 814 1,082 0 84 0 2006 2007 2008 2009 2010 2011

By gambling operators By others Gambling-related

Fig. 5.2 Number of STRs and share of gambling-related STRs, 2006–2011 (Sources: Calculations are based on GIF 2012 ; GIFa various years )

US diplomatic cable entitled “The Macau SAR Economy at 10: Even Jackpots Have Consequences”, the phenomenal success of the casino sector is “based on a formula that facilitates if not encourages money laundering”, i.e., the heavy dependence on VIP gambling operators,4 known as junket operators, who “arrange visas, supply local currency fi nancing and provide access to VIP gaming rooms in Macau casinos”. Although junket operators are subject to regulation, they allegedly work closely with organized crime groups in the mainland to identify customers and collect debts. 5 Junket operators allow players to avoid identifi cation. Know-your- customer and record-keeping requirements are thus signifi cantly looser than in other interna- tional gambling venues. The document stated that “oversight of both casinos and junket operators is limited and remains a serious weakness in Macau’s AML [anti- money laundering] regime. Periodic tightening of Chinese Individual Visitor Scheme permit requirements may refl ect Chinese government concern about cor- rupt offi cials laundering money in Macau” (WikiLeaks 2011 ).6

4 VIP gambling is estimated to account for over 70 % of total gambling revenue in Macao in 2012 (South China Research Limited 2012 , p. 1). 5 See also Leong (2002 ), Lo (2005 ), and Rose (2010 ) for the connections among Macao’s VIP gambling rooms, junket operators, and organized crime groups. 6 The cable was allegedly sent by the Consulate General of the US in Hong Kong to the US Department of State in December 2009 and released by the WikiLeaks (reference ID: 09HONGKONG2313) in August 2011. 108 5 Gambling Expansion and Social Change

5.2.3 Corruption

Before the handover, the colonial government was characterized by bureaucratic corruption and close relationships with casino capitalists (Lo 2005 ). The Commission Against Corruption (Comissariado contra a Corrupção, hereafter CCAC) was established in December 1999 to combat this lingering problem and carry out ombudsman functions. According to statistics announced by this public entity, the total number of cases that it handled increased rapidly from 978 in 2000 to 1,265 in 2001. The fi gure then declined to 1,116 in 2002 and 1,077 in 2003. However, in 2004, the number of cases shot up again to 1,227. Since then, there has been a steady drop in cases from 1,109 in 2005 to 681 in 2010. The main reason for the notable increase in 2009 (923 cases) was the Legislative Assembly (Assembleia Legislativa) election held in that year, which resulted in a higher number of reports and complaints (Table 5.2 ). Not all of the cases handled by the CCAC were corruption cases. If we look at the columns showing cases under investigation, we see a similar trend. Both criminal cases and administrative complaints did not rise uncontrollably after the introduction of the gambling liberalization policy. According to the CCAC (2010, p. 11), the dramatic increase in the number of administrative complaints in 2010 was probably due to their recommendations to the public that were issued that year concerning the administrative irregularities and illegalities of government departments, which allowed the people to better understand the role of the CCAC in monitoring the legality of public administration. In sum, we can see that although in some years the total number of cases handled by

Table 5.2 Number of cases recorded by the CCAC, 2000–2010 Qualifi ed cases Commenced for investigation Handled Referred Total number Criminal Administrative by informal to other Unqualifi ed Year of complaints cases complaints methods departments casesa 2000 978 83 52 – 60 783 2001 1,265 112 22 5 64 1,062 2002 1,116 115 16 9 59 917 2003 1,077 85 5 626 28 333 2004 1,227 75 1 362 81 708 2005 1,109 69 1 286 39 714 2006 840 54 3 292 31 460 2007 736 66 9 251 43 367 2008 796 31 5 295 – 465 2009 923 44 4 187 27 661 2010 681 88 385 121 – 87 Sources: Calculations are based on CCAC (various years ); Kwong (2011 , p. 22) a Unqualifi ed cases were mainly those beyond the scope of the CCAC’s powers or the information was insuffi cient for a follow up 5.2 Social Evils Became More Complex 109 the CCAC, both criminal cases and administrative complaints, increased signifi cantly, the overall trend has not been one of escalation. In other words, it cannot be said that there are clear signs of rampant corruption in Macao.7

5.2.4 Divorce Rate

Statistically, although there has been no sign of a worsening of corruption after the gambling liberalization policy, there does indeed seem to have been a rise in family strife, as refl ected in the divorce rate. Since the return to Chinese sover- eignty, Macao’s total population has increased steadily, as compared with that of the colonial period, from around 429,600 in 1999 to 557,400 in 2011. Within a period of 13 years, the total population rose by 29.7 %. However, if we look at the divorce rate, we see that this rose far more rapidly, from 0.7 ‰ in 1999 to 1.8 ‰ in 2011 (Fig. 5.3 ). During the same period, the divorce rate had risen by 157.1 %. Clearly, the increase in the divorce rate has been far greater than the increase in the population. However, we should point out that the current divorce rate in Macao is still far lower than in many Western societies. Also, we should bear in mind that the continuous rise in the divorce rate is nearly a worldwide phenomenon for multiple interlocking reasons, such as the liberalization of norms concerning individual choice, the growing independence of women, the desacralization of and greater freedom in marriage, and the passage of more liberal laws and easier legal procedures for getting a divorce (Giddens 1993 ; Cherlin 2004 ). A drastic increase in the number of “cross-border marriages” and “old-husband young-wife marriages”, which have recently become prevalent in Macao and Hong Kong, is also considered a critical factor in the rising divorce rate (People’s Daily Online 2007 ; Hong Kong Council of Social Service 2008 ; Yuen 2010 ; Ta Kung Pao 28 May 2012). In other words, apparently worsening marriage relationships may not be directly related to the gambling liberalization policy, but to other factors. Nevertheless, the continuous and drastic increase in the divorce rate is still a critical problem, especially its consequences, such as the increased risk of poverty and problems for the children of divorced parents (Ambert 2009 ), which the administration should address with great care.

7 The arrest in 2006 of Ao Man-long, former Secretary for Transport and Public Works (Secretário para os Transportes e Obras Públicas), and his later convictions aroused great public concern about the problem of corruption. Ao was fi rst convicted in January 2008 and sentenced to 27 years for taking bribes to ensure contracts would go to particular developers on dozens of public-works projects and money laundering. His sentence was extended to 28.5 years when he was convicted of an additional 24 graft charges in April 2009 ( The Wall Street Journal 2012 ). Ao was back to court in April 2012 to face further charges of taking bribes in exchange for public works contracts and land lots near the airport ( Macau Daily Times 17 April 2012 ). Some critics suggested that Ao could not have been the only offi cial involved, implying that the problem of corruption in society was more widespread and more serious than expected ( BBC News 2008 ). 110 5 Gambling Expansion and Social Change

600 2.0 1.7 1.8 1.8 500 1.5 1.6 1.3 1.2 1.2 1.2 1.4 400 1.0 1.0 1.2

0.9 )

300 0.8 0.8 1.0 ‰ 0.7 ( 0.8 (Thousands) 200 0.6 0.4 100 437.9 441.6 462.6 509.9 543.1 540.6 0.2 429.6 436.7 446.7 488.1 531.8 533.3 557.4 0 0.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year-end population Divorce rate

Fig. 5.3 Number of population and the divorce rate, 1999–2011 (Sources: Calculations are based on DSEC 2012 ; DSECa various years )

5.2.5 Juvenile Delinquency

Apart from the rising divorce rate, the increasingly complicated problem of juvenile delinquency has also aroused public concern. According to the Education and Youth Affairs Bureau (Direcção dos Serviços de Educação e Juventude, hereafter DSEJ), the total number of offenders below the age of 21 was 617 in 2003, 676 in 2004, and 773 in 2005, which represented an increase of 9.6 % in 2004 and 14.3 % in 2005. These rates of increase were far higher than those for people 21 years old and above. The juvenile crime rate dropped by 4.7 % in 2006, then shot up again by 21.6 % in 2007. Such a fl uctuation was clearly greater than that seen in the rate of crimes com- mitted by adults. In 2008, juvenile offenders rose more slowly than adult offenders (8.6 % vs 10.3 %) but also fell more quickly in 2009 (−32.4 % vs −6.1 %). However, in 2010, although the numbers of juvenile and adult offenders both fell, the rate at which the former dropped was slower than the latter, i.e., −0.5 % vs −4.5 % (Table 5.3 ). Clearly, since 2009, both juvenile and adult crimes have fallen. According to the analysis of the Prosecutor General (Procurador) Ho Chio-meng ( 2007 ), the situation regarding juvenile crime in Macao has deteriorated, mainly in the following fi ve aspects: (1) an increase in the number of crimes; (2) increasingly younger offenders; (3) many juveniles committed crimes only out of a desire to seek excitement; (4) an increase in the number of crimes committed by juvenile females; and (5) an increase in the seriousness of drug-related crimes. Just as the factors contributing to a rising divorce rate are complex, so are the reasons behind the rise and fl uctuations in the juvenile crime rate. Broken families, peer pressure, and worsening social morals are frequently cited causes. As the problem 5.2 Social Evils Became More Complex 111

Table 5.3 Number of juvenile and adult offenders, 2003–2010 Below 21 years old 21 years old and above Year Number % change Number % change 2003 617 – 9,122 – 2004 676 9.6 9,163 0.4 2005 773 14.3 9,790 6.8 2006 737 −4.7 10,217 4.4 2007 896 21.6 12,010 17.5 2008 973 8.6 13,247 10.3 2009 658 −32.4 12,438 −6.1 2010 655 −0.5 11,884 −4.5 Source: Calculations are based on DSEJ (2012b )

Table 5.4 Number of registered youth organizations, 2004–2011 Types 2004 2005 2006 2007 2008 2009 2010 2011 Youth organizations 32 32 34 36 47 51 56 60 Student societies 6 6 6 6 6 7 7 7 Youth centres 8 9 9 9 9 9 9 9 Affi liated youth organizations 65 65 65 64 65 65 65 65 Total 111 112 114 115 127 132 137 141 Source: DSEJ (2012a ) of juvenile delinquency became serious, the Macao government began paying more attention to it. Since 2007, the government has been putting more resources into addressing the issue. The government has established more youth organizations to prevent young people from going astray by providing ways for them to expend their energy and a healthy environment for them to grow up. If we examine the changes in the past few years in the number of registered youth organizations (including youth organizations, student societies, youth centres, and affi liated youth organizations) (Table 5.4 ), it would seem that this approach has had some positive results. For instance, from 2004 to 2007 (the period during which juvenile crime rose far more quickly than adult crime), the total number of registered youth organizations only increased slightly from 111 to 115. Starting in 2008, the number of registered youth organizations rose signifi cantly, and more resources were also provided. In subsequent years, juvenile crimes fell more obviously than adult crimes. At the moment, although there has been no research on the effect of youth organizations on the prevention of juvenile delinquency, it seems that as the number of registered youth organizations went up in 2008, juvenile crime dropped subsequently.

5.2.6 Pathological Gambling

The Social Welfare Bureau (Instituto de Acção Social) commissioned the University of Macau to conduct three rounds of territory-wide surveys on the participation of local residents in gambling activities in 2003, 2007, and 2010. The estimation of the 112 5 Gambling Expansion and Social Change

800 3.0 2.6 700 2.8 2.5 120 600 1.8 2.0 500 97 77 68 96 400 1.5 (%)

(Number) 300 52 1.0 200 0.5 100 572 467 418 440 373 234 0 0.0 2003 2006 2007 2008 2009 2010 2011

Case counselling Hotline counselling Pathological gambling prevalence rate

Fig. 5.4 Pathological gambling prevalence rate and counselling services provided, 2003–2011 (Sources: Fong and Ozorio 2010; Resilience Centre various years) (Note: Figures exclude non-g ambling cases) prevalence of pathological gambling was based on the fourth edition of the Diagnostic and Statistical Manual of Mental Disorder (DSM-IV). 8 The fi ndings reveal that although the participation rate of local residents in gambling activities has dropped from 67.9 to 59.2 % and then 55.9 %, there was a slight increase in the prevalence rate of pathological gambling—from 1.8 to 2.6 % and then 2.8 %. The odds of becoming a pathological gambler are 3.3 times greater for men than for women, and 7.0 times greater for those who have participated in local casino gambling, as compared with those who have not (Fong and Ozorio 2010 ). The scholar in charge of the study also stressed that work on responsible gambling has just started in Macao and that there is a very long way to go—at least 10–20 years until it may be possible to bring the city back to the pre-liberalization condition, when pathological gamblers accounted for less than 2 % of the population (Macau Daily Times 7 February 2011 ). The Social Welfare Bureau established the Resilience Centre (Casa de Vontade Firme) in November 2005 to provide counselling services, including face-to-face case counselling and hotline counselling, to gamblers and members of their family who have been harassed by gambling problems. As shown in Fig. 5.4 , there has been a downward trend in the number of people seeking help for both types of services, while the prevalence rate for pathological gambling has been on a generally upward trend.

8 Pathological gambling was added to the DSM in 1980. In DSM-IV, it is classifi ed under “Impulse- Control Disorders Not Elsewhere Classifi ed”, along with compulsive stealing and hair pulling. The American Psychiatric Association has proposed renaming pathological gambling a “Gambling Disorder” and reclassifying it under “Addiction and Related Disorders” in its forthcoming DSM-5 (American Psychiatric Association 2000 , 2012 ). 5.3 Mixed Views on Social Problems and Public Security 113

To sum up, although some objective indicators show that gambling-related crimes and the divorce rate have increased drastically and continuously after the implemen- tation of the gambling liberalization policy, some statistics show no worsening trend. Some kinds of data, however, indicate that certain types of social evils have become more complex and less easy to identify. As discussed earlier, in some cases, objective indicators may not always be suffi cient to explain a variety of intertwined socio-economic-political phenomena. Hence, in subsequent paragraphs, subjective indicators such as the perceived seriousness of social problems; class identity; and satisfaction with social stability, equality, and integrity will be cited for further illus- tration, to enable a better understanding of the role played by the expansion of gambling in bringing about social change.

5.3 Mixed Views on Social Problems and Public Security

5.3.1 Seriousness of Social Problems

One of the major public concerns about the gambling liberalization policy was that it would aggravate various types of social problems. Although certain aforemen- tioned objective indicators have shown that this was not the case, public worries could not be dispelled. In our longitudinal territory-wide survey, the respondents were asked to assess the degree of seriousness of various kinds of social problems, including gambling, youth, drugs, sex and pornography, and moral decay. Their responses were coded on a fi ve-point scale ranging from “not serious at all” to “very serious”, with individual scores ranging from 1 to 5. The higher the score was, the higher the degree of perceived seriousness. It is evident that, notwith- standing the enormous contribution of the gambling industry to the local economy and public coffers, the problem of gambling has been assessed as more serious than the other four problems (Table 5.5). The proportion of respondents who recognized gambling as a serious social problem amounted to 63.0, 72.7 and 70.7 % in 2005, 2007, and 2009, respectively. By contrast, the corresponding fi gures for moral decay were 32.5, 43.1, and 41.8 %. Clearly our respondents considered the prob- lem of gambling to be far more serious than that of moral decay. They became increasingly concerned about the problem from 2005 to 2007, but somewhat less so from 2007 to 2009. The seriousness mean score yields an estimate of the average perceived serious- ness of each selected social problem. One-way analysis of variance (hereafter ANOVA) tests were undertaken to examine the statistical signifi cance of the inter- group differences. As indicated in Table 5.5 , public awareness of social problems has been relatively high. All of the seriousness mean scores were above the mid- point of the fi ve-point scale. The highest score was for the perceived seriousness of gambling in 2007 (4.02), while the lowest was that for moral decay in 2005 (3.24). Except for 2005, the relative rankings of these fi ve social problems were very consistent. The problem of gambling generally ranked at the top, followed by youth 114 5 Gambling Expansion and Social Change

Table 5.5 The perceived seriousness of social problems (mean score) Year Overall GEI GRI GNI ANOVA test Gambling 2005 3.76 3.81 3.79 3.72 n.s. 2007 4.02 4.06 4.09 3.93 * 2009 3.94 3.93 3.98 3.91 n.s. Youth 2005 3.82 3.77 3.84 3.80 n.s. 2007 3.97 3.98 3.97 3.95 n.s. 2009 3.94 3.90 3.92 4.02 n.s. Drugs 2005 3.63 3.57 3.68 3.58 n.s. 2007 3.80 3.82 3.84 3.76 n.s. 2009 3.80 3.86 3.75 3.80 n.s. Sex and pornography 2005 3.61 3.58 3.62 3.61 n.s. 2007 3.77 3.77 3.79 3.74 n.s. 2009 3.71 3.77 3.67 3.69 n.s. Moral decay 2005 3.24 3.22 3.24 3.26 n.s. 2007 3.47 3.48 3.47 3.47 n.s. 2009 3.42 3.45 3.38 3.46 n.s. * p < 0.05 Note: Perceived seriousness: 1 = not serious at all, 2 = not serious, 3 = neutral, 4 = serious, and 5 = very serious problems (which topped the list in 2005), drugs, sex and pornography, and moral decay. During the period 2005–2009, a similar pattern of change—deteriorating signifi cantly in 2007 and remaining relatively stable afterwards—was found for all of the fi ve selected problems. Social problems are inherently subjective. In a pluralistic society, people may have different perceptions of social problems arising from differences in their social positions, experiences, and expectations. However, the three groups of respondents, i.e., GEI, GRI, and GNI, differed slightly in their evaluations of the seriousness of the problems of gambling, youth, drugs, sex and pornography, and moral decay. All of them tended to see these fi ve social problems in a critical light. The only signifi cant difference was in their perception of gambling in 2007. In that year, both GRI and GEI respondents showed a greater tendency to make negative assessments of gambling than GNI respondents—their corresponding seriousness mean scores were 4.09, 4.06, and 3.93. In sum, after the introduction of the gambling liberalization policy, most of the respondents felt that various social problems had become worse. The problems of gambling and youth topped the list and aroused the greatest public concern. Drug problems and sex and pornography problems followed, while the problem of moral decay ranking at the bottom of the list. However, out of a total of 15, only one seriousness mean score of over 4 was found for the problem of gambling in 2007. The relatively steady fi gures on the perceived seriousness of all problems since 2007 may indicate that people did not think that these social problems had spiraled out of control. In our survey, since we did not ask our respondents to offer an opinion on “who is to blame”, we did not know what they thought on this issue. However, a telephone poll conducted in 2009 revealed that 64.6 % of the respondents considered the 5.3 Mixed Views on Social Problems and Public Security 115

Macao government to be most to blame for various social problems. Other agents were pointed to as bearing some responsibility, but to a much lesser extent, for example, foreign investment (13.4 %), local gambling operators (6.8 %), and mainland tourists (4.3 %) (Lam 2011 ).

5.3.2 Public Security Situation

In addition to evaluating various social problems, we also asked our respondents to comment on public security, as one of the concerns was a deterioration in public order as casinos proliferated. In the 2005, 2007, and 2009 surveys, when the respon- dents were asked to give their views on public security at the time and 3 years ear- lier, a clear trend of improvement and then of decline was identifi ed. For instance, in 2005 over half (53.0 %) of the respondents regarded Macao’s public security situ- ation as better than it had been 3 years earlier, only 17.4 % thought the opposite, while the remaining 29.7 % took a neutral stance. In 2007 and 2009, those who considered that public security in Macao had improved dropped to 38.3 and 27.8 %, while those who considered that it had worsened rose to 32.2 and 37.8 %, respec- tively (Table 5.6 ). In other words, although most of the respondents felt that public security had changed for the better in the early years following the implementation of the gambling liberalization policy, they also sensed a steady decline afterwards. If we compare the views of the three groups of respondents on public security, we can see that intergroup variations were not statistically signifi cant in 2005 and 2007. But in 2009, GNI respondents were clearly more concerned about the prob- lem than both GEI and GRI respondents, while the views of the latter two were increasingly similar. For example, the percentage of GEI respondents who thought that public security was worse than 3 years ago rose from 13.1 % in 2005 to 29.1 % in 2007 and then to 34.9 % in 2009. However, the corresponding fi gures for GNI respondents rose from 18.3 % in 2005 to 35.3 % in 2007 and then to 44.5 % in 2009 (Table 5.6 ). Clearly, the issue of public security was a growing concern among the respondents, particularly those working in the GNI sector.

Table 5.6 Public security situation when compared to 3 years ago (%) Year Overall GEI GRI GNI χ 2 test 2005 Better than 3 years ago 53.0 52.5 52.7 53.5 n.s. The same 29.7 34.4 29.5 28.2 Worse than 3 years ago 17.4 13.1 17.8 18.3 2007 Better than 3 years ago 38.3 40.2 40.3 34.9 n.s. The same 29.5 30.7 28.5 29.8 Worse than 3 years ago 32.2 29.1 31.1 35.3 2009 Better than 3 years ago 27.8 30.2 31.1 21.4 ** The same 34.5 34.9 34.5 34.1 Worse than 3 years ago 37.8 34.9 34.5 44.5 ** p < 0.01 116 5 Gambling Expansion and Social Change

Table 5.7 Public security situation when compared to 3 years later (%) Year Overall GEI GRI GNI χ 2 test 2005 Better than present 35.9 24.7 40.0 34.8 *** The same 39.8 57.6 37.3 36.6 Worse than present 24.3 17.7 22.7 28.6 2007 Better than present 24.1 27.0 28.4 17.8 *** The same 42.6 43.0 42.2 42.8 Worse than present 33.3 30.0 29.4 39.4 2009 Better than present 22.4 24.2 26.8 15.4 *** The same 49.4 48.8 49.3 50.0 Worse than present 28.2 27.0 23.9 34.6 *** p < 0.001

Apart from asking our respondents to make backward-looking comparisons, we also asked them to make a forward-looking comparison by estimating what the public security situation would be like 3 years later. To our surprise, the largest group comprised those who considered that public security would not change—i.e., it would get neither worse nor better. For instance, in 2005, those respondents who thought that public security 3 years later would be better, unchanged, and worse comprised 35.9, 39.8, and 24.3 %, respectively. In 2007 and 2009, those who thought that public security would be better in 3 years dropped to 24.1 and 22.4 %, while those who answered “the same” rose to 42.6 and 49.4 %, respectively. The proportion of those who considered that public security would become worse in 3 years went up to 33.3 % in 2007 but fell to 28.2 % in 2009 (Table 5.7 ). Obviously, when compared to their views of the public security situation 3 years ago, although more respondents thought that public security would get worse 3 years later, a greater proportion did not seem to be strongly pessimistic about the situation. The three groups of respondents differed signifi cantly and consistently in their anticipation of public security. Cross-tabulation data showed that GNI respondents were the most pessimistic about public security in the future, while GEI and GRI respondents were less pessimistic about it. For instance, the percentage of GNI respondents who thought that public security would be worse 3 years later rose from 28.6 % in 2005 to 39.4 % in 2007 and then dropped somewhat to 34.6 % in 2009. The corresponding fi gures for GEI respondents were 17.7, 30.0, and 27.0 %. Another noteworthy point was that GRI and GNI respondents who answered that public security in the future would be the same rose steadily from below 40 % in 2005 to around 50 % in 2009, while the percentage of GEI respondents who gave the same answer fell from 57.6 % in 2005 to 48.8 % in 2009 (Table 5.7 ). As with the objective indicators presented in the previous section, both consen- sual and diverse views were seen for the subjective evaluations of social problems and public security. During the surveyed period, although most of the respondents asserted that all of the selected social problems had become more serious, they tended to accept that these problems were not out of control. By contrast, although a larger proportion of the respondents considered that public security was better 5.4 Class Identity and Relative Income 117 than in previous years, there was a drastic and continuous decline in the proportion of those who held such a view. In short, the saying that various social problems in Macao have become increasingly intertwined, complicated, and diffi cult to understand seems irrefutable.

5.4 Class Identity and Relative Income

5.4.1 Subjective Class Position

Proponents of the legalization of casino gambling or of the liberalization of the gambling business have argued that gambling can stimulate economic growth and create jobs. Changes in the unemployment rate and median occupational income are seen as key indicators for measuring the outcome of the policy, which seems to be favourable in the case of Macao (see Chap. 4 ) Furthermore, from a sociological point of view, if more job opportunities are created, this could lead to greater room for upward social mobility, making the goals of economic prosperity and social stability more achievable. In our survey, all of the working respondents were asked to assess their class position. The results from the three surveys seemed to suggest a trend of gradual upward social mobility. For instance, in 2005, 19.3 % of the respondents consid- ered that they belonged to the lower class, while 37.3 and 43.4 % identifi ed with the lower-middle class and the middle class or above, respectively. In 2007 and 2009, those who answered that they were in the lower class dropped to 17.2 and 15.9 % respectively, while those identifi ed with the lower-middle class dropped to 30.5 % in 2007 but rose slightly to 32.2 % in 2009. The percentage of those iden- tifying with the middle class or above rose to 52.3 % in 2007 and then dropped slightly to 51.8 % in 2009 (Table 5.8 ). After the gambling liberalization policy, upward social mobility was probably enhanced, even though the momentum has recently slowed. In the three surveys, respondents working in GEI, GRI, and GNI differed signifi - cantly in their subjective class position. First, the percentage of GRI respondents identifying with the lower class remained relatively higher, and the percentage iden- tifying with the middle class or above lower. Second, compared to GRI respondents, fewer GEI respondents considered that they belonged to the lower class. Yet, con- trary to expectations, the proportion of GEI respondents who considered themselves as belonging to the middle class or above witnessed a gradual decline—from 56.8 % in 2005 to 53.3 % in 2007 and 50.5 % in 2009. Third, notwithstanding the sudden cooling down of the local economy after the fi nancial tsunami, the proportion of GNI respondents who identifi ed with the middle class or above kept expanding from 45.8 to 55.5 % and 57.8 % (Table 5.8 ). Based on the above data alone, it is evident that the gambling liberalization policy has had a more positive effect on the class identity of GNI and GRI respondents than of the GEI respondents. 118 5 Gambling Expansion and Social Change

Table 5.8 Subjective class position (%) Overall GEI GRI GNI χ 2 test 2005 Middle or above 43.4 56.8 37.7 45.8 *** Lower-middle 37.3 28.6 40.5 36.3 Lower 19.3 14.6 21.8 17.9 2007 Middle or above 52.3 53.3 48.9 55.5 *** Lower-middle 30.5 36.1 28.4 29.4 Lower 17.2 10.7 22.7 15.1 2009 Middle or above 51.8 50.5 48.1 57.8 *** Lower-middle 32.2 36.5 31.8 29.4 Lower 15.9 13.0 20.2 12.8 *** p < 0.001

5.4.2 Relative Income

Apart from class identity, we asked our respondents to compare their occupational income with that of other Macao residents. Although the majority thought that their income was “almost the same”, those who considered their earnings to be “below average” outnumbered those who considered their income to be “above average”. The pattern seemed to refl ect a persistent phenomenon that a bigger proportion of the residents thought that other people were benefi ting more than themselves after the gambling liberalization policy than the proportion that considered themselves to be greater-than-average benefi ciaries. However, the gap (percentage point differ- ence) has narrowed from 27.2 in 2005 to 22.4 in 2007 and 14.0 in 2009 (Table 5.9 ). Looking closer, we fi nd sharp contrasts among the three groups of respondents. First, the proportion of GEI respondents who considered their income to be “below average” was signifi cantly lower than that of GRI and GNI respondents, while the proportion of GRI respondents remained the highest. Second, the distribution of GEI respondents regarding self-perceived relative income was comparatively sta- ble, albeit with a slight increase in those who believed their income to be almost the same as that of other Macao residents (from 62.6 to 67.5 %). The changes involving GRI respondents in this respect were the most positive—those who assessed their income to be below average dropped continuously from 43.9 to 35.4 %, and those who considered their income to be above average rose from 5.5 to 10.4 %. Third, GNI respondents were inclined to be optimistic—those who regarded their income to be average increased from 50.1 to 59.6 %, and those who considered their income to be below average fell steadily from 36.5 to 24.9 % (Table 5.9 ). In a nutshell, not only did class identity among the three groups of respondents differ, self-perceived occupational income also varied. Since the proportions of those respondents, particularly GRI and GNI respondents, who thought that they earned less than others were greater than of those who felt that they earned more than others, this could indicate that some of the respondents had overestimated the benefi ts to be brought by the gambling liberalization policy, especially those working in the industry. In fact, as the economy became more buoyant after the liberalization policy, frequent outcries were heard about the widening wealth gap. The government was 5.4 Class Identity and Relative Income 119

Table 5.9 Self-perceived occupational income compared to other Macao residents (%) Overall GEI GRI GNI χ 2 test 2005 Above average 10.4 18.7 5.5 13.4 *** Almost the same 52.0 62.6 50.6 50.1 Below average 37.6 18.7 43.9 36.5 2007 Above average 9.3 13.6 6.7 9.6 *** Almost the same 59.0 68.4 52.8 60.3 Below average 31.7 18.0 40.5 30.1 2009 Above average 13.3 15.3 10.4 15.6 *** Almost the same 59.4 67.5 54.3 59.6 Below average 27.3 17.2 35.4 24.9 *** p < 0.001

faced with increasing social discontent over the exponential rise in government rev- enues from taxes on gambling while many of the residents, especially ordinary people who were not engaged in the gambling industry or related industries or the public sector, were not sharing much of the benefi ts. In response, the Macao govern- ment announced an unprecedented “Wealth Partaking Scheme”, offering every Macao permanent resident (of any age) a cash handout of MOP5,000 in 2008. Non- permanent residents were also eligible to apply for the Scheme, but were limited to a handout of MOP3,000. In subsequent years, not only was the Scheme maintained, but the amount of cash offered was even increased. For instance, in both 2009 and 2010, the govern- ment offered each permanent resident of Macao a sum of MOP6,000, while in 2011 and 2012 the amounts were MOP4,000 and MOP7,000, respectively. For non- permanent residents, the corresponding cash handouts were MOP3,600, MOP2,400, and MOP4,200 ( Macao SAR Government various years). To a certain extent, the cash handout policy has become a “regular transfer”. The move has not only attracted international attention but has also prompted the Hong Kong SAR govern- ment (2012 ) to take a similar measure by offering each Hong Kong permanent resi- dent aged 18 and above a sum of HK$ 6,000 in 2011. If we take a household consisting of four members (all permanent residents) as an example, in the 5 years from 2008 to 2012 this household could receive a total of MOP112,000, which is indeed an attractive windfall for the household, particularly as the sum would be tax-free. In addition to the Wealth Partaking Scheme, the Macao government signifi cantly increased its expenditures on social welfare. For example, the annual subsidy for senior (aged 65 and above) permanent citizens rose from MOP1,200 in 2005 to MOP1,500 in 2006, MOP1,800 in 2007, MOP5,000 in 2009, and then MOP6,000 in 2012. In addition to the cash handout subsidy and the senior resident subsidy, the Macao government launched a number of other kinds of cash subsidies such as the electricity fee subsidy, telephone fee subsidy, transportation subsidy, health care subsidy, education subsidy, on-the-job training subsidy, and so on. There was also a tax reduction or exemption (rebate) and a mortgage tax subsidy specifi cally designed to help the middle class. Without doubt, the approach to redistributing public wealth 120 5 Gambling Expansion and Social Change in Macao seems to have been “ad hoc and piecemeal”, or lacking “long-term planning” in solving social problems (Chan and Lee 2011 , p. 214); however, it at least clearly demonstrates that the Macao government has suffi cient money to spend. We argue that without the gambling liberalization policy of 2002, which greatly stimulated Macao’s economy and brought in large amounts of public revenue, the Macao government may not have had the funds to distribute the above subsidies.

5.5 Decline in Satisfaction with Social Stability, Equality, and Integrity

Despite the prolonged period of economic growth and numerous attractive subsi- dies, public perceptions of social stability, equality, and integrity do not seem to be as positive as might be expected. In our surveys, the respondents were asked to evaluate their degree of satisfaction with these three societal conditions. Their responses were coded on a fi ve-point scale ranging from “very dissatisfi ed” to “very satisfi ed”, with individual scores ranging from 1 to 5. The higher the score was, the higher the degree of satisfaction.

5.5.1 Social Stability

As enshrined in the Preamble of the Basic Law , the purpose of establishing the Macao SAR lies not only in upholding national unity and territorial integrity, but also in maintaining the social stability and economic development of Macao. According to our surveys, positive satisfaction mean scores (i.e., above the mid- point of 3) in the domain of social stability were found in all of the surveyed years. In 2005, a mean score of 3.57 was recorded. As it was below the score of 4, we may conclude that people tended to be satisfi ed with the situation, but not strongly so. In subsequent surveys, the mean score dropped steadily to 3.39 in 2007 and then to 3.29 in 2009 (Table 5.10 ). In other words, although Macao’s economy remained prosperous after 2002, our respondents’ view of social stability became less favourable. With respect to intergroup variations, although the three groups of respondents made a similar evaluation in 2007, GEI respondents were less satisfi ed with the condition of social stability than the other two groups in both 2005 and 2009. For example, in 2009, the mean score was 3.18 for GEI respondents, as compared with 3.34 for GRI respondents and 3.32 for GNI respondents (Table 5.10 ).

5.5.2 Social Equality

When we asked our respondents to comment on social equality in Macao, the results were very disappointing—all of the satisfaction mean scores were below the mid- point of the fi ve-point scale. In 2005, the score was 2.85, which meant that the 5.5 Decline in Satisfaction with Social Stability, Equality, and Integrity 121

Table 5.10 Satisfaction with social stability, equality, and integrity (mean score) Overall GEI GRI GNI ANOVA test Social stability 2005 3.57 3.48 3.55 3.63 * 2007 3.39 3.38 3.45 3.33 n.s. 2009 3.29 3.18 3.34 3.32 * Social equality 2005 2.85 2.84 2.80 2.90 n.s. 2007 2.78 2.83 2.78 2.74 n.s. 2009 2.81 2.76 2.88 2.74 * Social integrity and cleanliness 2007 2.34 2.44 2.32 2.29 n.s. 2009 2.37 2.31 2.46 2.30 * * p < 0.05 Note: Satisfaction: 1 = very dissatisfi ed, 2 = dissatisfi ed, 3 = neutral, 4 = satisfi ed, and 5 = very satisfi ed people in Macao were inclined to hold a negative view of the situation of social equality. In 2007, the score dropped further to 2.78. Then, in 2009, the score rose a little to 2.81, probably because of the various kinds of government subsidies handed out since 2008 (Table 5.10 ). The three groups of respondents had similar satisfaction mean scores in 2005 and 2007. Yet in 2009, because the satisfaction of both GEI and GNI respondents with social equality dropped from 2005 to 2009 and GRI respondents felt somewhat dif- ferently, GRI respondents became the most satisfi ed among the three groups—the mean score was 2.88, as compared with 2.76 for GEI respondents and 2.74 for GNI respondents (Table 5.10 ).

5.5.3 Social Integrity and Cleanliness

In 2005, we did not ask questions relating to social integrity and cleanliness. After the arrest of Ao Man-long in 2006, as there was increasing public concern about the honesty and integrity of government offi cials, we added a question in the 2007 and 2009 surveys to gauge the respondents’ satisfaction with social integrity and cleanli- ness—an indirect way to tap the corruption issue in Macao. As expected, the mean scores for this question in these two surveys were 2.34 and 2.37 respectively—far below the mid-point of the fi ve-point scale (Table 5.10 ). It is obvious that people were not satisfi ed with social integrity and cleanliness in Macao.9

9 According to Transparency International’s (2012 ) Corruption Perceptions Index, which scores countries and territories in the world from 0 (highly corrupt) to 10 (very clean) based on perceived levels of public sector corruption, the score for Macao in 2006, 2007, 2008, 2009, 2010, and 2011 was 6.6, 5.7, 5.4, 5.3, 5.0, and 5.1—a signifi cant drop of 1.5 scores in the past 6 years. In 2011, the respective scores for Singapore, Hong Kong, Japan, and Taiwan were 9.2, 8.4, 8.0, and 6.1; and the scores for these four societies in 2006 were 9.4, 8.3, 7.6, and 5.9, respectively. Furthermore, in a survey conducted in 2009, when the respondents were asked to evaluate the problem of corruption in Macao after the opening up of the gambling industry, 70.4 % of them answered that this move “made corruption more serious” (Lam 2011 , pp. 48–49). 122 5 Gambling Expansion and Social Change

The ANOVA data indicated that the three groups of respondents differed slightly in this respect in 2007. But in 2009, the satisfaction mean score of GEI respondents dropped signifi cantly from 2.44 to 2.31, while that of GRI respondents rose from 2.32 to 2.46 and that of GNI respondents was very stable (from 2.29 to 2.30). As a result, both GEI and GNI respondents were less satisfi ed with the condition of social integrity and cleanliness than GRI respondents. However, since the mean scores of all groups of respondents were below the mid-point of the scale, great effort and attention are still badly needed to promote cleaner and less corrupt practises in business, government, and society. Why did GRI respondents become the group most satisfied about social stability? Why had the view of GRI respondents on social equality as well as social integrity and cleanliness changed for the better? Was it because they had received more benefi ts from a series of social remedial policies such as the “habitual” cash handouts, or was it because they thought that social equality in general had improved? Or were there other considerations? Since we did not include questions relating to this issue in our surveys, we are unable to offer a clear explanation at this stage.

5.5.4 A Good or Bad Society?

Apart from obtaining the respondents’ views on social stability, social equality, and social integrity and cleanliness, we also asked our respondents to comment on Macao society as a whole to see whether they thought that it was closer to the ideal of a good society or closer to the stereotype of a bad society, by using an 11-point scale, i.e., from 0 = very bad society, … to 5 = neutral, … to 10 = very good society. What is the ideal type of good society? Although there is no standardized defi nition, we think that the comment of the former Chief Executive of Macao, Edmund H. W. Ho, in his 2004 policy address, gives a rough idea. He said: We will share our lives together in a society where everybody stands shoulder to shoulder in their desire to benefi t mankind, and where everybody values love and righteousness, shares both prosperity and hardships, and both makes a fair contribution and receives their just rewards from society. It will never become a society in which everybody is preoccupied with personal gains and losses, and people harm the interests of others for the sake of their own, or are fi lled with indifference and envy, and delight in the misfortunes of others. We strongly believe that if the people of Macao share both success and failure, they will be able to continuously develop their potential and improve themselves as they learn more and more through the help and sympathy they give to others who are facing diffi culties, and as they gain encouragement and inspiration from the successes of others. I believe there will never be any sarcasm, mockery or exclusion in our society…. We will explore the future and overcome diffi culties, hand-in-hand and with one accord. We will taste both the bitter and the sweet together with a caring heart. (Ho 2003 ) First, in 2005, when the respondents were asked if Macao society at that time was closer to a good society or a bad society, the mean score given was 5.89, which meant that the respondents tended to believe that the society was closer to a good society. 5.5 Decline in Satisfaction with Social Stability, Equality, and Integrity 123

When the respondents were asked for their view of Macao 3 years ago (the year that the Macao government formally launched the gambling liberalization policy), the mean score was far lower, at only 4.89. This meant that a greater number of the respondents considered Macao society 3 years earlier to be closer to a bad society, and that society had improved greatly since then. Then, when the respondents were asked to comment on Macao society 3 years from now, the mean score rose to 6.55. This score was far higher than the score for society 3 years ago and the present-day society, implying that people were optimistic about the future. In 2007, when the same questions were asked again, some obvious changes in attitude could be observed. For instance, the mean score on the present-day society dropped to 5.80, while the mean score for society 3 years later had also dropped to 6.25. The mean score for the present-day society was still higher than that for society 3 years ago, but lower than that for society 3 years later. This meant that, while there was still a strong feeling of social progress, our respondents were taking a somewhat less rosy view of Macao’s social development. Then, in 2009, when the respondents answered the same set of questions about a good society or bad society, the mean score was 5.83 for the present-day society, 5.68 for society 3 years ago, and 5.91 for society 3 years later. Although the mean score for the present-day society rebounded a little, the difference in scores among the present-day society, society 3 years ago, and society 3 years later had narrowed further (Table 5.11 ). If we compare the overall data in these three surveys, three points are notable: First, when looking backward, our respondents seemed to suggest that Macao’s society had gradually improved. Second, when looking forward, our respondents seemed to be optimistic about Macao’s future, but their optimism was declining. Third, they felt that the present-day society was closer to a good society, but that it was only “slightly above average”. There is still a long way to go if Macao is to develop into the kind of good society described by the former Chief Executive in his 2004 policy address.

Table 5.11 Perceptions of Macao society (mean score) Overall GEI GRI GNI ANOVA test Present-day 2005 5.89 5.75 5.82 6.03 * 2007 5.80 6.01 5.83 5.66 ** 2009 5.83 5.79 5.87 5.80 n.s. 3 years ago 2005 4.89 4.79 4.84 4.99 n.s. 2007 5.14 5.04 5.15 5.20 n.s. 2009 5.68 5.54 5.68 5.80 * 3 years later 2005 6.55 6.42 6.56 6.59 n.s. 2007 6.25 6.52 6.33 6.01 ** 2009 5.91 5.89 5.94 5.88 n.s. * p < 0.05; ** p < 0.01 Note: Perception: 0 = very bad society … 5 = neutral … 10 = very good society 124 5 Gambling Expansion and Social Change

The ANOVA data indicated that intergroup variations were more salient in the scores for the present-day society than for society in the past and future. However, in 2009, only the differences pertaining to looking backward were statistically sig- nifi cant. Specifi cally, in 2005, GEI respondents were the least optimistic group in their view of the present-day society. That year, the mean score they gave was 5.75, while the corresponding scores given by GRI and GNI respondents were 5.82 and 6.03. However, the three groups of respondents differed slightly in the scores that they gave to society 3 years ago as well as to society 3 years later. In 2007, GEI respondents became the most optimistic among the three groups of respondents, while GNI respondents became the most conservative. For instance, GEI respondents gave a score of 6.01 to the present-day society and 6.52 to society 3 years later; while the corresponding scores given by GNI respondents were 5.66 and 6.01. Again, the three groups of respondents differed slightly in the scores that they gave to society 3 years ago. In 2009, the views of the three groups of respondents became very similar, espe- cially those of GEI and GNI respondents in evaluating the present-day society (5.79 vs 5.80) and society 3 years later (5.89 vs 5.88). The only signifi cant difference was found in the scores that they gave to society 3 years ago—GNI respondents remained the most optimistic, and GEI respondents the least optimistic (5.80 vs 5.54) (Table 5.11 ). Based on the above evaluation of social stability, equality, and integrity, as well as the conception of a good society, we can say that shortly after the gambling lib- eralization policy, the respondents’ perceptions of social transformation were quite positive. The buoyant economy and improved public security contrasted favourably with the prolonged economic downturn and rampant criminal activities during the late period of Portuguese rule. Later, as the gambling industry became more pros- perous but its benefi ts were not shared equally and, more importantly, as various social problems became more complex and worsened, the respondents’ satisfaction with social stability, equality, and integrity also declined. As such, their views on the overall development of Macao’s society also became less optimistic or less positive in comparison to the period when the gambling liberalizing policy was fi rst launched.

5.6 Conclusion

As a city with a long history and solid experience in running gambling businesses, people in Macao from all walks of life—men and women, old and young, Chinese and foreign, locally bred and immigrants—seemed quite well informed about the evil side of gambling. Some Macao residents had even developed an “immunity” to gambling—or, rather, it is better to say that they had already adapted to the harsh environment of casinos and slot machines. Hence, when the gambling industry was liberalized in 2002, various social problems did not erupt as rapidly or seriously as expected, unlike in societies where gambling had previously been unlawful. For example, based on the calculations of H2 Gambling Capital, the world’s biggest gambling nations/territories, or the biggest losers, include plenty of unlikely 5.6 Conclusion 125 candidates. As measured by net spending on legal forms of betting in the nation/ territory, divided by the number of residents over the age of 16, Singapore ranked second in 2010, trailing only Australia. The average gambling losses per adult resident in these two countries was around US$1,200. Further down the list were Ireland, Canada, Finland, Italy, and Hong Kong, but their gambling losses were less than half of those of Australia and Singapore. Macao and Monaco, which derive nearly all of their gambling revenue from tourists, did not make the top-15 list ( The Economist 2011 ). Nevertheless, some subtle changes can be identifi ed, involving a perceived deterioration of various social problems and morality, a lower degree of satisfaction with social stability, equality, and integrity, and a less optimistic view of society in the future. One of the major concerns following the deregulation of the gambling industry was that crime and public security might deteriorate. However, both objective and subjective indicators showed that even as large numbers of tourists fl ooded in and more casinos opened, the overall crime rate was not noticeably affected, although gambling-related crimes did indeed increase signifi cantly. Many of the respondents even thought that public security in Macao had improved in recent years when com- pared to the situation in the early post-handover period. Another frequently expressed fear was that more gambling activities would aggravate various family problems by giving rise to more family strife, more divorces, and more juvenile delinquency. Regarding these problems, the objective and subjective indicators show a mixed picture. For instance, although the divorce rate has gone up recently, a problem with gambling was not acknowledged as the critical factor. Likewise, the number of juvenile offenders did shoot up in some years, but have dwindled signifi cantly in recent years. Although subjective indica- tors revealed that the public perception of the youth problem had become increas- ingly negative, this did not imply that the problem was out of control. On the question of social morality after the opening up of the gambling industry, a similar pattern of “deterioration but not very serious” can also be confi rmed. Since gambling has been legal in Macao for over one and a half centuries, businessmen (casino operators, gambling subcontractors, and agents) and the government have established effective ways of handling the industry, and common people have also developed pragmatic social values and beliefs. Because of this, when the traditional gambling monopoly was abolished and more competition was introduced, along with a more modern and professional approach to the industry, public perceptions of gambling were not as negative as before. Thus, only a mild deterioration in social morality can be detected. Although objective and subjective indicators did not show that various social evils became rampant after the introduction of the gambling liberalization policy, public concern and criticism of the government’s performance, and its view of the government’s integrity and cleanliness, did indeed worsen. The eruption of the Ao Man-long corruption case revealed a great deal of malpractice or irregularities in government land sales, which aroused further public concern over collusion between businessmen and the government. As such, discontent and grievances among certain sectors in society doubtlessly escalated. The Macao government should strengthen 126 5 Gambling Expansion and Social Change its anti-corruption measures and upgrade the transparency of its administration to regain public confi dence and support. Otherwise, anti-government rallies or protests could erupt more frequently than before (see Chap. 6 ). Although there have been worries that rapid economic growth might lead to growing social inequality and social dislocation, ultimately undermining social sta- bility, it is equally clear that as Macao’s economy has fl ourished, there has been a positive impact on the people’s subjective class position. This could be interpreted as a result of more opportunities for upward social mobility. Given that more respon- dents considered their social position to be in the middle or above and their income to be almost the same as that of other Macao residents, although social discontent may in some sense be mounting, it has not reached an explosive level. In the face of a widening income gap, the Macao government has launched repeated schemes of “cash handouts”, tax rebates, business subsidies, and more public assistance. However, these policies have frequently been criticized as ill- planned, ad hoc, or piecemeal. Notwithstanding all this, it is an irrefutable fact that without the gambling liberalization policy, the SAR government would not be able to afford to offer such subsidies and engage in public construction projects. Compared to the situation faced by many Western governments, who have had to deal with a prolonged and serious economic recession and who have been forced to make large budget cuts to deal with government debts and defi cits, Macao’s robust economic growth and attractive surpluses are highly enviable. On the whole, based on both objective and subjective indicators, it is apparent that more gambling activities did indeed aggravate social evils and cause these problems to become more intertwined and complex. Nevertheless, it is equally obvious that these social evils did not become as serious or as rampant as many people had predicted. What seems to have kept these problems under control is Macao’s long history in running the gambling business. To be more specifi c, since both the government and society have developed ways of dealing with gambling- related problems, the policy to deregulate gambling did not result in an eruption of negative problems as might have occurred in other societies. In other words, Macao was in a position to derive a great deal from a vigorous gambling industry without having to pay as high a price for it. The last point worth noting is that as gambling has been labelled an “evil product” or a social vice, a great deal of “moral baggage” is attached to the activity. Many evaluations of gambling policies tend to either exaggerate the negative impact or to understate the positive results of such policies. By using both objective and subjective indicators and by examining various socio-economic changes following the policy to deregulate gambling, we see that, in the case of Macao, the benefi ts generated after the introduction of the gambling liberalization policy were probably greater than the costs. Of course, we should emphasize that Macao is a unique case. It has a long history of running a legalized gambling business and is supported by the “one country, two systems” model. It is also the only city in China where casino gambling is legal, which implies that Macao faces a nearly unlimited demand for its gambling goods and services, an area in which foreign companies are eager to gain an edge. References 127

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Leong AVM (2002) The “bate-fi cha” business and triads in Macau casinos. Qld Univ Tech Law Justice J 2(1):83–97 Lo SH (2005) Casino politics, organized crime and the post-colonial state in Macau. J Contemp China 14(43):207–224 Macao Government (1998) Decree-law no. 24/98/M. (In Chinese) http://bo.io.gov.mo/bo/i/98/22/ declei24_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2006a) Prevention and suppression of the crime of money laundering (Law no. 2/2006). http://www.gif.gov.mo/web1/doc/gif/law%202–2006.pdf . Accessed 23 Oct 2012 Macao SAR Government (2006b) Prevention and suppression of the crimes of terrorism (Law no. 3/2006). http://www.gif.gov.mo/web1/doc/gif/law-3-2006.pdf . Accessed 23 Oct 2012 Macao SAR Government (Various years) Wealth partaking scheme. http://www.planocp.gov. mo/2012/default_e.html . Accessed 23 Oct 2012 Macau Daily Times (2011) More pathological gamblers in 2010, 7 February. http://www. macaudailytimes.com.mo/macau/21922-More-pathological-gamblers-2010.html . Accessed 23 Oct 2012 Macau Daily Times (2012) Ao Man Long Faces new graft charges, 17 April. http://www. macaudailytimes.com.mo/macau/35219-Man-Long-faces-new-graft-charges.html . Accessed 23 Oct 2012 People’s Daily Online (2007) Nearly half of Guangdong divorce decrees involve mainland–Hong Kong/Macao cross-border marriage, November 29. (In Chinese) http://hm.people.com.cn/ BIG5/85423/6589838.html . Accessed 23 Oct 2012 Pinto R (2008) Macau’s war on terror. Macau Closer, May:12–17 Rephann TJ, Dalton M, Stair A, Isserman A (1997) Casino gambling as an economic development strategy. Tour Econ 3(2):161–183 Resilience Centre, Social Welfare Bureau (Various years) Service report of the Resilience Centre: problem gambling. http://www.ias.gov.mo/cvf/en/report.jsp . Accessed 23 Oct 2012 Rose IN (2010) Does Macau create legal risks for American operators? Gaming Law Rev Econ 14(6):457–462 South China Research Limited (2012) Macau gaming sector, June 25. http://www.sctrade.com/ data/sctoday/20120625160200Eng-Macau%20gaming%20sector%20-%20120625.pdf . Accessed 23 Oct 2012 Stitt G (2000) Effects of casino gambling on crime and quality of life in new casino jurisdictions, fi nal report. http://lansingkewadin.fi les.wordpress.com/2012/03/casinos-and-crime-u-s-department-of- justice-2.pdf . Accessed 23 Oct 2012 Ta Kung Pao (2012) Cross-boundary marriages face higher risk of domestic violence; cultural differ- ences come up against economic diffi culties; hope turns to despair, p A15, 28 May (In Chinese) The Economist (2011) Gambling: the biggest losers, May 16. http://www.economist.com/blogs/ dailychart/2011/05/gambling . Accessed 23 Oct 2012 The Wall Street Journal (2012) Macau ex-offi cial found guilty of bribery, June 4. http://online.wsj. com/article/SB10001424052702303830204577445361095752908.html . Accessed 23 Oct 2012 Transparency International (2012) Corruption perceptions index. http://www.transparency.org/ research/cpi . Accessed 23 Oct 2012 US Department of the Treasury (2005) Treasury designates Banco Delta Asia as primary money laundering concern under USA PATRIOT Act (Press release), September 15 WikiLeaks (2011) The Macau SAR economy at 10: even jackpots have consequences, August 30. http://Wikileaks.org/cable/2009/12/09HONGKONG2313.html . Accessed 23 Oct 2012 Yuen H (2010) Exploring critical family issues in cross-border marriages. J Youth Stud 13(1):54–67 Chapter 6 Gambling Expansion and Political Development

6.1 Introduction

After the handover, Macao is no longer a Portuguese colony but an SAR of China. Unlike Hong Kong, “the selection of the Chief Executive by universal suffrage” and “the election of all the members of the Legislative Council by universal suffrage”,1 dubbed “double universal suffrage”, are not stipulated as being “ultimate aims” in the Basic Law of Macao.2 Nonetheless, Macao can enjoy a “high degree of autonomy” and the special privilege of “Macao people governing Macao” under the framework of “one country, two systems”. Because of this historical change, Macao’s political system was restructured and the public’s desire for more direct political participation rose. The liberalization of the gambling industry, which triggered dramatic economic growth and social transformation, further galvanized calls to speed up democracy and to alter the “balance of representation” in the legislature.3 Such demands have come not only from those who have not benefi ted much from the buoyant economy (New Macau Association 2009 ), but also from the privileged sectors. For example, the casino operators are lobbying for a gambling industry seat in the Legislative Assembly ( 27 March 2012 ) so as to guarantee their representation in the law-making body. Modernization theory claims that economic, cultural, and political changes basically follow a coherent pattern (Inglehart 1997 , p. 67). Confl icts or problems are inevitable when one aspect of development occurs more quickly or slowly than another, and social stability and economic development may consequently be undermined.

1 See Articles 45 and 68 of the Basic . 2 See Annexes I and II of the Basic Law of Macao. 3 At present, the Legislative Assembly has ten indirectly elected members, of whom four represent the industrial, commercial, and fi nancial sector; two represent the labour sector; two represent the professional services sector; and two represent the social services, culture, education, and sports sector (Legislative Assembly Election 2009). For the participation of gambling operators and employees in previous direct and indirect elections to the Legislative Assembly, see, for example, Chen (2010 ) and Kwong (2010 ).

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 129 DOI 10.1007/978-3-642-40749-9_6, © Springer-Verlag Berlin Heidelberg 2014 130 6 Gambling Expansion and Political Development

However, if we examine the Macao miracle, which was dominated by the “Macao formula” for over four centuries, we clearly see that pragmatism and tolerance were its mainstays. Although today there is increasing pressure from certain social groups for greater political participation, the predominant values of economic development and social stability remain unshaken. In over one decade after the handover, what is the pace of political development in Macao? Has civil society become more vigorous or less after the rapid expansion of gambling? What is the public’s view of the government’s performance? These questions are addressed in this chapter.

6.2 The Pace of Political Development and Pressure for Participation

Colonial administration in Macao, as in Hong Kong but unlike other colonies, was carried out without signifi cant coercion of the local population (Ghai 1995 ). The people were deprived of political representation in government, but nonetheless enjoyed a relatively high degree of personal liberties, and the society achieved substantial socio-economic development.4 In 1976, 2 years after the Carnation Revolution, the democratic Portuguese administration passed the Macao Organic Statute ( Estatuto Orgânico de Macau) that guaranteed the territory’s autonomy and established a partially directly-elected legislature in the same year, i.e., 15 years earlier than the British did in Hong Kong. Measures of democratization initiated by the Portuguese in anticipation of their withdrawal paved the way for decolonization and the formula of “Macao people governing Macao”.5 Because of its liminal position, and also due to its heavy reliance on the gam- bling business, Macao’s residents—largely consisting of non-locally born people— did not harbour great political aspirations nor were they fervent advocates of democracy. Macao’s political culture has been described as apathetic, parochial, and subject oriented (Lo 1990 ; Yee 2001 ). The territory’s press and civic groups have also been less vigorous than those in Hong Kong.6 As the Portuguese administration

4 In the annual report Freedom in the World, Political Rights and Civil Liberties are measured on a scale of 1–7, with 1 representing the highest degree of freedom and 7 the lowest. In 2004, the last edition for which Macao was assessed, the scores for Macao on Freedom Rating, Civil Liberties, and Political Rights were 5, 4, and 6, respectively. The corresponding scores for Hong Kong were 4, 3, and 5 (Freedom House 2004 ). 5 See Lau (1997 ) and Lau and Kuan (2000 ) for a similar process of partial democratization in Hong Kong, or for Britain’s search for governability and an exit with glory from that territory. 6 According to the assessment of the Freedom House (2004 ), Macao had fewer outspoken voices for greater political freedom as well as for more transparency in government and business than Hong Kong. Most of its daily newspapers were pro-Beijing and offered little coverage of people, groups, or activities that challenged Macao’s conservative political and business establishment. Human rights groups operated freely, but generally had little impact on the territory’s political life. Dominant labour unions were more of a political front for mainland Chinese interests than an advocate for better wages, benefi ts, and working conditions. 6.2 The Pace of Political Development and Pressure for Participation 131

Table 6.1 Composition of the Legislative Assembly, 1976–2009 1976–1980 1996–1999 1999–2001 2001–2005 2005–2009 2009–2013 Directly returned 6 8 8 10 12 12 Indirectly returned 6 8 8 10 10 10 Appointed 5 7 7 7 7 7 Total number of seats 17 23 23 27 29 29 Sources: Legislative Assembly (2012 ); Wu (1993 , p. 38) gradually opened to more political participation in the mid-1970s, some members of the middle-class intelligentsia began to express political demands, either by join- ing various political movements or by organizing different pressure/interest groups. Nevertheless, their approach and tone were by no means radical and strident. The principle of gradual development within a limited scope was frequently empha- sized. In fact, Macao’s slow-paced or conservative political development can be vividly illustrated through the changes in the number of seats, especially the directly elected seats, in the Legislative Assembly.

6.2.1 Composition of the Legislative Assembly

In 1976, the Legislative Assembly consisted of a total of 17 seats. Six of them were returned by direct elections while another six were fi lled through indirect elections. The remaining fi ve seats were appointed by the governor. In the last election held by the outgoing colonial administration in 1996, the total numbers of seats had been increased to 23, with the addition of two seats for each category (Table 6.1 ). In order to ensure a smooth transition, the legislative councillors could take the “through train” and became the fi rst batch of councillors in the Macao SAR legislature. The composition of the Legislative Assembly was specifi ed in Annex II of the Basic Law . In the fi rst term, it should be formed in accordance with the decision of the National People’s Congress—i.e., the total number and allocation of seats among the three categories remained unchanged. In the second term, the total num- ber of seats increased to 27, with four newly added seats allocated equally to the directly and indirectly elected categories, while the number of appointed seats was frozen. In the third and subsequent terms, the total number of seats increased to 29, with the two newly added seats both given to the directly elected category, while the number of indirectly elected and appointed seats were frozen (Table 6.1 ). 7 As seen from the changes in the number of seats in the Legislative Assembly, the process of

7 The Basic Law also stipulated that “If there is a need to change the method for forming the Legislative Council of the Macao Special Administrative Region in and after 2009, such amend- ments must be made with the endorsement of a two-thirds majority of all the members of the Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People’s Congress for the record”. 132 6 Gambling Expansion and Political Development

Table 6.2 Voting rates in the direct elections to the Legislative Assembly, 1996–2009 1996 2001 2005 2009 Number of registered voters 116,445 159,813 220,653 248,708 Voter turnout 75,093 83,644 128,830 149,006 Voting rate (%) 64.5 52.3 58.4 59.9 Sources: Legislative Assembly Election (2002 , 2005 , 2009 ) democratization was clearly neither fast nor dramatic, although some modest development was found. This meant that the number of directly elected and indirectly elected seats increased to 12 and 10, respectively, while the number of appointed seats remained at 7.8

6.2.2 Voting Rates

Apart from the changes in the composition of the Legislative Assembly, the voting rates in different elections could shed light on the process and features of political development in Macao. Although the Portuguese administration had introduced direct elections for around one-third of seats in the Legislative Assembly only since 1976, the voting rates in the various legislative elections were not low as expected. Table 6.2 shows the voting rates in the past four Legislative Assembly direct elections. In the 1996 election, the voting rate reached 64.5 %, which was by any standard neither low nor unenthusiastic. 9 In the 2001 election, although the voting rate dropped signifi cantly to 52.3 %, this still meant that over half of the voters had cast a ballot. Then, in the 2005 and 2009 elections, the voting rates rose steadily to 58.4 and 59.9 %, respectively. Compared to elections of a similar nature in other Chinese societies like Hong Kong and Taiwan, the voting rates in the legislative elections in Macao were not particularly low.10 Given that over half of the registered voters had cast ballots in the three elections after the handover and that the voting rate was increasing, it may be concluded that Macao people are interested in more political participation.

8 In the 2001, 2005, and 2009 direct elections to the Legislative Assembly, pro-democracy candidates won two, two, and three seats, respectively (Legislative Assembly Election 2002 , 2005 , 2009 ). 9 The high voting rate was due to two key interrelated factors—the “handover effect” and “bribery in the election”. The former implied that the legislative councillors could take the “through train” to the Macao SAR legislature, which was historically signifi cant, while the later involved “abnormal social mobilization” in the hope of winning (see, for example, Yee 2001, pp. 107–127; Yee et al. 2011 , pp. 131–136). As such, the voting rate was boosted. 10 For instance, in Taiwan, the voting rates in the Legislative Yuan elections in 2001, 2004, and 2008 were 66.3, 59.4, and 58.7 %, respectively (Central Election Commission various years); while in Hong Kong, the voting rates in the Legislative Council elections in 2000, 2004, and 2008 were 43.6, 55.6, and 45.2 %, respectively (Electoral Affairs Commission various years). 6.2 The Pace of Political Development and Pressure for Participation 133

6.2.3 Civic Associations

In Macao, there are no registered political parties. Politically active groups, includ- ing the New Macau Association and New Hope, are registered as societies or com- panies.11 Since direct political participation was limited during the period of Portuguese colonial rule, leading members from various key civic associations such as the Macao Chamber of Commerce, the Macao Federation of Trade Unions, the General Union of Neighbourhood Associations of Macao, and The Women’s General Association of Macau were absorbed to the legislature to serve the func- tions of political consultation and representation. As such, civic associations obtained strong grassroots support and played an infl uential role in the old political system of Macao, and the Portuguese style of ruling was described as “ruled by corporatism” (Lou 2004 ; Chan 2011 ; Lee 2011 ). After the handover, although the Basic Law stipulated that the majority of the members of the Legislative Assembly should be elected, it neither spelled out whether they were to be directly or indirectly elected, except for the fi rst three terms, nor provided universal suffrage as an ultimate aim. In the past three elections, there were almost an equal number of directly and indirectly elected seats, meaning that indirectly elected seats are a vital part of the Macao legislative structure. More importantly, the indirect election of legislators is limited to organizations registered as “corporate voters”, the number of which increased nearly fourfold from 276 in 1999 to 973 in 2010 (Table 6.3 ),12 and the selection of the Chief Executive also depends greatly on corporate voters.13 The critical role of civic associations from various sectors, professions, and socio-cultural-religious backgrounds, predomi- nantly those branded as conservative pro-Beijing “traditional associations”, has thus been maintained. The Macao SAR government seems happy to accept the arrange- ment and has taken positive measures to boost its development as a method of “political absorption” (commonly termed “consultative democracy” in Macao) to

11 A non-profi t making association that wishes to help exercise civic and political rights and partici- pates in political activities can register as a “political association”. However, the requirements for registration, including a declaration with signatures of not less than 200 citizens who have regis- tered as electors (the signatures have to be notarized at the Public Notary Offi ce), are stricter than those for a non-profi t making civic association. For details, see Identifi cation Services Bureau (2012 ). The Democratic Centre of Macau (Centro Democrático de Macau) is the only registered political association in Macao. 12 See Centro de Serviços da RAEM ( 2011) and Recenseamento Eleitoral (2012 ) for the distribu- tion of corporate voters by sector. 13 The Chief Executive is elected by a 400-member Election Committee drawn from four sectors: (1) 120 from the industrial, commercial, and fi nancial sector; (2) 115 from the culture, education, specialty, and sports sector; (3) 115 from the labour, social services, and religion sector; and (4) 50 from the Legislative Assembly, Macao deputies to the National People’s Congress, representatives of Macao members of the National Committee of the Chinese People’s Political Consultative Conference sector. Only the last sector is composed of individual voters. For details, see the Chief Executive Election Law (Law No. 11/2012) (Macao SAR Government 2012 ). 134 6 Gambling Expansion and Political Development

Table 6.3 Number of corporate voters and registered non-profi t making associations, 1999–2011 Civic associations Political associations Corporate Newly Cumulative Newly Cumulative Year voters registered number registered number 1999 276 150 1,729 1 1 2000 – 117 1,846 0 1 2001 625 149 1,995 0 1 2002 645 196 2,191 0 1 2003 648 146 2,337 0 1 2004 703 200 2,537 0 1 2005 905 231 2,768 0 1 2006 908 682 3,450 0 1 2007 914 273 3,723 0 1 2008 923 291 4,014 0 1 2009 973 389 4,403 0 1 2010 973 376 4,779 0 1 2011 – 393 5,172 0 1 Sources: Centro de Serviços da RAEM (2011 ); Recenseamento Eleitoral (2012 ); internal informa- tion provided by the Identifi cation Services Bureau on 20 July 2012 counterbalance the increasingly loud calls in the past decade for direct political participation. It is believed that Macao has one of the highest densities of civic associations among cities in the world. In 2011, although Macao had a total population of around 557,400, it had 5,172 registered civic associations, i.e., roughly one for every 108 persons. More interestingly, the number of registered civic associations grew steadily after the handover. For instance, in 1999, there were a total of 1,729 regis- tered civic associations. Ten years later, the total number more than doubled to 4,403 in 2009, and then to 5,172 in 2011 (Table 6.3 ). The pace of growth was rapid by any measure. Another point worthy of note is that there was a sudden increase in the number of civic associations (24.6 %) in 2006, a year which also saw drastic socio-political changes in Macao.

6.2.4 Political Protests

Although the room for indirect political participation (or political absorption) has expanded signifi cantly, political pressure to re-adjust government policies or to make governance more transparent in various sectors seems to have escalated. A key indicator commonly used to monitor political pressure is the frequency and intensity of political protests. As mentioned in Chap. 3 , soon after the handover, political protests erupted because of escalating unemployment and insuffi cient unemployment subsidies. Afterwards, as the economy picked up quickly after the gambling liberalization policy and the labour market greatly improved, workers stopped marching in the streets to exercise their political rights. 6.3 Political Involvement: Interest, Effi cacy, and Participation 135

However, after being silent for several years, on International Labour Day (1 May) in 2006, thousands of local workers took to the streets hand-in-hand and chanted slogans against illegal workers and demanding that the government stop importing workers (Macao Daily News 2 May 2006 ). As the government did not take immediate steps to prevent illegal workers from fl ooding into Macao, local workers held a street protest again on 20 December—the day celebrating the founding of the Macao SAR (Macao Daily News 21 December 2006 ). Since then, various kinds of demonstrations held by different types of organizations with various political demands have been held on commemorative days such as International Labour Day, National Day, and Macao SAR Foundation Day. Table 6.4 lists information on various demonstrations held from 2006 to 2011. Some of the demonstrations even attracted international attention. For instance, the 2007 International Labour Day demonstration, which was initiated by six organizations, attracted 10,000 protestors (as estimated by the organizer). In that demonstration, a clash occurred between the police and protestors. To put a stop to the chaos, a plain- clothes policeman fi red warning shots, which injured a passer-by. The handling of this demonstration by the authorities has frequently been quoted as a case of poor crisis management (Macao Daily News 2 May 2007 ). Seven months later, on 20 December, 7,000 protestors (as estimated by the organizer) took to the streets chanting the slogan “against corruption and for democracy” (Macao Daily News 21 December 2007 ). In sum, although Macao’s economy remained prosperous and the unemployment rate stayed at a low level, demonstrations and protests kept occurring (Table 6.4 ). Some even led to physical violence and radical confrontations. In fact, not only were there numerous rallies and demonstrations, since 2005 there has been a signifi cant increase in other forms of political demands, such as letters of complaint or petitions (Lou et al. 2009 ). It is believed that one reason for the incessant outbreak of social disputes is that social problems had become increasingly complex after the introduc- tion of the gambling liberalization policy. Other reasons are public discontent over collusion between businessmen and government offi cials, the far from satisfactory government administration, the lack of effective political channels for handling dif- ferent political demands and social confl icts, and the slow pace of institutional and democratic development (Lou et al. 2009 ; Scott and Lam 2011 ). In order to obtain a more thorough understanding of political developments in Macao, various subjective indicators will be cited for discussion in the subsequent paragraphs.

6.3 Political Involvement: Interest, Effi cacy, and Participation

6.3.1 Political Interest

In modern societies, individual participation in political activities is generally regarded as a virtue in its own right. It has been perceived not only as a civic duty, but also as one of the best methods to ensure one’s interest in society. Macao people 136 6 Gambling Expansion and Political Development

Table 6.4 Number of demonstrations and participants, 2006–2011

Date of Estimated participants demonstration By police By organizer Major requests/slogansa 2006 1 May 1,500 3,000 Anti-illegal workers; reduce imported workers 20 December 630 1,000 Anti-illegal workers; provide free education 2007 1 May 2,400 10,000 Anti-illegal workers; anti-corruption 30 September 2,300 5,000 More parking spaces for motorcycles 1 October 1,300 5,000 Anti-corruption; protect livelihoods 20 December 1,500 7,000 Anti-corruption; more democracy 2008 1 May 800 1,000 Anti-illegal workers; more public housing 28 September 450 1,000 Fair and equitable employment system of civil servants 1 October 120 300 Anti-illegal workers; more public housing 20 December 450 500 Anti-corruption; reduce imported workers 2009 1 May 400 500 Reduce imported workers; protect livelihoods 20 December 950 1,100 Anti-corruption; more democracy 2010 1 May 1,500 – Reduce imported workers; more public housing 1 October 80 150 Improve medical care system; anti-infl ation 20 December 1,250 – Anti-corruption; anti-hexie (anti-harmonious) culture 2011 1 May 2,300 – Reduce imported workers; more public housing 25 September 350 450 Help mainland-born children reunite with family in Macao 1 October 480 – More public housing; anti-infl ation 20 December 360 800 Anti-corruption; protect livelihoods; democracy Sources: Macao Daily News (various dates); Yu (2010 , p. 11) aNot all protests were organized by a single political/pressure group. Many, in fact, were organized by a number of parties. Other chanted slogans/demands were: anti-businessmen and government collusion, protect local workers’ rice bowls, anti-high property prices, lower the eligibility age for elderly subsidy, make government more transparent, and so on have nevertheless long been characterized as politically apathetic, parochial, and subject oriented (Lo 1990 ; Yee 2001 , pp. 83–106). After 2006, as large-scale politi- cal protests became increasingly frequent and protestors seemed to have become more radical, questions such as the following were frequently raised: “Have the Macao residents become more interested in politics?” and “Were the political chan- nels suffi cient and effi cient in handling the increase in political demands?” The lack of political interest among Macao Chinese is again demonstrated. In 2009, when our respondents were asked to indicate their degree of interest in poli- tics, 49.5 % of them replied that they were not interested, 37.3 % indicated that they 6.3 Political Involvement: Interest, Effi cacy, and Participation 137

Table 6.5 Self-declared interest in politics, 2009 (%) Overall GEI GRI GNI χ 2 test Interested 13.2 10.8 12.2 16.4 n.s. Neither interested nor uninterested 37.3 40.3 36.0 36.6 Not interested 49.5 48.9 51.8 47.0

were neither interested nor uninterested, and only 13.2 % answered clearly that they were interested in politics (Table 6.5 ). 14 Obviously, around half of the respondents can be classifi ed as “politically apathetic”. However, we should also bear in mind that over one-third who took the “middle stance” might easily be convinced to become engaged when the socio-political atmosphere changes. Cross-tabulation data showed that although the percentage of GNI respon- dents who declared an interest in politics (16.4 %) was higher than that for both GRI and GEI respondents (12.2 and 10.8 %, respectively), intergroup differences as a whole were not statistically signifi cant. In other words, no or low interest in politics is a general ethos shared by people working in the three broad categories of industries.

6.3.2 Internal Political Effi cacy

A major factor deterring ordinary people in Chinese societies from participating in politics is the commonly accepted saying that the game of politics is for the elites of society, not for common citizens (Lau 1982, pp. 105–109). The feeling of politi- cal effi cacy has been conceptualized as having two dimensions: internal and exter- nal. The former represents the extent to which an individual feels that he/she has power or infl uence over the government’s actions, whereas the latter refl ects the belief in the government’s responsiveness. Both aspects relate to the subjective evaluation of the value and effectiveness of participating in politics. It should be noted that, in our study, the concept of internal political effi cacy refers not to the situation of an individual alone having personal power over the government, but to one in which an individually defi ned reference group (“ordinary people like me”) as a whole has power. The respondents were fi rst asked to comment on the statement that “politics is too complicated for an ordinary person like me to understand”, an indicator of a person’s internal political effi cacy. In 2005, 2007, and 2009, over half of the respon- dents replied that they agreed with the statement, around one-fi fth answered dis- agree, while another one-fi fth took the stance of “neither agree nor disagree”. Only minor changes in view were identifi ed in these three surveys (Table 6.6 ).

14 Questions relating to political interest and frequency of participation in political activities were not asked in our 2005 and 2007 surveys. 138 6 Gambling Expansion and Political Development

Cross-tabulation data indicated that in 2005, political powerlessness was a pervasive feeling shared by the three groups of respondents. However, in 2007 and 2009, while higher proportions of GEI and GRI respondents seemed to agree with the statement that politics is too complicated for them to understand, relatively higher proportions of GNI respondents did not agree with the statement or took the stance of “neither agree nor disagree”. Since some of the GNI respondents were involved in community services or were civil servants, their capacity to understand politics and their confi dence that they did so might therefore be greater than those of other respondents. The respondents were further asked to comment on the statement that “ordinary people like me do not have any infl uence on government policies”, another indicator of internal political effi cacy. In the three rounds of the survey, around three-fi fths replied in the affi rmative, i.e., they did not think that they had any infl uence on the government. About one-fi fth disagreed. Another one-fi fth evaluated the possibility of infl uencing government policies as average. During the period 2005–2009, the proportion of respondents giving an optimistic answer fell slightly from 20.4 to 17.1 %. The variations among the three groups of respondents in their self-assessed infl uence on government were generally insignifi cant. Only in 2007 did GNI respondents show a relatively lower sense of political powerlessness than GEI and GRI respondents (Table 6.6 ).

Table 6.6 Feeling of internal political effi cacy (%) Year Overall GEI GRI GNI χ 2 test Politics too complicated to understand 2005 Agree 58.9 57.8 60.6 57.1 n.s. Neither agree nor disagree 20.4 20.6 20.7 20.0 Disagree 20.7 21.7 18.7 22.9 2007 Agree 56.0 62.1 59.1 49.2 *** Neither agree nor disagree 23.8 22.5 22.9 25.5 Disagree 20.2 15.4 17.9 25.3 2009 Agree 56.6 58.2 60.7 50.1 * Neither agree nor disagree 22.3 21.2 21.0 24.7 Disagree 21.1 20.7 18.3 25.2 No infl uence on government policies 2005 Agree 61.3 65.0 61.4 60.0 n.s. Neither agree nor disagree 18.3 15.8 19.0 18.2 Disagree 20.4 19.1 19.6 21.8 2007 Agree 61.6 62.0 63.2 59.7 * Neither agree nor disagree 20.1 23.4 19.9 18.2 Disagree 18.3 14.6 16.9 22.1 2009 Agree 62.6 64.0 64.8 58.6 n.s. Neither agree nor disagree 20.3 18.5 19.6 22.6 Disagree 17.1 17.4 15.6 18.8 * p < 0.05; *** p < 0.001 6.3 Political Involvement: Interest, Effi cacy, and Participation 139

6.3.3 External Political Effi cacy

The belief that the government is answerable to the people will increase the utility of political participation and the incentive to engage in politics. When the respon- dents were asked to comment on the statement “the government cares about what ordinary people like me think”, in 2005 40.9 % gave a negative answer, 31.4 % gave a positive answer, while 27.7 % took the stance of “neither agree nor disagree”. Then, in 2007 and 2009, the proportions of respondents who thought that the gov- ernment cared about public opinion dropped substantially to 25.0 and 20.0 % respectively, while those who thought otherwise rose to 46.8 and 48.4 % respec- tively (Table 6.7 ). In other words, after the handover, Macao people are still aggrieved by a strong sense of external powerlessness. After 2005, public distrust of government responsiveness became even more obvious. Intergroup variations in the feeling of external political effi cacy were minimal. In 2007, the three groups of respondents were very similar in this respect. Only in 2005 and 2009 were GEI respondents more likely than the other two groups to disagree that the government cared about public opinion. For example, in 2005, while 50.8 % of GEI respondents had no belief in the government’s respon- siveness, only 41.6 % of GRI respondents and 36.6 % of GNI respondents took such a view. In recent years, Macao people have enjoyed an increasing number of channels, opportunities, and requests to express their opinions on a variety of public issues. Collective social action has already become a popular course of political expres- sion. However, our survey fi ndings revealed that political powerlessness is a linger- ing and pervasive feeling. Most people, regardless of their industry, not only suffer from a lack of political self-confi dence, but also harbour doubts about the govern- ment’s responsiveness.

Table 6.7 Feeling of external political effi cacy (%) Year Overall GEI GRI GNI χ 2 test Government cares about public opinion 2005 Agree 31.4 26.6 30.7 34.0 * Neither agree nor disagree 27.7 22.6 27.7 29.4 Disagree 40.9 50.8 41.6 36.6 2007 Agree 25.0 24.9 27.6 22.2 n.s. Neither agree nor disagree 28.2 30.2 27.1 28.4 Disagree 46.8 44.9 45.4 49.4 2009 Agree 20.0 17.3 24.2 16.8 * Neither agree nor disagree 31.6 32.0 29.3 34.1 Disagree 48.4 50.7 46.5 49.1 * p < 0.05 140 6 Gambling Expansion and Political Development

6.3.4 Socio-political Participation

The level and scope of the socio-political participation of Macao’s people are not only an indication of the state of social integration and exclusion in Macao, but also of the capacities of the civil society, or of members of particular minority/majority groups, to accumulate social capital and claims-making power. However, in contrast to the high density and important role of civic associations in the political and social systems of Macao, the level of self-reported socio-political participation has been unexpectedly low. First, when we asked our respondents to report the frequency with which they participated in socio-religious activities or associations in the previous year, the over-whelming majority answered “never or seldom”. During the surveyed period, although the proportion of those who indicated that they “often” participated in socio-religious activities remained unchanged at around 6 %, those who answered “never or seldom” dropped from 81.0 % in 2005 to 75.4 % in 2007 and 75.2 % in 2009. Those who “sometimes” joined socio-religious activities went up from 13.0 % in 2005 to 17.7 % in 2007 and 18.7 % in 2009 (Table 6.8 ). It can be said that since 2005 there has been a modest increase in our respondents’ participation in socio- religious gatherings. The three groups of respondents differed signifi cantly in their level of participa- tion. The proportion of GEI respondents who “never or seldom” joined socio- religious activities was persistently the highest, and that of GNI respondents the lowest. More importantly, although the three groups all showed an increase in level of participation, the gap between the lowest and the highest appeared to be widen- ing. For instance, in 2005 the proportions of GEI and GNI respondents who “never or seldom” joined socio-religious activities were 90.4 and 74.9 %, respectively. In 2009, the corresponding fi gures dropped to 87.7 and 66.0 %. In other words, the gap between the two grew from 15.5 to 21.7 percentage points in 5 years. The gap between GNI and GRI respondents remained at less than 10 percentage points. Obviously, when compared to GEI respondents, both GNI and GRI respondents were more active in participating in socio-religious activities, and clearly became more so after the deregulation of the gambling industry. Second, we further explored the nature of the participation of those who “some- times” or “often” participated in socio-religious activities or associations in the pre- vious year. We did this by asking what kinds of activities or associations they had taken part in, including community-related, cultural, educational, ethnic, religious, welfare-related, work-related, recreational, political, social advocacy, and so on. In 2005, 2007, and 2009, only 11.6, 11.6, and 11.1 %, respectively, of the respondents participated in activities or associations that involved political and social advocacy, such as campaigning for environmental protection, women’s rights, and consumer rights. The changes in the three surveys were negligible (Table 6.8 ). Our fi ndings revealed that in 2005, more GEI than GRI and GNI respondents joined activities or associations involving political and social advocacy. That year, 33.3 % of GEI respondents indicated that they had done so, but the corresponding fi gures for GRI and GNI respondents were only 6.2 and 13.1 %, respectively. 6.3 Political Involvement: Interest, Effi cacy, and Participation 141

Table 6.8 Socio-political participation (%) Year Overall GEI GRI GNI χ 2 test Frequency of participation 2005 Never or seldom 81.0 90.4 83.3 74.9 *** Sometimes 13.0 5.3 12.0 16.9 Often 6.0 4.3 4.7 8.2 2007 Never or seldom 75.4 87.9 76.7 66.8 *** Sometimes 17.7 10.5 16.7 23.1 Often 6.8 1.5 6.7 10.1 2009 Never or seldom 75.2 87.7 74.4 66.0 *** Sometimes 18.7 10.1 20.1 24.1 Often 6.0 2.1 5.5 9.9 Participated in political activities or associations 2005 Yes 11.6 33.3 6.2 13.1 ** No 88.4 66.7 93.8 86.9 2007 Yes 11.6 7.7 10.7 13.1 n.s. No 88.4 92.3 89.3 86.9 2009 Yes 11.1 4.3 11.8 12.4 n.s. No 88.9 95.7 88.2 87.6 Participated in election gatherings 2009 Yes 8.8 9.7 7.4 9.8 n.s. No 91.2 90.3 92.6 90.2 Engaged in electoral campaigns 2009 Yes 6.1 7.5 4.7 6.7 n.s. No 93.9 92.5 95.3 93.3 ** p < 0.01; *** p < 0.001

However, as those GEI respondents who answered that they had joined such activi- ties or associations dropped to 7.7 % in 2007 and 4.3 % in 2009, differences among the three groups became statistically insignifi cant. In short, most of the respondents did not show strong enthusiasm towards participating in socio-religious activities or associations. Even those who “sometimes” and “often” joined socio-religious gath- erings or were members of socio-religious institutions mostly participated in those that were charitable, cultural, religious, and social in nature. Only a few took part in social advocacy and political activities or associations. Our respondents’ political zeal was by no means high. Lastly, in 2009, we also asked our respondents if they had participated in any election-related activities in the last Legislative Assembly election. Less than one- tenth replied in the affi rmative—8.8 % had participated in election gatherings and 6.1 % had engaged in electoral campaigns. Although over half of the registered voters had cast ballots in the past three Legislative Assembly elections and the vot- ing rate was increasing, the absolute majority of Macao residents are still abstaining from participating in other electoral activities. No statistically signifi cant differences were observed among the three groups of respondents in this aspect of electoral participation. That only a tiny proportion of the respondents took part in election gatherings or campaigns was a cross-industry phenomenon (Table 6.8 ). 142 6 Gambling Expansion and Political Development

6.4 Decline in Satisfaction with Democratic Development, Human Rights, and Government Performance

Portugal, the fi rst democracy in the third wave of democratization, introduced par- tial democratization in Macao in 1976 by opening up a limited number of seats in the legislature. Since then, the pace of democratization has remained extremely slow and the powers of the legislature have been confi ned to monitoring the govern- ment and representing societal interests. The frequently quoted conservative prin- ciple of “gradual progress towards democratization” was considered a “consensus value” in society. 15 Given the distinctive structure of Macao’s economy and society, 16 pragmatism and tolerance are still considered cornerstones of Macao’s stability and prosperity. In fact, there is no dearth of studies exploring the views of Macao people on political development. However, these studies almost always say that Macao people have little concern for the development of democracy. Their view of democ- ratization is usually described as conservative, realistic, and pragmatic. It is said that Macao people tend to see the government (or government offi cials) as their benefac- tor, instead of as “civil servants”. They have also been said to consider politics to be a game involving a small group and to think that becoming involved in politics could be dangerous (Yee 2001 , pp. 83–106).

6.4.1 Democratic Development

Given the limited scope and slow pace of democratic development, do the Macao people really not care about democracy? In our survey, the respondents were asked to express their degree of satisfaction with the democratic development taking place in Macao. Their responses were coded on a fi ve-point scale ranging from “very dis- satisfi ed” to “very satisfi ed”, with individual scores ranging from 1 to 5. The higher the score was, the higher the degree of satisfaction. The mean score in 2005 was 2.99—slightly below the mid-point of 3. Hence, we can say that the respondents had a lukewarm attitude towards democratic development. However, in 2007 and 2009, the corresponding mean scores dropped to 2.78 and 2.75 (Table 6.9 ). The proportion of respondents who expressed clear dissatisfaction with the development of democ- racy in Macao increased from 24.5 % in 2005 to 32.5 % in 2009, while those who were satisfi ed decreased from 26.7 to 15.1 %. Intergroup variations were not substantial. The ANOVA data indicated that the three groups of respondents differed slightly in this respect in 2005 and 2007.

15 The Basic Law of Hong Kong (Articles 45 and 68) has laid down “the principle of gradual and orderly progress” in the road map for the territory’s democratic development. Since the ultimate aim of universal suffrage was not stipulated in the Basic Law of Macao, “the principle of gradual and orderly progress” was also not specifi ed. 16 Macao’s economy is increasingly tilting towards the gambling industry and the patrons are increasingly mainland Chinese. 6.4 Decline in Satisfaction with Democratic Development, Human Rights… 143

Table 6.9 Satisfaction with democratic development and human rights in Macao (mean score) Year Overall GEI GRI GNI ANOVA test Democratic development 2005 2.99 2.87 2.99 3.02 n.s. 2007 2.78 2.86 2.81 2.71 n.s. 2009 2.75 2.74 2.82 2.66 * Human rights situation 2005 3.13 2.96 3.12 3.21 ** 2007 3.02 3.01 3.02 3.02 n.s. 2009 2.99 2.87 3.07 2.98 ** * p < 0.05; ** p < 0.01

However, while the degree of satisfaction of GNI respondents with Macao’s democratic development was the highest among the three groups in 2005, they became the most disappointed group in 2009—their mean score dwindled from 3.02 to 2.66. The degree of satisfaction of GEI and GRI respondents on the issue also fell, but at a less rapid pace. Their mean scores dropped from 2.87 and 2.99 in 2005 to 2.74 and 2.82 in 2009, respectively. Democracy is a political system that Macao people generally value, but public support for it is far from overwhelming. This is probably due to their idiosyncratic belief that a “good government” is not necessarily a democratic government. Direct elections are the sine qua non of democracy. However, when we asked our respon- dents what they considered to be a good government in 2009, only 6.8 % answered “a government elected by the people”. Over half (51.8 %) identifi ed a good govern- ment as one that is willing to consult its people, i.e., willing to listen to public opin- ion and take care of the interests of citizens. This conception is clearly in accordance with the traditional Chinese idea of minben (people as the basis of government). Those who regarded “clean and just” and “high effi ciency” as the primary criterion of a good government amounted to 27.4 and 11.7 %, respectively.

6.4.2 Human Rights

In the latest Human Rights Report for Macao, which covered internationally recog- nized individual, civil, political, and worker rights, as set forth in The Universal Declaration of Human Rights and other international agreements, the US Department of State ( 2011 ) only identifi ed the following problems: “limits on citizens’ ability to change their government and lack of progress in prosecuting cases of traffi cking in persons. National security legislation, passed in 2009 in accordance with Article 23 of the Basic Law , remained a source of concern, but by year’s end no cases had been brought under the law”. In its fi rst Human Rights Report on Macau , the New Macau Association (2011 ) focused on the issues of media self-censorship, freedom of speech and assembly, and the protection of property. 144 6 Gambling Expansion and Political Development

Our respondents were also asked to indicate their degree of satisfaction with the human rights situation in Macao, using the same fi ve-point scale, i.e., the higher the score was, the greater the degree of satisfaction. In 2005, the overall mean score was 3.13—slightly over the mid-point of 3. Then, in 2007 and 2009, the mean scores dropped to 3.02 and then to 2.99 (Table 6.9 ). The proportion of respondents who were dissatisfi ed with the local human rights situation increased from 19.0 % in 2005 to 23.7 % in 2009, whereas those who were satisfi ed decreased from 32.3 to 25.0 %. As with democratic development, our respondents’ degree of satisfaction with the human rights situation in Macao also dropped little by little as the gambling industry became more open and robust. Although it is too early to conclude that democratic development and human rights in Macao are eroding, it would seem that great attention is needed when handling these matters. Intergroup comparisons indicated that GEI respondents were less satisfi ed with the human rights situation in Macao than GRI and GNI respondents. For instance, in 2005, when GEI respondents gave a mean score of 2.96 to the human rights situation, the corresponding fi gures for GRI and GNI respondents were 3.12 and 3.21, respectively. Furthermore, although the three groups of respon- dents all reported a decline in satisfaction during the surveyed years, the level of satisfaction of GNI respondents fell at a more rapid pace (from 3.21 to 2.98) than did that of both GEI and GRI respondents (from 2.96 and 3.12 to 2.87 and 3.07, respectively). Without doubt, the level and scope of the socio-political participation of Macao people were not high, particularly in light of the very large number of registered civic associations in relation to the population. Nevertheless, as Macao’s economy grew rapidly after the introduction of the gambling liberalization policy, public sat- isfaction with the situation regarding democratic development and human rights in Macao steadily declined. This may be contributing to a mounting desire for greater government responsiveness and more direct political participation.

6.4.3 The Government’s Performance

Political trust refl ects the people’s evaluation of the polity, and is thus vital to regime stability. The institutional approach, in contrast to the cultural approach, argues that political trust arises from rational responses by individuals to the performance of political institutions. Empirical studies have revealed that evaluations of policy per- formance are important determinants of political trust and support in both Western and Asian societies (Hetherington 2005 ; Wong et al. 2011 ). In 2005, our survey fi ndings indicate a favourable evaluation of the performance of the Macao government. Although 47.3 % of the respondents regarded the perfor- mance of the government as being about average, a substantial proportion (37.7 %) rated its performance as satisfactory, more than double those who rated it as unsat- isfactory (14.9 %). In 2009, the respondents were asked to evaluate the work 6.4 Decline in Satisfaction with Democratic Development, Human Rights… 145

Table 6.10 Evaluation of the government’s performance (%) Year Overall GEI GRI GNI χ 2 test 2005 Satisfactory 37.7 24.1 39.3 40.5 ** Neutral 47.3 57.5 45.4 46.2 Unsatisfactory 14.9 18.4 15.3 13.3 2009 Satisfactory 26.1 22.2 30.4 23.7 * Neutral 48.2 50.0 46.2 49.3 Unsatisfactory 25.7 27.8 23.4 27.0 * p < 0.05; ** p < 0.01

effi ciency of the government (a difference in wording). The proportion of respondents who rated the government’s performance in this respect as being about average remained more or less the same (48.2 %). Yet those who gave a positive evaluation dropped signifi cantly from 37.7 to 26.1 %, while those who thought otherwise rose from 14.9 to 25.7 % (Table 6.10 ). Obviously, within a few years, our respondents’ rating of the government’s performance had become less positive, even though the economy remained robust. On closer scrutiny, in 2005 we see that the proportion of GNI and GRI respon- dents who evaluated the government’s performance as satisfactory (40.5 and 39.3 %, respectively) was signifi cantly greater than that of GEI respondents (24.1 %). Then, in 2009, those GEI respondents who found the government’s work effi ciency to be satisfactory dropped slightly to 22.2 %. This change in percentage was far lower than that for GRI and GNI respondents, the corresponding fi gures for whom were 30.4 and 23.7 %, respectively. Apparently, something had happened in the govern- ment and/or in the normative expectations of the people between these years that caused the respondents to become increasingly discontented. To a certain extent, the dramatic economic growth that took place after the dereg- ulation of the gambling industry bolstered the status and authority of the Macao government. Hence, in 2005, around one-third of the respondents still agreed that the government was concerned about their opinion. However, within a few years, not only had the respondents’ view of the amount of infl uence they had on the gov- ernment become less favourable (also implying how open-minded they thought the government was), so had their evaluation of the government’s performance. As Macao’s economy and labour market kept fl ourishing, it is reasonable to speculate that the change related to the government’s credibility, authority, and accountability. Although the political ethos of the Macao people could still largely be described as apolitical or lukewarm, they undoubtedly had expectations of the government after the handover, because of the promises of a “high degree of autonomy” for the Macao SAR and “Macao people governing Macao” under the “one country, two systems” framework. As such, if the performance of the government fell below public expec- tations, socio-political grievances could quickly mount, which, if not properly addressed, could ultimately undermine social stability. 146 6 Gambling Expansion and Political Development

6.5 Conclusion

By analyzing both the objective data from offi cial statistics and the subjective data on political attitudes and behaviour, a picture emerges of an increasingly compli- cated socio-political environment after the deregulation of gambling. While Macao’s economy remained prosperous even after the fi nancial tsunami and attractive gov- ernment subsidies have been handed out nearly every fi nancial year, demonstrations and protests have become larger and more frequent, views of the government have become less favourable, and grievances have become greater. Looking back, one of the critical factors that triggered growing socio-political discontent seemed to be the aforementioned Ao Man-long corruption case (see Note 7 of Chap. 5 ). Before the Ao Man-long corruption case, although there were criticisms that the Macao government was not clean enough, and that there was collusion between busi- nessmen and government offi cials, socio-political discontent was not as strong. However, since Ao was the then Secretary of Transportation and Public Works and his immediate boss was the Chief Executive, the credibility of the Macao SAR government in the eyes of the public plummeted after the eruption of the case. Although Ao was fi nally convicted and sentenced to 29 years of imprisonment, some Macao residents were still dissatisfi ed. Many even believed that the Ao Man-long case was only the tip of the iceberg of offi cial corruption (BBC News 5 February 2008 ; Godinho 2009 ). Later information revealed that since the 1999 handover, “only a handful of more than 400 sites sold by the government have gone through the public bidding pro- cess” (South China Morning Post 22 March 2010 ). As such, many Macao residents thought that the opening up of the gambling industry had caused the problem of corruption to become more serious. Viewed from this angle, it would seem that not only did the Ao Man-long corruption case do much to erode the government’s authority and credibility, it also led to a series of socio-political transformations and policies, including the bestowing of various subsidies and cash handouts and, of course, to more rallies and protests. It would be fair to say that not many Macao people would disagree with the statement that the Ao Man-long corruption case in 2006 was a watershed in Macao’s socio-political development. To be more specifi c, before this corruption case, although grievances were mounting in some sectors or classes of the society, Macao’s economy was growing and there was no solid evi- dence of SAR government offi cials taking bribes, so there was nothing to trigger an eruption. The Ao Man-long corruption case acted as a catalyst that brought previ- ously muted socio-political discontent to the surface. Not only did accusations of collusion between businessmen and government offi cials become more strident, so did criticisms of the opaqueness of the administration and its ineffectiveness in han- dling increasingly complex socio-political confl icts. If we examine the various subjective indicators, we fi nd that the average Macao person tends to be politically apathetic or parochial. In the past and to this day, Macao is known as a place for “making a living”. Most Macao people tend to concentrate on making a living rather than participating in politics. An underlying reason for their strong disinterest in politics is the deep-rooted traditional belief that “politics is for the elites”. As such, the majority of the respondents not only References 147 expressed the view that “politics is too complicated for me to understand”, but also seldom or never join political activities or gatherings. Another perception that Macao people have is that of political incapability. During the four and a half centuries of Portuguese administration, there was no mechanism by which common people would be fully consulted before the formula- tion and implementation of any important public policy. Thus, the government stood apart from the people. People in Macao were therefore apt to think that they did not have any infl uence on government policy. That explains why, during times when the economy remains prosperous and society stable, the majority of Macao people are inclined to keep their distance from politics and the government. The transfer of sovereignty, the opening up of the gambling industry, and the Ao Man-long corruption case have not greatly changed the mindset of ordinary Macao people towards politics. This is evident from the fact that over half of the respon- dents indicated that they are still relatively indifferent towards politics. However, we can observe that a sizable number of more educated people who were born after the 1980s—a period that signifi ed the confi rmation of China’s resumption of sover- eignty over Macao—have become particularly vocal and critical about recent issues of governance and socio-economic-political developments. Since a signifi cant pro- portion of this cohort have neither joined traditional civic associations (institutions established for the purpose of political absorption) nor have been given the chance to freely express their views through conventional channels (such as the mass media because most of them are pro-Beijing and offer little news coverage that challenges Macao’s political and business establishment), they have tended to establish their own political platforms and to use the Internet as their main vehicle to voice their political views. After the implementation of the policy to deregulate gambling, socio-political confl icts have intensifi ed as competition for resources, interests, or power has become more acute. However, the mechanisms, systems, and procedures of the cur- rent administration, most of which have been carried over from the period of Portuguese colonial rule, do not seem to be able to meet present-day challenges. Traditional civic associations also seem to have become less effective at political absorption and political arbitration. This situation has led to the emergence of a group of less politically apathetic people who are dissatisfi ed with the government’s performance and who are not part of the establishment. They have taken to march- ing on the streets or linking up on the Internet to demand a clean, transparent, and accountable government with more room for direct political participation.

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Macao Daily News (2006) 600 marched yesterday with various demands; police maintained order without incidents, p B07, 21 December (In Chinese) Macao Daily News (2007) Demands end in riot; organizer: lose-lose situation; protesters charge the barricades; police fi re guns and pepper spray, p A01, 2 May (In Chinese) Macao Daily News (2007) Multiple demands; order maintained; 1,500 marched for democracy, p B05, 21 December (In Chinese) Macao SAR Government (2012) Chief Executive election law (Law no. 11/2012). (In Chinese) http://bo.io.gov.mo/bo/i/2012/37/lei11_cn.asp . Accessed 23 Oct 2012 Macau Post Daily (2012) Casino CEO calls for gaming-industry seat in legislature, p P01, 27 March New Macau Association (2009) Proposal for democratic political development in the Macao Special Administrative Region. (In Chinese) http://www.newmacau.org/cms/index. php?option=com_content&view=article&id=1090&Itemid=27 . Accessed 23 Oct 2012 New Macau Association (2011) Human rights report on Macau: 2010–2011. http://www.newmacau.org/ material/Human_Rights_Issues_2010-2011_Eng.pdf . Accessed 23 Oct 2012 Recenseamento Eleitoral (2012) A comprehensive report on electoral activities 2001–2009: part III—Register of electorates. (In Chinese) http://www.re.gov.mo/re/public/html.jsf?lang=zh_ TW&article=download . Accessed 23 Oct 2012 Scott I, Lam NMK (2011) Gaming, governance and public policy: constraints and opportunities. In: Lam NMK, Scott I (eds) Gaming, governance and public policy in Macao. Hong Kong University Press, Hong Kong, pp 217–224 South China Morning Post (2010) Macau row over move to fi ll lake to build hospital, 22 March. http://www.scmp.com/article/709311/macau-row-over-move-fill-lake-build-hospital . Accessed 23 Oct 2012 US Department of State (2011) 2010 human rights report: China (includes Tibet, Hong Kong, and Macau). http://www.state.gov/j/drl/rls/hrrpt/2010/eap/154382.htm . Accessed 23 Oct 2012 Wong TKY, Wan PS, Hsiao HHM (2011) The bases of political trust in six Asian societies: institutional and cultural explanations compared. Int Polit Sci Rev 32(3):263–281 Wu Z (1993) Macao’s political system. Macau Public Administration Association, Macao (In Chinese) Yee HS (2001) Macau in transition: from colony to autonomous region. Palgrave, Basingstoke Yee HS, Lou SH, Chan CW (2011) A longitudinal study of the political culture of Macao Chinese. Joint Publishing (Hong Kong) Company Limited, Hong Kong (In Chinese) Yu WY (2010) Political modernization of Macao and its challenges. J Macau Stud 56:7–16 (In Chinese) Chapter 7 National/Regional Integration and Local Development

7.1 Introduction

Macao’s gambling industry would not prosper without patrons from outside Macao’s borders. This was the case not only in the past, but remains true in the present and will remain true in the future. The attractiveness and competitiveness of Macao’s gambling industry not only depends on Macao’s gambling products, promotion strategy, transportation networks, and so on, but also on the gambling policies of its neighbours. To be specifi c, if gambling were to be made lawful in a close neighbour, for example Hong Kong or Guangdong province, Macao could suffer a tremendous decline in business. Since the policies of its neighbours are beyond Macao’s control, Macao’s top government offi cials must always keep in mind how to maintain a harmonious relationship with all of them—and must convince its neighbours, as well as the Beijing government, that it is in their interests not to make gambling lawful within their boundaries. As a city with a tiny territory, a small population, limited resources, and a high degree of dependence on its neighbours, Macao has always embraced a philosophy of regional cooperation and integration. In fact, there is historical evidence showing that Macao, Hong Kong, and Guangdong province had various complementary relationships of trade and exchange in the past (Deng 1999; Deng et al. 2000 ). After the reunifi cations of Hong Kong and Macao in 1997 and 1999 respectively, and also under the CEPA and Individual Visit Scheme policies, Macao’s integra- tion with both of these places has intensifi ed. Macao’s role in regional economic development has also become more visible. Under the waves of globalization and the rise of China, how can Macao better reposition itself in the region through the mechanism of cooperation and integration to enhance its attractiveness? Can improving its transportation network really strengthen Macao’s economic sustainability? What is the public’s perception of Macao’s increasing dependence on the gambling industry as well as on the continuous infl ux of tourists from mainland China? Have there been changes in the state of national vis-à-vis local identity orientations? More importantly, in what way can Macao’s gambling

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 151 DOI 10.1007/978-3-642-40749-9_7, © Springer-Verlag Berlin Heidelberg 2014 152 7 National/Regional Integration and Local Development industry be better developed not only to ensure its own sustainable growth but also to better serve the country’s socio-economic-political-diplomatic diversifi cation? All of these questions are discussed in the following paragraphs.

7.2 Embracing Regional Integration as a Development Strategy

Macao does not have a self-suffi cient and self-reliant economy. Because of a lack of natural resources, manpower, capital, and know-how for survival and to sustain economic development, Macao heavily relies on visitors from neighbouring areas and around the globe. As explained in Chap. 2, from the past to the present day, both the government and the people of Macao have accepted regional integration and placed a strong emphasis on pragmatism and multi-cultural/racial co-existence. They have done so, of course, due to the inherent weakness of Macao’s economic base and structure. If we examine various objective indicators such as trade, investment, and tourism, we can clearly see Macao’s high degree of dependence on its neighbours and trading partners, and that this dependence has become greater after the deregulation of gambling.

7.2.1 External Trade

From the 1950s to the 1980s, under the geopolitics of the Cold War, like Hong Kong, Macao’s socio-economic interactions with mainland China were largely sup- pressed. Thus, Macao’s trade, investment, and tourists came mainly from Hong Kong. From the 1980s to before the handover, although socio-economic interac- tions between Macao and the mainland were being promoted, as there was no socio- economic liangdian (literally “fl ashpoint”), no dramatic growth took place in Macao. After the handover, especially after the deregulation of gambling and the introduction of the Individual Visit Scheme policy, Macao’s economy has been booming, which has created a robust demand for imported goods. Figure 7.1 shows Macao’s total annual imports (in value) from its various main markets from 2000 to 2011. Most notable is the fact that total annual imports expanded rapidly from MOP18,098 million in 2000 to MOP62,289 million in 2011, or an increase of 244.2 % in 11 years. Of course, there have been some fl uctuations in growth. Total annual imports have risen steadily since 2000. In 2009, although there was a sudden dip mainly attributable to the fi nancial tsunami, total annual imports rebounded rapidly as Macao was far from the epicentre of the fi nancial crisis and had very little involvement in fi nancial derivatives. A closer scrutiny further indicates that although Macao was sourcing imports from around the world, a large percentage of these imports, over 70 %, were from Asia, especially greater China (DSEC 2012b ).1

1 The term greater China economy frequently refers to Singapore, Macao, Hong Kong, Taiwan, and mainland China, as the majority of the population in these societies are Chinese. However, in this book, we adopt a narrower defi nition and only include the latter four economies. 7.2 Embracing Regional Integration as a Development Strategy 153

70,000 62,289 60,000

50,000 43,114 43,034 44,118

40,000 36,527 36,902 31,340 27,904 (million) 30,000 22,097 19,17020,323 20,000 18,098

10,000

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Asia EU US Worldwide total

Fig. 7.1 Macao’s annual imports from main markets, 2000–2011 (million MOP) (Sources: DSEC 2012b ; DSECb various years )

If we examine the major Asian markets, we see that mainland China tops the list and that the value of its exports to Macao is growing more rapidly than most of its competitors. Although Hong Kong ranks second, the value of its annual total exports to Macao is far smaller than that of mainland China. Taiwan and Japan rank third or fourth, respectively. For instance, in 2000, Macao imported commodities from mainland China and Hong Kong worth MOP7,429 million and MOP2,758 million, respectively. Meanwhile, imports from Taiwan and Japan were worth MOP1,720 million and MOP1,142 million, respectively. Around one decade later (2011), total annual imports from mainland China and Hong Kong to Macao increased to MOP19,121 million and MOP7,588 million, respectively (or a total increase of 157.4 and 175.1 %, respectively). In the same period, imports from Taiwan fell to MOP1,330 million (or a contraction of 22.7 %), but imports from Japan expanded astonishingly to MOP3,911 million (a remarkable increase of 242.5 %) (Fig. 7.2 ). If measured by the growth rate, Japan’s exports to Macao expanded more rapidly than those of mainland China and Hong Kong. Based on these import trade fi gures, we can conclude that as Macao becomes more prosperous, not only are its annual total imports rising, its level of dependency, especially on its close neighbours, is also becoming more lopsided. Unlike the import trade, which has increased greatly in the past decade, Macao’s export trade is a story of decline. Although gambling is usually considered its “dragon-head” industry, this does not mean that Macao’s export-oriented industries have been insignifi cant. Like Hong Kong, Macao began to industrialize in the 1950s after the imposition of a trade embargo on mainland China. Key manufacturing sectors 154 7 National/Regional Integration and Local Development

35,000 3,911

30,000 3,875 3,639 1,330 3,049 25,000 3,812 1,500 7,588 3,412 1,424 1,173 3,039 20,000 2,684 4,359 3,723 4,366 1,078 1,261 1,987 1,354 1,121 (million) 15,000 1,371 3,126 4,628 1,142 1,041 2,950 1,282 4,036 1,358 1,720 1,278 2,794 10,000 2,956 2,758 2,660

5,000 7,429 8,165 8,477 9,490 12,39413,51516,47018,37816,92611,57113,71819,121 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mainland China Hong Kong Taiwan Japan

Fig. 7.2 Macao’s annual imports from main Asian markets, 2000–2011 (million MOP) (Source: DSEC 2012b )

such as textiles and garments, footwear and baggage, as well as food products and beverages were highly active and once absorbed the majority of Macao’s labour force. Macao’s major markets for its products were developed economies such as Europe and the US. From the 1980s onwards, because of rising production costs in Macao and very low wages and rents in mainland China, many assembly lines in Macao were moved to locations in the latter. This brought about a prolonged economic downturn in Macao (Hao 2011 ). Entering the new millennium, Macao’s light industrial sector remained weak. Before 2002, the US and EU were still the major markets for Macao’s manufactured goods. Asia only ranked third. After 2002, although the US still remained the top export market for Macao-made commodities, Asia overtook the EU as the second export destination. From 2004 onwards, Macao’s exports to the US and EU dropped rapidly, especially after 2007. Macao’s exports to Asia kept growing from 2001 until 2007, after which they began to decline. After 2008, although Asia overtook the US as Macao’s top export market, all exports from Macao to the three key regions recorded a continuous decline (Fig. 7.3 ). In other words, although the gam- bling industry has become increasingly buoyant since 2004, Macao’s export trade, which was essentially reliant on manufacturing industries, went in the opposite direction. A clear picture emerges of an economy that has become increasingly dependent on the gambling business. Since Asia has become Macao’s major export region after 2008, a more detailed analysis of the composition of its Asian trading partners is needed. As mentioned 7.2 Embracing Regional Integration as a Development Strategy 155

12,000

10,000

8,000

6,000 (million) 4,000

2,000

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Asia EU US

Fig. 7.3 Macao’s annual exports to main markets, 2000–2011 (million MOP) (Source: DSEC 2012a )

before, in past centuries there was much trade and exchange among Macao, Hong Kong, and Guangdong province. Because of a similar colonial background and a philosophy of free trade, Hong Kong was Macao’s top export market in Asia for many decades. Although the market in Guangdong province was huge compared to that of Hong Kong, the trade embargo and the restrictive trading policy adopted in China before 2000 made this market diffi cult to access. Thus, the value of Macao’s annual total exports to mainland China was dwarfed by its exports to Hong Kong. After the handover, as Macao and Hong Kong became SARs under the “one-country two systems” model, the two regions formed closer socio-economic-cultural connections with mainland China, as expected. Although Macao’s light industrial products were still targeted at Western markets, its exports to Hong Kong and mainland China recorded steady growth. Before 2007, mainland China was the top export market in Asia for Macao’s goods, followed by Hong Kong and Taiwan. From 2007 onwards, Macao’s exports to mainland China fell rapidly, but those to Hong Kong were maintained. That year, Hong Kong overtook mainland China to become the largest export market in Asia for Macao’s manufactured products (Fig. 7.4 ). Without doubt, because of the fallout from the fi nancial tsunami in the US, the sovereign debt crisis in the EU, and the local shrinking manufacturing base, Macao’s exports to these regions plummeted. Although Macao’s exports to Hong Kong grew considerably, as its exports to mainland China and other Asian economies all fell, this did little to offset the contraction in the other markets. It is clear that Macao’s export trade is becoming increasingly weak, and that Macao is becoming more reliant on the support of its close neighbours. This is confi rmed by a study conducted by Nicolas ( 2012 ) showing that Macao’s trade dependency rate on the greater China 156 7 National/Regional Integration and Local Development

6,500 6,000 255 5,500 136 218 202 182 5,000 153 103 4,500 130 161 176 4,000 1,704 2,292 171 148 1,362 1,943 2,674 3,500 1,100 3,163 3,000 1,178 3,015 3,109 (million) 2,500 1,330 3,003 2,000 1,500 2,155 2,844 2,946 3,034 1,000 3,035 2,073 2,948 3,140 1,968 1,102 500 1,117 1,098 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mainland China Hong Kong Taiwan

Fig. 7.4 Macao’s annual exports to main Asian markets, 2000–2011 (million MOP) (Source: DSEC 2012a ) economy rose steadily after the handover from 32.6 in 2000 to 41.3 in 2005, and then to 42.7 in 2010. Some people may have the impression based on the above import and export trade fi gures that Macao faces a serious trade defi cit. In fact, because of the tremen- dous infl ow of capital and export of services (i.e., gambling and related entertain- ment), Macao enjoys a surplus in its balance of payments. Since we have discussed the development of the tourist industry, especially after the implementation of the CEPA and Individual Visit Scheme policies, in the subsequent paragraphs we focus on capital infl ows, examining particularly the scale and sources of these infl ows.

7.2.2 Foreign Direct Investment

Macao is not only lacking in natural resources but also in capital for investment. Because of this, Macao relies heavily on outside investment. The government has regarded foreign direct investment (hereafter FDI) as a means of fostering techno- logical transfers and has expected the entry of transnational enterprises to have sig- nifi cant positive spillover effects on other industries; thus, it has designed strategic policies to attract foreign capital to the gambling industry (Vong 2007 , pp. 31–32). This policy has resulted in a spectacular infl ow of FDI. 2 Figure 7.5 shows the annual inward FDI fi gures for Macao from 2001 to 2010. We can see two salient points: First, the total amount of inward FDI has risen rapidly since 2002. Second, the inward FDI fi gures show a high concentration of investment in the gambling sector.

2 In 2001, the DSEC began to release statistics on FDI. 7.2 Embracing Regional Integration as a Development Strategy 157

120.0 80.0 66.7 69.2 64.8 64.7 64.5 100.0 60.5 57.7 58.4 58.3 58.5 60.0 80.0 38.7 25.9 60.0 29.7 40.0 23.6 (%) (Billion) 40.0 18.3 15.9 20.0 10.8 11.9 12.9 20.0 10.1 13.7 15.1 16.6 18.2 24.4 33.7 49.1 58.2 54.3 70.3 0.0 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Gambling sector Others Share of gambling sector

Fig. 7.5 Macao’s stock of inward FDI, 2001–2010 (billion MOP, %) (Sources: Calculations are based on DSECa various years )

Examining the fi gures in detail, we see that the total stock of inward FDI was MOP23,779 million in 2001. Five years later (in 2006), the total had more than doubled to MOP52,087 million. The fi nancial tsunami in 2008 did not stem the infl ux of capital to Macao. In 2010, the total amount of incoming capital doubled again to MOP109,013 million. Thus, in 10 years’ time, FDI in Macao had risen by 3.5 times. This is an impressive growth by any standard. As expected, the major portion of FDI infl ows has been concentrated in the gambling sector, ranging from 57.7 % in 2001 to 69.2 % in 2008. In 2010, FDI in the gambling sector amounted to MOP70,280 million, comprising 64.5 % of the total amount of FDI. FDI generally runs at 2–3 % of the size of an economy (United Nations Conference on Trade and Development 2010 , p. 16). From 2002 to 2010, the net infl ow of FDI in Macao, ranging from 5.9 % of GDP in 2002 to 27.9 % in 2007, was unquestionably outstanding. Figure 7.6 shows FDI as a percentage of GDP in Macao and selected Asian economies. The performance of Macao in this respect trails only that of Hong Kong and Singapore. The answer to the question “Where did the FDI come from?” shows us that Macao’s FDI has undergone a subtle change from a “single-dominant” pattern to a “multi-dominant” pattern. In 2001, of total FDI of MOP23,779 million, the bulk (MOP16,810 million, or 70.7 % of the total) came from Hong Kong. Although there were some investments from mainland China (MOP2,994 million), Portugal (MOP2,617 million), the UK (MOP651 million), and the US (MOP95 million), they were not signifi cant in percentage terms. After the implementation of the gambling liberalization policy, as some of the concessionaries were from Hong Kong, the US, 158 7 National/Regional Integration and Local Development

40.0

35.0

30.0 27.9

25.0

20.0

15.0 18.1 14.8 15.0 12.3 10.0 7.5 5.0 5.9 6.5 0.2 2.5 0.8 0.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Macao Mainland China Hong Kong South Korea Singapore

Fig. 7.6 FDI (net infl ow) as a percentage of GDP in Macao and selected Asian economies, 1999– 2010 (%) (Source: World Bank 2012 )

and Australia, it might be supposed that investments would have fl ooded in from these places. However, offi cial data shows that although there was indeed an infl ux of capital from these places, a signifi cant proportion came from tax-free “paradises” like the Cayman Islands and the British Virgin Islands. For example, of total FDI of MOP109,013 million in 2010, the shares of the top fi ve investor countries or territories were: Hong Kong (37.5 %), Cayman Islands (21.2 %), the US (16.2 %), mainland China (12.5 %), and British Virgin Islands (5.8 %) (Fig. 7.7 ). This is a refl ection of the increasingly less nationally based nature of international capital and multinational conglomerates, which are speculative, profi t-driven, and highly mobile (Strange 1998 ). Compared to Hong Kong, the return of Macao to Chinese sovereignty attracted only a small amount of international attention. Also, predictions on Macao’s eco- nomic development were less favourable than those for Hong Kong. However, after the handover, especially after the implementation of the policy to deregulate gam- bling, not only was Macao’s economic performance considered far better than Hong Kong’s, but the number of tourists from around the world fl ooding into Macao also exceeded the number of visitors to Hong Kong. The turning point in all this was clearly the opening up of the gambling industry. Notwithstanding its impressive economic growth, Macao’s reliance on its neighbours, especially mainland China and Hong Kong, has become increasingly acute and obvious, not only in terms of trade 7.3 Enlarging the Foundation for Sustaining Growth 159

(million) 109,013 110,000 Hong Kong

100,000 Mainland China

Cayman Islands 90,000 US 84,077 84,052

80,000 British Virgin Islands 72,743 Portugal 70,000 UK

60,000 Others 52,087 Total 50,000

40,242 40,000 31,169 28,461 30,000 25,876 23,779

20,000

10,000

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Fig. 7.7 Year-end stock of inward FDI in Macao, 2001–2010 (million MOP) (Sources: DSECa various years)

and investment, but also as sources of tourists. Thus, during economic downturns or times of socio-political crisis, the potential social threats or business risks to Macao would undoubtedly be great.

7.3 Enlarging the Foundation for Sustaining Growth

7.3.1 Extensive Land Reclamation

Land is without doubt the most precious resource in Macao. Because of the growing demand for land to build casinos, hotels, private and public housing, and infrastructure after the handover, the SAR government undertook a series of land reclamation projects after obtaining consent from the central government. At the initial stage, most of the 160 7 National/Regional Integration and Local Development reclamation projects were concentrated in the Macao peninsula, especially the area close to the Outer Harbour. After the opening up of the gambling industry, as the need for land to build casinos and hotels became increasingly acute and the peninsula was getting crowded, the government assigned a strip of reclaimed land between Coloane and Taipa islands—the Cotai area (now known as the Cotai Strip) for the building of new casinos and hotels (Fig. 7.8 ). New fi ve-star hotels have mushroomed in the past few years. According to different reports, that area had originally been earmarked for residential housing, schools, parks, and public facilities (Wan and Pinheiro 2011, p. 28). The change in land use inevitably affected the supply of residential housing as well as the provision of other public facilities. Table 7.1 shows the change in total land area, the number of newly built residen- tial units, and the average transaction price and average gross fl oor area of residen- tial units in Macao from 1999 to 2011. We can see that in about one decade, Macao’s total land area rose impressively from 23.8 to 29.9 km2 . As these newly reclaimed lands were mostly given over to commercial and residential use, they became an important base for continuous growth in Macao. However, although a total of 26,438 residential units were built, the prices are far beyond the purchasing power of local residents—the average transaction price of residential units per square metre soared from MOP6,261 in 2002 to MOP41,433 in 2011, an upsurge of 561.8 %, while the corresponding increase in median monthly employment earnings was merely 114.0 % (DSEC 2012c ). In addition, the average size of the newly built residential units increased from 72.4 m2 in 1999 to a peak of 156.2 m2 in 2009, commonly regarded as an indicator of the “luxurization” of private properties. As observed by the Monetary Authority of Macao (Autoridade Monetária de Macau), foreign buy- ers are behind a considerable part of the demand for local properties. The signifi cant increase in the number of intermediate transfers of titles for new buildings also indicates an increase in speculative activities (Un 2007 , pp. 88, 90). All told, as Macao’s economy became increasingly vibrant after the liberalization of gambling, the perceived seriousness of the housing problem as well as the percentage of so- called “slugs” (people who do not own a fl at) both rose. In the words of Wang Guangya, Beijing’s top offi cial on SAR affairs: “Housing is an issue many of the general public [in both Macao and Hong Kong] are concerned about. We have to be concerned about it as it is an economic problem and a livelihood problem…. It could turn into a political one if poorly handled” (The Standard 17 June 2011 ). As a potential political problem, one aspect could well include a rise in negative public sentiment towards regional integration.

7.3.2 National Policy Support

Regional integration at the subnational level, so as to achieve economic diversifi ca- tion, is a top priority for Macao. With the initiative coming from the central gov- ernment, a series of formal agreements and mechanisms were introduced to facilitate exchanges of goods and services, joint and synergistic development, 7.3 Enlarging the Foundation for Sustaining Growth 161

Fig. 7.8 Land reclamation in Macao, 1912–2011 (Source: Cartography and Cadastre Bureau 2012 ) 162 7 National/Regional Integration and Local Development

Table 7.1 Total land area and basic information on residential units in Macao, 1999–2011 Residential units Total land Number of newly Average transaction Average gross Year area (km2 ) built units price per m2 (MOP)a fl oor area (m2 )b 1999 23.8 4,252 – 72.4 2000 25.4 2,747 – 83.8 2001 25.8 1,774 – 98.1 2002 26.8 360 6,261 129.4 2003 27.3 1,246 6,377 123.4 2004 27.5 962 8,259 126.9 2005 28.2 1,098 11,621 146.6 2006 28.6 2,783 13,881 148.0 2007 29.2 1,856 20,729 142.9 2008 29.2 1,099 23,316 134.2 2009 29.5 3,096 23,235 156.2 2010 29.7 4,066 31,016 126.7 2011 29.9 1,099 41,433 117.0 Sources: Calculations are based on DSECb (various years); UN (2007 , p. 88) a Offi cial data on house prices in Macao have only been available since 2004 b Average gross fl oor area = total gross fl oor area/number of newly built units convenient boundary crossings, the connection of infrastructure, and so on. Examples include the CEPA in October 2003, the Pan -Pearl River Delta Regional Cooperation Framework Agreement in June 2004,3 and the Framework Agreement on Cooperation Between Guangdong and Macao in March 2011. The central government also promulgated The Outline of the Plan for the Reform and Development of the Pearl River Delta ( 2008– 2020) in January 2009, which elevates the development of the Pearl River Delta region to the strategic level of national development, specifying cooperation among Macao, Hong Kong, and Guangdong province as a national policy (National Development and Reform Commission 2008 ).4 In addition, the role of

3 The Pan-Pearl River Delta region is comprised of nine provinces/regions in the Pearl River Delta in southern China, namely Guangdong, Fujian, Jiangxi, Hunan, Guangxi, Hainan, Sichuan, Guizhou, Yunnan, and the two SARs of Macao and Hong Kong, widely known as “9 + 2”. The region accounts for 20 % of the total area of China and represents one-third of the country’s population. The signatories to the agreement have pledged to cooperate in ten major areas, namely infrastructure; enterprise and investment; information development; tourism; commerce and trade; agriculture; labour; science, education and culture; environmental protection; and health and disease prevention. For details of this and the following agreements, see the web page of the Macao Economic Services (Direcção dos Serviços de Economia) and Macao SARG Portal (Portal do Governo da RAE de Macau). 4 This Outline stipulates that Macao’s status is that of a global centre of tourism and recreation and identifi es the following major foci of regional cooperation for Macao: the development of modern service industries and advanced manufacturing industries; the construction of integrated transpor- tation infrastructure; the convergence of urban planning, information networks, energy base net- works, and urban water supply; the deepening of CEPA; and the building of a community with a high quality of life. 7.3 Enlarging the Foundation for Sustaining Growth 163

Macao, as an international tourism and leisure hub as well as a platform for business and trade between China and the Lusophone countries, was further highlighted in a dedicated chapter of China’s twelfth 5-year national plan (2011–2015) (National Development and Reform Commission 2011 , Chapter 57). Two key development projects endorsed by the State Council of China to promote socio-economic cooperation in the Pearl River Delta region can be cited for illustration. The fi rst is the building of the Hong Kong–Zhuhai–Macao Bridge, and the second is the establishment of Hengqin (Macao’s close neighbour, with a land area of about 106 km 2 and a population of 6,943 people in 2011) as a strategic economic area. Both projects put Macao in a strategic position that could further enhance its socio- economic competitiveness in the new millennium, not only within greater China, but globally. According to The Outline of the Plan for the Reform and Development of the Pearl River Delta ( 2008 – 2020 ) put forward by the National Development and Reform Commission in 2009 and the Guiding Opinions on Expediting Economic Integration in the Pearl River Delta Region brought out by the government of Guangdong province in the same year, a cross-sea bridge connecting Macao, Zhuhai, and Hong Kong should be built. The aim would be to strengthen trade, industry, the utilization of resources, environmental protection, and public services, and to integrate standards of living in the region. At the moment, Macao and Hong Kong are connected only by ships and helicop- ters, while its transportation network with Zhongshan, Jiangmen, and Foshan mainly relies on ordinary highways. When this cross-sea bridge is completed in 2016 and another connecting superhighway fi nished,5 the western Pearl River Delta and the two SARs will fall within a “three-hour commuting radius”. Thus, Macao’s accessibility will be further improved. As the travel distance between Macao and its neighbours is reduced, not only will inter-regional trade and socio-economic inter- actions be enhanced, but more tourists will also be attracted to Macao to patronize its casinos, enjoy other forms of entertainment, or sight-see. This will give Macao’s economy a further boost. Apart from the Hong Kong–Zhuhai–Macao Bridge, it is also believed that the proposed development of Hengqin will bring a new impetus to Macao’s society and economy. According to the Hengqin Overall Development Plan released by the State Council in 2009, Hengqin will be developed as a green city to complement the economies of Macao, Hong Kong, and Guangdong province. Tertiary industries, such as leisure and sports, performance and entertainment, education and training, conventions and exhibitions, and technological research and development, will be promoted. Then, on 14 July 2011, the State Council further declared that Hengqin would be established as a strategic economic area following the models of Pudong in Shanghai and Binhai in Tianjin. With a territory three times larger than Macao and adjacent to Macao’s Coloane and Taipa districts, the policy represents strong support from the

5 This transportation system will also be connected to China’s high-speed railway system, which will greatly improve Macao’s accessibility to inhabitants of other parts of the country. 164 7 National/Regional Integration and Local Development state to expand Macao’s foundation for development in the coming decades.6 The area in Hengqin leased to Macao will be run under Macao’s jurisdiction and will be used mainly for developing new industries. This is regarded as a landmark decision by the central government. More detailed planning is under way, yet the Macao government has ruled out building more casinos on its geographical extension. Although Macao’s economy had become highly prosperous from the infl ux of huge amounts of capital and large numbers of tourists in the past decade, the unex- pected fi nancial tsunami in 2008 led to an economic setback and social panic. This prompted the central government to seriously evaluate Macao’s over-reliance on the gambling industry. The hope is that the development of Hengqin will help Macao to diversify its economy as well as to achieve better regional integration. It is regarded as an exemplary zone for a new mode of cooperation among the provincial authori- ties, Macao, and Hong Kong. To implement the policy and to achieve good results, specially designed incentives such as attractive tax rates, favourable fi nancial terms, and better land development terms will be given to companies based in Macao and Hong Kong (Wen Wei Po 5 August 2011b , 23 August 2011a ). If this unprecedented development project can be successfully implemented, it is believed that Macao’s comprehensive socio-economic strength will be further enhanced. On the whole, although Macao faces the inherent problems of limited land for development and over-reliance on the gambling industry, through a local policy of well-planned land reclamation, and national policies for strategic regional integra- tion, its base for sustainable development has been greatly expanded and its com- petitiveness has been enhanced. Macao was less than one-tenth the size of Hong Kong in terms of population, territory, and GDP. After reunifi cation, since Macao is an SAR that along with Hong Kong enjoys the privileges of the “one country, two systems” arrangement, its strategic position in the country has also been upgraded to the same level as that of Hong Kong. As such, Macao can be better integrated into the region and malicious competition (especially in the gambling business) can be greatly reduced (e.g., land-based casinos are not allowed to operate in Hong Kong). In other words, through various local and national policies, Macao’s position as a global gambling playground in the region has become more secure.

7.4 Negative Views on National/Regional Integration

Although the opening up of the gambling industry and the promoting of national/ regional integration paint a rosy picture of further economic development, the comments on these initiatives have not been uniformly favourable. As discussed

6 Before the declaration of this policy, on 27 June 2009 a one square kilometre piece of land in Hengqin had been assigned as the site for University of Macau, which would fall under the adminis- tration of the Macao SAR government. Clearly, the central government sees the development of Hengqin as a “win-win” policy that will help Macao enlarge its foundation for sustainable growth and also speed up the development of Hengqin ( Macao Daily News 28 June 2009 ). 7.4 Negative Views on National/Regional Integration 165 in Chap. 4 , the drastic increase in the number of imported workers (legal and illegal) has also upset most local workers. Both types of non-local workers are considered direct competitors in the local labour market. They are accused of stealing the jobs of local workers, and of restricting their opportunities for job promotions and wage increases. Another criticism of growing national/regional integration is of the large infl ux of capital to Macao, which is believed to be the main factor behind the escalation in local rents and property prices. As mentioned above, after the implementation of the liberalization policy, the average transaction price of residential units per square metre has more than quintupled in 10 years (Table 7.1 ), while the fi gure for median monthly employment earnings has only doubled. The house-price-to-income ratio, the basic measure of affordability, has remained at a high level since 2003 (Un 2007 , pp. 92–93; Wong et al. 2010 , pp. 51–52). In the second quarter of 2012, the average transaction price of residential units rose to a new high of MOP55,427 per square metre, up by 21.9 % quarter-to-quarter (DSEC 2012d , p. 3). According to our surveys, in 2005, when the respondents were asked to comment on local property prices, 93.7 % replied that they were so high as to be affordable. In 2007 and 2009, the question was changed to ask the respondents to give their opinions on whether “reasonable property prices in Macao should be set lower, higher, or at the present level”. As expected, the overwhelming majority (84.1 % in 2007 and 80.1 % in 2009) of the respondents replied that prices should be set lower. Moreover, no signifi cant differences were seen among the GEI, GRI, and GNI groups of respondents. As local residents, particularly the “slugs”, have become increasingly frustrated with the rising property prices/rents, they have urged the government not only to build more public and subsidized housing, but also to adopt unusual measures, including the imposition of limitations on the purchase of properties with non-local capital or by non-locals, to arrest the rise in property prices ( Macao Daily News 9 April 2012 ). In line with the actual and perceived lack of affordability of private dwelling units, the local people have become more conservative in their view that a growing gambling business would bring more benefi t than harm to Macao. For example, when our respondents were asked to evaluate the costs and benefi ts of the growing gambling sector, although a larger proportion of them still thought that it had brought more benefi t, there was an obvious rise in the number of those who consid- ered that it had brought more harm to Macao. Specifi cally, in 2005, over half (52.2 %) of the respondents viewed the growth of the gambling industry as being of benefi t to society, with only 17.3 % holding the opposite view. There were no statis- tically signifi cant differences among the three groups of respondents. In 2009, the proportion of upbeat respondents decreased to 44.5 %, while those who reported negative sentiments rose to 23.4 %. Cross-tabulation data showed that those respon- dents who worked in GEI and GRI tended to believe that the growing gambling industry brought more benefi t and less harm, while those respondents who worked in GNI were less optimistic (Table 7.2 ). 166 7 National/Regional Integration and Local Development

Table 7.2 Perceived costs and benefi ts of the growing gambling sector (%) Year Overall GEI GRI GNI χ 2 test 2005 Benefi cial 52.2 53.7 52.9 51.0 n.s. Neutral 30.5 28.6 30.7 30.9 Harmful 17.3 17.7 16.4 18.1 2009 Benefi cial 44.5 46.7 47.4 38.9 * Neutral 32.2 33.8 29.5 34.3 Harmful 23.4 19.5 23.2 26.8 * p < 0.05

While gambling is a “dragon-head” industry that has produced tremendous direct and less-direct job opportunities, generated the lion’s share of government revenues and, more importantly, bolstered the whole economy of Macao, only about half of the respondents recognized its benefi cial effects. Around one-fourth even thought that it led to more harm than good. Clearly, our respondents have taken a cautious attitude towards the continuous growth of the gambling industry in Macao. As a society in which the gambling business has been legal for over one and a half centuries, Macao people must be very well acquainted with both the benefi ts and the harm from the gambling industry. Also, they must understand the inherent weakness of a place with little in the way of natural resources, a limited amount of land, and an unfavourable socio-economic-demographic structure. Notwithstanding this, after the liberalization of gambling, as more residents came to realize that the increasingly vigorous gambling industry was displacing existing businesses, dis- torting the property market, and driving up the cost of living, they became more reserved in their views on the continuous expansion of the industry. The Macao government must become aware of the gradually mounting discontent and take the necessary measures to mitigate the negative effects of the mushrooming of casinos and ensure that the common residents share the fruits of economic growth.

7.5 The Perception of Cross-Boundary Activities Remains Positive

To a certain extent, the prolonged economic recession and rampant criminality prior to the handover had contributed to a strong desire among the residents of Macao for reunifi cation. One expectation of the public was that after the handover, as Macao’s socio-economic interactions with mainland China strengthened, trade of all kinds could be promoted. Macao’s economy would thus regain its impetus for growth. 7.5 The Perception of Cross-Boundary Activities Remains Positive 167

Table 7.3 Perceived costs and benefi ts of the growing tourist industry (%) Year Overall GEI GRI GNI χ 2 test 2005 Benefi cial 92.5 89.0 92.7 93.5 n.s. Neutral 6.5 9.9 6.4 5.4 Harmful 1.0 1.1 0.9 1.1 2009 Benefi cial 86.9 85.2 87.3 87.7 n.s. Neutral 11.9 13.7 11.1 11.4 Harmful 1.2 1.1 1.5 0.9

In the fi rst 2 years following the handover, in order to ensure a smooth transition such trade was kept moderate in scale, although Macao’s interactions with its close neighbours had deepened. After the implementation of the Individual Visit Scheme put forward by the central government in 2003 to help Macao and Hong Kong emerge from the doldrums of the SARS epidemic, cross-boundary activities reached an unprecedentedly high level (see Chap. 4 ). As the number of tourists from main- land China surged, making most streets and shops crowded day and night, Macao’s economy rebounded immediately. Although the tremendous infl ux of tourists stimulated an impressive degree of economic growth, some negative effects such as chronic traffi c jams, worsen- ing pollution, and an increasing cost of living quickly became talking points in the town. What is the general view of Macao residents on the continuous growth of the tourist industry? Do they consider enhanced cross-boundary integration an entirely positive development that has no drawbacks? These questions are explored below. When the respondents were asked to comment on the growth of the tourist indus- try resulting from increasing national/regional integration, the overwhelming major- ity viewed it in a positive light. For instance, in the 2005 survey 92.5 % of the respondents thought that the growth of the tourist industry would generate more benefi t than harm to Macao. Only an insignifi cant 1.0 % said the opposite, while 6.5 % took a neutral stance. Four years later, when the same question was raised again, although the overwhelming majority (86.9 %) still believed that the growth of the tourist industry would produce more benefi t than harm, those who took a neutral stance rose slightly to 11.9 %. The proportion of pessimists remained insig- nifi cant at 1.2 %. Cross-tabulation data showed that there were no signifi cant varia- tions among the three groups of respondents in both surveys (Table 7.3 ). Since the tourist industry is generally considered a smokeless industry, it is not surprising to see that the overwhelming majority of respondents were inclined to think positively of its growth. However, the scope of cross-boundary activities is broader than tourism. The developmental experiences of some Western societies clearly show that although more active cross-boundary/border activities, i.e., regional integration at the sub- or supra-national level, can bring tremendously positive 168 7 National/Regional Integration and Local Development

Table 7.4 Perceived costs and benefi ts of the growing cross-boundary integration (%) Year Overall GEI GRI GNI χ 2 test 2005 Benefi cial 76.7 70.7 75.9 79.7 n.s. Neutral 17.4 21.0 18.3 15.1 Harmful 5.9 8.3 5.8 5.2 2007 Benefi cial 71.0 68.4 70.8 72.7 n.s. Neutral 20.5 21.3 21.4 19.0 Harmful 8.5 10.3 7.8 8.3 2009 Benefi cial 75.8 74.3 76.7 76.0 n.s. Neutral 18.1 20.2 16.0 19.1 Harmful 6.1 5.5 7.3 4.9 socio-economic results to all who are involved in them, its negative effects should not be underestimated.7 In other words, there are some costs to regional integration. As residents of a tiny city, although Macao people welcomed regional cooperation and integration in the past, do they still do so today? In 2005, when we asked our respondents to comment on the impact of growing cross-boundary activities, 76.7 % of them thought positively of the development and agreed that it would bring more benefi t than harm to Macao. Only a tiny 5.9 % took the opposite view and saw the growth of regional integration as a threat. The remaining 17.4 % had no defi nite opinion. In the following years, as large numbers of tourists kept fl ooding into Macao and the gambling business remained vibrant, people’s views of the continu- ous growth of cross-boundary activities became less positive. Still, in 2007, 71.0 % of the respondents considered the growth of cross-boundary integration to be posi- tive, 8.5 % negative, while 20.5 % took a neutral stance. In 2009, as Macao’s econ- omy was besieged by the fi nancial tsunami and worries about an economic downturn mounted, our respondents’ views on regional integration became more positive, with 75.8 % feeling that regional integration could be benefi cial while only 6.1 % thinking otherwise, and 18.1 % taking a middle position. On the whole, the majority of the respondents viewed regional integration positively and welcomed its growth. There were also no signifi cant variations among the three groups of respondents in the surveys conducted in the different years (Table 7.4 ).

7 The evolution of the EU from a divided and confrontational Europe after WWII, to a common market with limited membership and cooperation, and then to the European Community with a larger membership and vibrant trading relationships, and fi nally to the EU sharing common eco- nomic advancement through the use of a single currency (the euro), is a good example. On the way to achieving the EU, although the prospects of some sectors of the domestic economy improved, others were crowded out, which inevitably led to the restructuring of the labour market. As most EU members felt that the benefi ts generated from membership would largely outweigh the costs (economic and socio-political), they agreed to come to a compromise (specifi cally, to share both good and bad times) and unanimously reached an agreement to form a “united Europe” like the US (Healey 1995; Mattli 1999 ). To a certain extent, the example of the EU inspired the Chinese gov- ernment to pursue a strategic policy of regional integration involving Macao, Hong Kong, Taiwan, and mainland China by forming the greater China economy to promote social development and cultural exchanges in addition to economic cooperation (Cheung et al. 2007 ; Zheng 2012 ). 7.6 National and Local Identities 169

As has been addressed in previous chapters, Macao residents place a strong emphasis on pragmatism and multi-cultural/racial co-existence. With this kind of outlook and also given Macao’s inherent weaknesses of a lack of resources, limited land, and so forth, it is not surprising to see that the local residents take a highly favourable view of the growing tourism and cross-boundary activities. Nevertheless, as increasingly large numbers of tourists fl ooded in, criticisms arose of worsening public transport and pollution problems. The Macao government should pay great attention to these problems by taking the necessary measures to prevent them from getting worse and ensuring that the achievements of regional integration are shared equally by ordinary residents of Macao. The recent experience in Hong Kong is a good example of how and why anti-mainlander sentiment is surging in a time of increasing integration and economic vibrancy.8

7.6 National and Local Identities

Of Macao’s 552,503 residents, 92.4 % are ethnic Chinese and 46.2 % were born in mainland China (DSEC 2012e, pp. 61, 63). Because Macao was once a colony and had been cut off socially, economically, and politically from the communist regime in China from the 1950s to the late 1970s, the disparity in development between the two places has caused Macao, as a social entity, to drift far from its motherland. On the one hand, due to the completely different socio-economic-political system and way of life in Macao from that of mainland China at the time, a distinctive local identity, hinging upon the demarcation between “Macao people” and “Chinese”, developed gradually among the Macao Chinese. On the other hand, many Macao residents, especially new migrants from mainland China, clearly understand that Macao is an integral part of China and perceive themselves in terms of a national identity as Chinese people. To some extent, the unprecedented framework of “one country, two systems” was designed to accommodate such ambiguous feelings in addressing the so-called “identity crisis” in the Macao SAR. Nonetheless, political integrity is defi ned by a subjective sense of identity. Since a substantial proportion of early immigrants were refugees fl eeing communist rule, the local identity was embedded with an anti-communist sentiment. Such a political arrangement further complicates the construction of national identity in Macao. The divergence in iden- tity, or a lack of national identity, thus has serious implications for mainland–Macao

8 In 2011, Hong Kong received 28.1 million arrivals from mainland China (Tourism Commission 2012). Despite all of the policy support received from the central government, Hong Kong resi- dents have been stridently demanding that the local government curb birth tourism by mainlanders (37.4 % of all babies born in Hong Kong were the children of mainland couples (Census and Statistic Department 2012, p. 35) and automatically have the same rights as local citizens), protest- ing against luxury stores (like Dolce and Gabbana) for giving preferential treatment to mainland- ers, publicly insulting tourists from mainland China as uncouth and unhygienic, accusing them of being “locusts” who buy up daily necessities (such as infant milk powder) ( BBC News 1 February 2011 , 8 February 2012 ), push up property prices, and so on. 170 7 National/Regional Integration and Local Development

Table 7.5 Identities and sense of belonging (%) Year Overall GEI GRI GNI χ 2 test Identities 2005 Macao people 40.3 43.7 39.1 40.6 n.s. Both 19.5 16.4 19.8 20.3 Chinese 40.2 39.9 41.2 39.1 2007 Macao people 39.8 43.4 37.4 40.3 n.s. Both 23.4 25.6 24.4 21.0 Chinese 36.8 30.9 38.2 38.7 2009 Macao people 36.4 36.6 39.0 32.7 n.s. Both 30.4 31.4 27.4 33.6 Chinese 33.2 32.0 33.6 33.6 Sense of belonging 2005 Strong 69.2 67.0 68.9 70.4 n.s. Average 27.0 28.2 27.7 25.8 Weak 3.8 4.8 3.4 3.8 2007 Strong 69.4 69.5 69.6 69.1 n.s. Average 26.1 26.2 25.6 26.5 Weak 4.6 4.4 4.8 4.4 2009 Strong 67.8 63.4 70.0 68.7 n.s. Average 26.5 30.6 25.2 24.7 Weak 5.7 5.9 4.9 6.6

integration after the resumption of Chinese sovereignty over Macao, as is also the case with the Hong Kong SAR (Lau 2000 ; Zheng and Wong 2011 ). In our surveys, when the respondents were asked to choose among “Chinese” (national identity), “Macao people” (local identity), or both (mixed identity) as their primary identity, in 2005, around two-fi fths chose the national identity, another two- fi fths chose the local identity, while around one-fi fth selected the mixed identity. In 2007 and 2009, the proportions of those taking a national or local identity dropped steadily—with the rate of decline for the former being slightly more rapid (from 40.2 % in 2005 to 33.2 % in 2009) than that for the latter (from 40.3 % in 2005 to 36.4 % in 2009), while the proportion of those claiming both identities rose signifi cantly from 19.5 % in 2005 to 23.4 % in 2007 and then to 30.4 % in 2009 (Table 7.5). The fi ndings reveal that in terms of a sense of iden- tity the people of Macao are divided into three camps—those who claim a national, local, and mixed identity—with increasingly equal proportions in each camp. Equally signifi cant is the increasing proportion of people who identify themselves with both China and Macao at the same time. The three groups of respondents did not differ signifi cantly in this respect. In addition to claiming a local or mixed identity, a lopsided majority (around 70 %) of respondents reported a strong sense of belonging to Macao society. Only a tiny proportion replied that they had a weak sense of belonging. Around one-fourth took the middle stance by giving the answer of “average” (Table 7.5 ). Only minor 7.7 Conclusion 171 changes were found among the three surveys. Differences among the three groups of respondents were also not statistically signifi cant. It can be said that the respondents’ strong sense of belonging to the local society was a cross-industry phenomenon. Compared to residents of neighbouring cities like Hong Kong and Taipei, and many Western societies, residents of Macao have an undeniably low interest in poli- tics and a low level of political effi cacy.9 The liminality of Macao’s society and the introduction of participatory politics only around three decades ago after a long history as a colony shaped the apathetic political attitude of Macao people. Also because of the colonial background, Macao people were rather ambivalent about their identity. Some residents considered themselves as Macao people, while some others thought of themselves as Chinese people. Since the transfer of sovereignty, there have been calls for the local people to have a stronger national identity. In the context of “one country, two systems”, the claim for national citizenship embodies the ideal of universalism in the form of the Chinese nation-state, whereas the local identity pivots around a sense of difference between Macao and mainland China. The failure to maintain a dynamic balance can put political stability and social cohe- sion at risk. After the introduction of the gambling expansion policy, both the num- ber of people with a self-perceived local identity and those with a national identity fell, but those with a mixed identity were on the rise. Although Macao people did not show a strong interest in politics, they were inclined to believe themselves polit- ically powerless and the government irresponsive to public opinion, and were ambivalent about their self-perceived identity, their strong sense of belonging to Macao was notable. We believe that such emotional attachment to the society is conducive to enhancing concern about all aspects of the development of Macao.

7.7 Conclusion

From the above analysis of Macao’s position in the region and its people’s perceptions of the increasing socio-economic interaction and integration between Macao and its neighbours, we found that some subtle changes have occurred in the past decade. First, although Macao is still heavily reliant economically on its neighbours and trading partners, the structure of this reliance has changed from a “sole-partner pat- tern” (Hong Kong) to a “multi-partners pattern” (mainland China, Hong Kong, the EU, and the US). Notwithstanding this development, the level of trade and diversi- fi cation of investments in Macao is by no mean broad when compared to other

9 For example, in our 2009 survey, only 13.2 % expressed interest in politics, in contrast to 49.5 % who reported otherwise. Furthermore, according to our 2009 survey and the 2008 AsiaBarometer surveys led by Professor Takashi Inoguchi, the proportion of Macao respondents who agreed with the statement “generally speaking, people like me don’t have the power to infl uence government policy or actions” amounted to 60.6 %, as compared with 41.7 % in Japan, 43.9 % in the US, and 58.5 % in mainland China. 172 7 National/Regional Integration and Local Development economies. As such, more endeavours to augment Macao’s economic structure are badly needed. Second, through national and regional integration, not only has the transporta- tion system (network of connections) been largely upgraded, its base for sustainable economic growth has also been enlarged. As Macao becomes more accessible and visible, more tourists can be attracted to come while it is expected that more trade can be carried out at a lower cost. As Macao’s socio-economic foundation grows, both its capability for industrial diversifi cation and the possibilities for doing so will be greatly enhanced. Whether the Macao government can seize this opportunity and raise Macao’s economy to new heights is a challenge that lies ahead. Third, although most Macao residents welcome national and regional integra- tion, certain negative effects of the process need to be handled properly and swiftly to ensure that favourable development continues. These include the large numbers of imported workers (including illegal workers), whose presence has been fre- quently criticized as undermining the interests of local workers; the fl ood of money coming from outside of Macao, which has pushed up property prices and the cost of living and is blamed for making life in Macao harder; the mushrooming of casi- nos, aggravating traffi c congestion, and a worsening pollution problem, all of which have undermined the overall environment of life in the city. The Macao government needs to take measures to alleviate these negative effects and to ensure that the economic benefi ts of national and regional integration are shared by all local residents. As a concluding remark, three more points need to be added to pinpoint Macao’s distinctive position in the era of globalization and the rise of China. First, if the Macao gambling business had not been liberalized at the beginning of the new mil- lennium, large numbers of Chinese gamblers (tourists) and gambling capital might have fl ooded to North America, Europe, and Australasia because of the prolonged economic growth in mainland China and the continued implementation of the open door policy. With the liberalization of the Macao casino gambling market since 2002, not only have visitors from Hong Kong become more numerous, the number of tourists from the mainland have also increased to a remarkable degree. In other words, travellers from Asia who would otherwise need to take long fl ights, apply for visas, and go through stringent security checks to engage in gambling have turned to Macao as a place that can provide them with such entertainment at a lower cost and with greater ease of access. To a certain extent, the opening of the gambling industry in Macao has changed the “route of the game” in the world gambling mar- ket. Because of this change, there has been a reduction in the amounts of gambling money going outside of the greater China economy, and the competitiveness of Western gambling industries has weakened in parallel. Second, if viewed from a micro or local perspective, it can surely be said that Macao’s economy is becoming increasingly lopsided in the direction of the gam- bling industry, which itself is largely dependent on patrons from mainland China and Hong Kong. But if viewed from a macro or national perspective, since there is only one city in the region in which casino gambling is lawful, Macao is in the positive position of being able to offer a good/service that is “limited in supply”. As its References 173 neighbours still uphold an anti-gambling policy, Macao’s position as a unique gambling paradise is unshakable. Also, since socialist China still pursues a strict anti- gambling policy, Macao can serve as a “safety valve” to release pressure from the desire of mainland residents to engage in gambling, and do so under the control/ monitoring of the state. Third, Macao’s gambling industry can play a strategic role in the greater China economy by counter-checking its gambling contenders or competitors. A simple proposition is that if there was no place in Chinese territory where casino gambling was legal, not only would illegal gambling in China become rampant, the billions of dollars spent annually on gambling would probably fl ow to Western economies, especially to the US. If so, this money would create more jobs and generate more revenues for Western economies, which would inevitably further boost their com- petitiveness in the global economy. In short, since Macao’s gambling industry not only serves local/domestic economic development, but fi ts into a national strategic plan, its unique status as a regional gambling hub seems to be irreplaceable in the foreseeable future.

References

BBC News (2011) China demand “means HK parents cannot get baby milk”, February 1. http:// www.bbc.co.uk/news/world-asia-pacifi c-12336975 . Accessed 23 Oct 2012 BBC News (2012) Surge in anti-China sentiment in Hong Kong, February 8. http://www.bbc. co.uk/news/world-asia-china-16941652 . Accessed 23 Oct 2012 Cartography and Cadastre Bureau (2012) Types of map: thematic map—the evolution from the beginning of the 20th century. http://www.dscc.gov.mo/ENG/knowledge/map_category.html . Accessed 23 Oct 2012 Census and Statistics Department, Hong Kong SAR Government (2012) Hong Kong population projections: 2012–2041. Census and Statistics Department, Hong Kong Cheung YW, Chinn MD, Fujii E (2007) The economic integration of greater China: real and fi nancial linkages and the prospects for currency union. Hong Kong University Press, Hong Kong Deng K (1999) History of Macao (1840–1949). Zhuhai Press, Zhuhai (In Chinese) Deng K, Huang H, Wu Z, Lu X (eds) (2000) A new interpretation of the history of Macao. Huashan Literature and Art Publishing House, Shijiazhuang (In Chinese) DSEC (2012a) Export values by main market. http://www.dsec.gov.mo/Predefi nedReport. aspx?ReportID=22 . Accessed 23 Oct 2012 DSEC (2012b) Import values by main market. http://www.dsec.gov.mo/Predefi nedReport. aspx?ReportID=25 . Accessed 23 Oct 2012 DSEC (2012c) Median monthly employment earnings by industry. http://www.dsec.gov.mo/ Predefi nedReport.aspx?ReportID=11 . Accessed 23 Oct 2012 DSEC (2012d) Private sector construction and real estate transaction: 2nd quarter/2012. DSEC, Macao DSEC (2012e) Results of 2011 population census. DSEC, Macao DSECa (Various years) Direct investment statistics. http://www.dsec.gov.mo/Statistic.aspx? NodeGuid=32c3aaa0-214e-4130-b2d8-165ca32ea0f2 . Accessed 23 Oct 2012 DSECb (Various years) Yearbook of statistics. DSEC, Macao Hao Z (2011) Macau: history and society. Hong Kong University Press, Hong Kong 174 7 National/Regional Integration and Local Development

Healey NM (ed) (1995) The economics of the new Europe: from community to union. Routledge, London Lau SK (2000) Hongkongese or Chinese: the problem of identity on the eve of resumption of Chinese sovereignty over Hong Kong. In: Lau SK (ed) Social development and political change in Hong Kong. The Chinese University Press, Hong Kong, pp 255–284 Macao Daily News (2009) Hengqin people looking forward to University of Macau’s new campus, June 28, p B05 (In Chinese) Macao Daily News (2012) Ho Ion Sang: regulate the purchase of properties by foreign legal per- sons, April 9, p A02 (In Chinese) Mattli W (1999) The logic of regional integration: Europe and beyond. Cambridge University Press, Cambridge National Development and Reform Commission, PRC (2008) The outline of the plan for the reform and development of the Pearl River Delta (2008–2020). http://en.ndrc.gov.cn/ . Accessed 23 Oct 2012 National Development and Reform Commission, PRC (2011) The outline of the twelfth fi ve-year plan for national economic and social development of the People’s Republic of China. (In Chinese) http://www.ndrc.gov.cn/fzgh/ghwb/gjjh/P020110919592208575015.pdf . Accessed 23 Oct 2012 Nicolas F (2012) Regional integration within greater China: state of play, future prospects and implications for European fi rms. Paper presented in a close-door workshop, Central Policy Unit, Hong Kong, April 17 Strange S (1998) Mad money: when markets outgrow governments. The University of Michigan Press, Ann Arbor The Standard (2011) Macau tops on homes, says Wang, June 17. http://www.thestandard.com.hk/ archive_news_detail.asp?pp_cat=11&art_id=112214&sid=32753919&con_type=1&archive_ d_str=20110617 . Accessed 23 Oct 2012 Tourism Commission, Hong Kong SAR Government (2012) Tourism performance in 2011. http:// www.tourism.gov.hk/english/statistics/statistics_perform.html . Accessed 23 Oct 2012 Un PS (2007) House price developments in Macao. Macao Monet Res Bull 3:83–104 United Nations Conference on Trade and Development (2010) World investment report: 2010. http://unctad.org/en/Docs/wir2010_en.pdf . Accessed 23 Oct 2012 Vong LK (2007) Foreign direct investment: concepts and relevance to Macao. Macao Monet Res Bull 5:19–34 Wan P, Pinheiro FV (2011) The development of the gaming industry and its impact on land use. In: Lam NMK, Scott I (eds) Gaming, governance and public policy in Macao. Hong Kong University Press, Hong Kong, pp 19–35 Wen Wei Po (2011a) Hengqin: new height in special economic regions in 21st century China, August 23, p A24 (In Chinese) Wen Wei Po (2011b) Hengqin free trade zone policy approved, August 5, p A19 (In Chinese) Wong YC, Kwok KC, Choi SW, Lai N (2010) Macao public housing policy research. The Hong Kong Centre for Economic Research, University of Hong Kong, Hong Kong (In Chinese) World Bank (2012) Foreign direct investment, net infl ows (% of GDP). http://data.worldbank.org/ indicator/BX.KLT.DINV.WD.GD.ZS . Accessed 23 Oct 2012 Zheng V (2012) Chinese family business, stock market and the Haiwankong fi nancial network. J Asian Publ Policy 5(3):313–330 Zheng V, Wong SL (2011) Identity and political attitude. In: Cheung FM, Wong SL, Wan PS, Zheng V (eds) The new face of the Macao SAR: ten years of development and changes. Hong Kong Institute of Asia-Pacifi c Studies, The Chinese University of Hong Kong, Hong Kong, pp 309–338 (In Chinese) Chapter 8 The First Decade and the Road Ahead

8.1 Introduction

Both Macao’s past and present Chief Executives have repeatedly emphasized in their policy addresses that the government would give priority to “upgrading the quality of life” of the people. We have thus monitored the subjective quality of life of Macao’s people at both the societal and personal levels. At the societal level, the majority of the respondents thought that the overall living environment in the city had improved after the gambling liberalization policy. In 2005, when they were asked to compare the present overall city living environment to that of 3 years ago (i.e., in 2002), 71.5 % told us that it was “better than 3 years ago”, while a miniscule 6.5 % thought otherwise. However, in 2007 and 2009, the proportion of those who took a positive view dropped signifi cantly to about half, while about one-seventh gave a negative assessment. Clearly, even though the optimistic sentiment may have been dented by worsening traffi c congestion, increasing pollution, and the mushrooming of casinos, which were frequently criticized for altering the previously peaceful, tranquil, and village-like living landscape of the city, those who were downbeat about the changes in overall living environment still constituted a minority. The differences among the three groups of respondents were not statistically signifi cant in 2005 and 2007. However, in 2009, GNI respondents were more inclined than others to consider that the overall city environment was worse than it had been 3 years ago (Table 8.1 ). At the personal level, our surveys reveal that the level of global life satisfaction of Macao residents, although on a slowly rising trend, remains moderate by comparison with international levels. Specifi cally, in all of the surveys less than half of the respondents gave a positive evaluation of their present life-as-a-whole. Yet the proportion rose slightly and steadily from 42.1 % in 2005 to 43.8 % in

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 175 DOI 10.1007/978-3-642-40749-9_8, © Springer-Verlag Berlin Heidelberg 2014 176 8 The First Decade and the Road Ahead

Table 8.1 Evaluation of the overall city environment when compared to 3 years ago (%) Year Overall GEI GRI GNI χ 2 test 2005 Better than 3 years ago 71.5 71.4 71.1 72.0 n.s. No change 22.0 24.3 22.4 20.6 Worse than 3 years ago 6.5 4.3 6.5 7.3 2007 Better than 3 years ago 54.4 59.5 55.6 50.2 n.s. No change 27.7 25.0 28.1 29.0 Worse than 3 years ago 17.8 15.5 16.3 20.8 2009 Better than 3 years ago 53.7 51.6 55.7 52.8 * No change 32.4 36.5 32.4 29.0 Worse than 3 years ago 13.9 11.8 11.8 18.2 * p < 0.05

Table 8.2 Global life satisfaction (%) Year Overall GEI GRI GNI χ 2 test 2005 Satisfi ed 42.1 47.9 36.8 46.7 *** So-so 46.5 44.7 51.6 40.7 Dissatisfi ed 11.4 7.4 11.6 12.5 2007 Satisfi ed 43.8 44.3 43.5 43.8 n.s. So-so 45.9 43.7 47.0 45.9 Dissatisfi ed 10.4 12.1 9.5 10.3 2009 Satisfi ed 46.7 39.5 47.0 52.4 ** So-so 42.8 49.1 42.4 38.3 Dissatisfi ed 10.4 11.5 10.6 9.3 ** p < 0.01; ***p < 0.001

2007 and 46.7 % in 2009. 1 Only about one-tenth viewed their life negatively. In 2005, more GEI and GNI respondents tended to feel satisfi ed with their life-as- a-whole than GRI respondents. But in 2009, in contrast to a rise in satisfaction in both the GRI and GNI groups (from 36.8 and 46.7 % to 47.0 and 52.4 %, respectively), the proportion of GEI respondents who gave a positive evaluation decreased signifi cantly from 47.9 % in 2005 to 39.5 % (Table 8.2 ). This was probably due to the sudden downturn in the gambling industry after the outbreak of the fi nancial tsunami in 2008. In all, having cross-examined various aspects of development after the liberalization of gambling in the past decade, we can clearly see that objective indicators showed remarkable growth in such areas as per capita GDP, public revenues, and tourism, and a continuous decline in the unemployment rate, crime rate, and poverty rate.

1 According to the 2008 AsiaBarometer Surveys and 2009 Hong Kong Social Indicators Survey, respondents who were satisfi ed with their life-as-a-whole comprised 46.2 % in Hong Kong, 52.8 % in mainland China, 59.2 % in Russia, 72.2 % in Japan, 83.0 % in India, 87.4 % in the US, and 89.1 % in Australia (Cheung and Wan 2011 , pp. 108–110). 8.2 Challenges and Opportunities in the Gambling Industry 177

Based on our subjective indicators, a quick snapshot can also be given of some of the positive effects of the deregulation of the casino gambling industry in Macao arising from growing tourism and cross-boundary integration. These include perceived improvements in the overall environment of the city and a boost in satisfaction with life-as-a- whole. Nevertheless, as economic development deep- ened, negative feelings rose slightly but steadily. These feelings included local residents being less optimistic about their own employment outlook or not perceiving much improvement in their overall economic situation; and a worsening of their views on social equality, government and societal corruption, government performance, and so on. Of course, it is too early to say that the mounting negative feelings are due to the harmful effects of a growing gambling industry and may lead to anti-social action. But no responsible government would fail to turn their attention to such a problem. How to further develop the gambling industry and to sustain economic growth, while reducing the social costs of growth and making the benefi ts of economic growth accessible to the entire population are some of the critical challenges that the Macao government will have to confront. In fact, in the era of globalization and in the face of the threat from global fi nancial crises, the challenges ahead are not only internal ones. Rapid and rela- tively unrestricted fl ows of capital that may pose a threat to the local fi nancial system are one of the external challenges. Competition from around the globe for a share of the gambling market is another. Thus, if Macao is to maintain its leading position in the industry, the Macao government must be alert to the various internal and external challenges that arise. Notwithstanding the growing challenges, the opportunities that await exploration are equally numerous. As the sole gambling playground in China, Macao faces nearly unlimited market demand for its gam- bling goods and services. As China continues to develop and the Chinese people become increasingly affl uent, Macao’s market will grow in tandem. The improving transportation networks that are providing more direct links between Macao and its close neighbours and more distant trading partners are further enhancing Macao’s competitiveness. The tremendous synergies generated from the great wave of regional integration are not only enhancing Macao’s developmental capability but also making its status as a regional gambling hub unassailable. Determining how these local, regional, and global opportunities are to be effectively and properly tapped clearly requires the joint efforts of the private and public sectors. In this chapter, the various challenges and opportunities facing Macao will be reviewed in wrapping up the discussion in this book.

8.2 Challenges and Opportunities in the Gambling Industry

In the period of Portuguese administration, because of Macao’s liminal position as well as its long history in running a legalized casino business, Macao was believed to have the absolute advantage in the gambling industry in Asia. Macao had well-established gambling facilities, skills and know-how, business connections, and 178 8 The First Decade and the Road Ahead peripheral/auxiliary gambling goods and services, as well as a socio-cultural-legal atmosphere conducive to the development of the gambling business. It is clearly stated in Macao’s Basic Law that, after the handover, under the framework of “one country, two systems”, the capitalist system (more specifi cally the legalized gambling industry) can be kept unchanged. This means that Macao’s status as a gambling paradise in Asia is fully backed by the Chinese government, and is also known by the international community. Since casino gambling is strictly prohibited in mainland China and Hong Kong, Macao remains the sole gambling playground in the country. As explained in previous chapters, the development of Macao’s gambling industry is very much policy-driven in that Macao’s gambling competitiveness depends very much on the gambling policies of its neighbours. If any of its neighbours decides to make gambling lawful, Macao’s business will inevitably be affected. Although Macao has achieved an irreplaceable status in the gambling business—with the industry receiving not only the blessing of the local government but also the national government, this does not mean that it does not face challenges or competition from other parts of the world. For instance, after the Asian fi nancial turmoil, many Asian economies such as Hong Kong, Japan, Laos, the Philippines, Singapore, and South Korea started to consider making casino gambling lawful as an important way of simulating economic growth. Shortly after the deregulation of gambling in Macao, the Singapore government passed all of the necessary legislation to make gambling a lawful business, and turned itself into a strong competitor to Macao. Recently, because of the increasing threat of a global economic recession triggered by the fi nancial tsunami in the US and the sovereign debt crisis in Europe, more Asian governments such as North Korea, Taiwan, and Vietnam also put forward proposals to legalize gambling as a means of boosting their economies. Although some of the proposals were fi nally rejected because of strong opposition in these societies, potential competition in the region, e.g., supply in the Philippines and Vietnam is scheduled to come on line in the near future (Reuters 2012a ), should not be underestimated. Apart from real or potential competition from its neighbours, there are numerous challenges from within the industry itself. Some frequently quoted weaknesses of the Macao gambling industry are the low per capita spending of the gamblers, the large proportion of day-trippers, the narrow market of high-rolling table-game players, and the over-reliance on patrons from mainland China and Hong Kong (Bloomberg 2012 ; Forbes 2012 ; Reuters 2012b ). For example, although Macao’s GGRs grew 57.5 % in 2010 and 41.9 % in 2011 (DSEC 2012 , p. 228), Fitch Ratings (2012 ) downgraded its Macao 2012 gaming revenue forecast twice in a couple of weeks—from 20 to 15 % on 8 June 2012 and then from 15 to 10–12 % on 25 July 2012, refl ecting its cautious view on the near-term impact of the slowdown in mainland China’s economy. Before the deregulation, since the business was under monopolistic management, both the gambling products and services were below international standards. After the opening of the market, as new concessionaries brought new competition, the variety of gambling products increased and gambling services improved. Visiting a casino 8.2 Challenges and Opportunities in the Gambling Industry 179 is no longer promoted as an activity purely for the purpose of gambling, but as a trendy way of life that will satisfy not only gamblers but also offer entertainment and amusement for people of all ages in all seasons. Seen from this perspective, the gambling industry in Macao has transformed itself since the deregulation. In fact, although the Macao gambling industry is plagued with a number of problems that defi nitely need to be addressed, its vitality has been greater than expected. One indication of this is that after the fi nancial tsunami Macao’s gambling industry was the fi rst industry in the city to rebound. Today, the gambling industry still outperforms other industries in Macao, and has the highest annual growth rate (DSEC 2012 ). The developmental momentum of the gambling industry clearly demonstrates the irrefutable fact that Macao enjoys an enviable advantage in running the business (Ernst & Young 2011 ). As such, more effort should be expended in making the industry bigger and stronger, and extending its positive spillover effect to other directly or less directly related industries, so as to strengthen Macao’s overall economy (Li et al. 2010 ). To strengthen and expand Macao’s gambling industry, apart from launching more new gambling products and services and more regional/global marketing campaigns, an industry integration strategy can also be considered. Generally, industry integration covers two aspects—vertical integration and horizontal integration. Vertical integration refers to the bringing in of a related supply/production chain, which together with the original chain can lead to better economic results. Vertical integration can be sub-divided to three types: upstream vertical integration (toward the material), downstream vertical integration (toward the end product), and lateral vertical integration (in the same supply/production status). Horizontal integration refers to the acquisition of additional business activities that are in the same fi eld or in a related fi eld, which can generate a positive effect. Since Macao’s gambling industry had reached a critical mass shortly after the implementation of the policy of deregulation, it is argued that great synergies could be generated if the industry were to deploy an integration strategy. According to Articles 17 and 18 of the Legal Framework for the Operations of Casino Games of Fortune (Law No. 16/2001), each concessionary is required to do business on its own. Thus, the six concessionaries cannot legally join together and engage in the process of horizontal integration. Because of this, the following discussion will focus only on vertical integration (Macao SAR Government 2001 ). Apparently, the gambling industry can be integrated upstream to include the production of gambling equipment such as slot machines, electronic video games, and wheels; or gambling products such as cards, dice, chips, and dominos; or gambling-related products such as gambling tables, gambling tools, gambling utensils, and so on. Simultaneously, the industry can be integrated downstream through the acquisition of travel agencies, the running of hotels and resort facilities, the operation of entertainment and leisure businesses, or the offering of banking and fi nance services. For upstream vertical integration, production plants can be set up in the Macao–Zhuhai Industrial Zone. For downstream vertical integration, some offi ces, shops, and hotels can be established in Coloane and Taipa, while some large-scale hotels and resort facilities, or entertainment and leisure grounds, can 180 8 The First Decade and the Road Ahead be built in the Hengqin New Area. Although casino gambling is usually regarded as self-contained with regard to services, food, shopping, and entertainment, which means that the chance for spillover is limited, through these series of integration strategies it may be possible to better share the positive effects of the gambling industry. As such, not only would the competitiveness of the Macao gambling industry be greatly enhanced, more jobs and a larger variety of jobs would also be created. In addition to industry integration, in order to strengthen Macao’s leading position globally in the gambling industry, more high-quality gambling training, design, and educational programmes or courses with a greater focus on Asian culture should be introduced in the local institutions of higher education. High-end research and development centres should be established and properly funded. Research exchanges with world-class gambling research institutes should also be promoted. Through these various measures, Macao’s “soft power” in the industry could be further strengthened. Without doubt, the gambling industry in the world has become increasingly competitive—especially in the era of globalization when Internet technology is bringing together people, markets, and ways of life as well as facilitating a signifi cant boom in .2 Although Macao enjoys certain absolute advantages in the industry, which cannot be easily duplicated or imitated, this does not mean that Macao is invincible. If Macao cannot keep abreast of the pace of development in the industry by taking pro-active measures with an innovative mindset to enhance its competitiveness in the market, it will sooner or later lose its world-leading position.

8.3 Challenges and Opportunities Facing the Economy

As Macao’s economy largely relies on the gambling industry, its challenges and opportunities also relate to the way in which the gambling business has developed. Most of the important challenges and opportunities concern the level of economic diversifi cation or the level of dependence on the gambling industry. As we have already discussed the possible paths to be taken to ensure the continuous expansion of the gambling industry, in the subsequent paragraphs we focus on the aspect of economic diversifi cation. Since 1847, when Macao had formally made casino gambling lawful as a way of saving its economy from decline, voices were raised on the need to search for and develop other key industries in order to reduce Macao’s over-reliance on the gambling business. However, because of the abovementioned inherent weaknesses of Macao

2 According to the American Gaming Association (2012 ), about 85 countries have legalized Internet gambling. As of 30 June 2010, a survey found 2,679 Internet gambling sites, offering various wagering options, owned by 665 companies worldwide. As estimated by the H2 Gambling Capital (2012 ), in 2011, gross revenues for the global eGaming sector reached 24.6 billion euros and accounted for 8.6 % of the total value of the global gambling industry. 8.3 Challenges and Opportunities Facing the Economy 181 and also due to the half-heartedness of the Portuguese administration in pursuing the goal of economic diversifi cation, little signifi cant progress was achieved. After the opening up of the casino business, especially after the implementation of the CEPA and Individual Visit Scheme policies, although the scale of Macao’s economy and the scope of its market expanded vigorously, the over-dependence of the economy on the gambling industry became acute. Later, after the 2008 fi nancial tsunami, as the central government saw great risks in the over-reliance of Macao’s economy on the gambling industry, the need for diversifi cation was repeatedly stressed on various different occasions (The Editorial Department of the Hong Kong and Macao Economy Yearbook various years). Shortly afterwards, a series of related proposals and policies (including the proposal to build the Hong Kong–Zhuhai– Macao Bridge and the development of the Hengqin New Area) were announced by the State Council to help Macao kick off the real process of economic diversifi ca- tion. This time, since the central government had taken the initiative and Macao’s economic diversifi cation has been placed on the agenda of regional integration (see Chap. 7 ), the chances seem very high that the job will get done. In fact, after the liberalization of gambling, not only has the size of Macao’s economy and the scale of its tourism industry grown, transportation networks connecting Macao to the region and other parts of the globe have also greatly improved. Because of this, more options or routes for economic diversifi cation have become available. It would seem that greater synergies can be expected in the future. In addition to Macao’s role as a platform for economic, trade and fi nancial services, especially with regard to cooperation between China and Lusophone countries, the following paths or areas of economic diversifi cation can be proposed for consideration. The fi rst path is to make Macao into a world-class tourist hub in the region. Since 2006, the annual number of tourists coming to Macao has exceeded 20 million. Although it is believed that most of these tourists came mainly to gamble, many also came to sight-see. An equally large proportion was attracted by Macao’s East- meets- West history, art, architect, religion, and lifestyle.3 In other words, Macao’s attractiveness to tourists around the globe is not confi ned to casinos or slot machines. Rather, its distinctive liminal history and rich mixed culture also makes it stand out in the region. A very good example of this is the fact that the old town of Macao was awarded the status of “Historic Centre” by the UNESCO World Heritage Site scheme in 2005. As such, while taking advantage of its vigorous gambling business, Macao should try its best to promote its non-gambling attractions to visitors. In this endeavour, Macao can join hands with Hong Kong and neighbouring cities such as Zhuhai, Zhongshan, Kaiping, Xinhui, Jiangmen, Guangzhou, Dongguan (known as hometowns of the overseas Chinese), and Shenzhen

3 According to the Macao Visitor Profi le Study conducted by the Institute for Tourism Studies, the two primary attractions to visitors coming to Macao in 2011 were to visit local attractions and to shop, with gambling rating third. Concerning specifi c activities that are the most popular, dining came fi rst (92.7 %), followed by shopping (79.6 %), casino touring (63.3 %), tourist attractions (58.3 %), and gambling (46.6 %) ( Macau Daily Times 20 April 2012 ). 182 8 The First Decade and the Road Ahead

(the most rapidly developed city in China) to promote “around the Pearl River Delta tourism”. Apart from the two SARs, which are well-known for their East-meets- West culture, ways of life, and different socio-economic-political systems compared to mainland China, other Pearl River Delta cities are also endowed with various unique features that not only refl ect their special culture and tradition, but also the process of China’s modernization and economic reformation. For instance, Zhuhai and Zhongshan were the hometowns of compradores. Sun Yatsen’s revolutionary movement also started from these two cities. Kaiping’s historic centre contains diaolou , a kind of multi-storey defensive house that combines Chinese and Western architectural styles that refl ect early Chinese emigration and East–West socio-cul- tural exchanges. Like Macao, the site was awarded World Heritage Site status by UNESCO. The Western Han tomb in Guangzhou, i.e., the Museum of the Mausoleum of the Nanyue King, is another place that is usually listed in most tourist guides as a “must-visit” location. Although Shenzhen is the youngest city in the region, it is worth seeing because of its rapid pace of development from a village with only around 30,000 villagers in 1980 into a mega city of over ten million residents today due to the open door policy. In short, because of improvements to the transportation system in the Pearl River Delta region and also under the strategy of promoting integration in the region, Macao should advocate “around the Pearl River Delta tourism”, or “multi- destination” itineraries, as one way of diversifying its economy. The second path to economic diversifi cation is to forge Macao into a wonderland for leisure and sporting activities. Although Macao is a small city with narrow and winding roads in comparison to its big neighbours with their numerous express- ways, its motor-racing activities, such as the Macau Grand Prix, is well known in the world. As Macao becomes more prominent in the world and also after the devel- opment of the Hengqin New Area, which is intended to be a “green economic ground” for holidays, relaxation, and recreation, Macao can achieve more synergies for promoting leisure and sporting activities if it joins hands in these endeavours with Hengqin. With solid experience in running or advertising the Macau Grand Prix, and also with a network of connections in the world for boosting sports and leisure activities, the Macao government can join with big business groups to sponsor various kinds of international tournaments, races, or competitions, such as holding fi rst-tier sport- ing events involving soccer, basketball, tennis, golf, and so on. Also, both the public and private sectors should join together in promoting second- and third-tier sports such as roller skating, marathon running, boat racing, sailing, cycling, polo, karate, kung fu , and so on. In addition, more national and international sporting events such as the National Games of the People’s Republic of China and the Asian Games should be vigorously promoted. Through organizing various kinds of leisure and sporting activities, it is believed that Macao would be able to gradually establish a reputation as a wonderland for leisure and sporting activities in the region, as well as attract a broader range of visitors—especially non-Chinese visitors. The third path to economic diversifi cation is to cultivate Macao as an enclave for entertainment and performance. Macao is a free city with many cultures, and 8.3 Challenges and Opportunities Facing the Economy 183 its gambling industry offers many opportunities to showcase various types of entertainment and performances. More importantly, tourists are searching for fun and pleasure, and would be receptive to high-quality entertainment and per- formances. In other words, the tremendous infl ux of tourists and the vigorous gambling industry in Macao would generate great market demand for entertainment and performances of various kinds and scales. Macao should therefore spend more resources on cultivating the local entertainment industry and take the initiative to invite more world- class artists to Macao to perform or teach. In order to accomplish the former goal, an academy (similar to the Institute for Tourism Studies [Instituto de Formação Turística]) to provide professional training in entertainment and performance, and also to incubate art and culture activities in Macao should be established. Referring the latter goal, as Europe and the US are currently beset by economic recession and rampant unemployment, it could be easier and more cost-effective than it might have been in the past to invite world- class artists to come to Macao to perform, especially during special events, festivals, or anniversaries. With a vibrant entertainment and performance industry, the gambling industry is sure to benefi t and the tourism industry and the economy as a whole will be stimulated. The fourth way of diversifying the economy is to develop Macao into an interna- tional venue for the convention and exhibition business, or MICE tourism. After the rapid growth of the gambling industry and the large infl ux of tourists, world-class hotels with sophisticated facilities for organizing international conferences and meetings have mushroomed. As this advantage synchronizes with other strengths such as an improved transportation network, a unique cultural heritage, a fl ourishing entertainment and performance business, as well as the green spaces in Hengqin for holiday and relaxation, the convention and exhibition business has great potential in Macao. To invigorate the convention and exhibition business in Macao, more professionals in the fi eld must be recruited or trained and favourable terms, such as better promotion in the media and more fl exible arrangements with regard to local transport, can be offered. Also, the Macao government—especially its trade promotion bodies— should take the initiative to promote the business around the globe. Apart from organizing commercial convention and exhibition activities of various kinds, high- quality art and culture exhibitions and conventions should also be emphasized. In addition to the abovementioned four possible ways for diversifying the economy, in order to meet the challenges of regional integration and global economic restructuring, encouragement should be given to developing other light industries or service industries such as the logistics industry, creative industries, the catering and restaurant industry, the retailing industry, and others. Of course, as Macao’s economy diversifi es, an equal emphasis should be placed on its gambling industry, so as to expand and strengthen it. Through all of the strategies proposed above, it is hoped that Macao’s economy could gradually be transformed from one dominated by a single industry to one supported by multiple industries, which would make the economy more sustainable and prosperous. 184 8 The First Decade and the Road Ahead

8.4 Challenges and Opportunities for the Society

Although the road to economic diversifi cation in Macao looks encouraging, the challenges and opportunities for societal development in the future seem less promising. Without doubt, the gambling liberalization policy brought greater prosperity to Macao. Both GDP and government revenues rose impressively. Other objective indicators further indicate that more resources are now available for education, health, social welfare, social security, environmental protection, and cultural promotion. Nevertheless, the rapid economic expansion is clearly lopsided. Some residents involved in the gambling business have become very affl uent. Those residents engaged in gambling-related businesses also seem to have been able to get a piece of cake. But the majority of common residents, who do not work in the gambling business or the public sector, have seen little improvement in their quality of life or standard of living. Various subjective indicators have demonstrated that social discontent and grievances have grown along with the economy. On the whole, after the opening up of the gambling industry, we found that challenges and opportunities for Macao’s society go hand-in-hand. In the coming decades, whether Macao’s development can reach another high level or remain stagnant will clearly be determined by its ability to address the following inter- twined discrepancies that have emerged in the past decade due to the rapid expansion of Macao’s economy but the slower pace of change in its social and political systems. First, a discrepancy exists between economic benefi ts and social costs. A fre- quently cited problem in most gambling economies is that the economic benefi ts of development are not necessarily equal to the social costs. As explained in Chap. 1 , economic benefi ts are more tangible and easy to calculate in pecuniary terms, while social costs tend to be intangible and diffi cult to quantify in pecuniary terms. Because of this, economic benefi ts tend to be measured in terms of economic growth or employment levels, and are usually over-emphasized, while social costs are often underestimated as they are refl ected in more subtle ways, such as in crime, pollution, traffi c congestion, and moral decay. An equally common consequence is that gambling products/services are over-provided. After the implementation of the policy to deregulate gambling, casinos sprang up in nearly every corner in Macao. More importantly, the economic benefi ts generated from the gambling business mostly accrue to the casino operators, but the social costs are mostly borne by every resident in Macao. Thus, if this discrepancy between economic benefi ts and social costs keeps growing, social grievances or social discontent will mount, possibly ultimately undermining social harmony and social stability. Second, there is the discrepancy between the development of the gambling industry and non-gambling industries. As discussed in the previous paragraph, since the gambling industry generally does not need to shoulder all of the social costs of its operations, it clearly enjoys more advantages when compared to the non- gambling industries. This also explains why gambling products/services tend to be over-provided. Moreover, as outlined in Chap. 1 and explored in Chap. 4 , the 8.4 Challenges and Opportunities for the Society 185 gambling industry usually tends to offer full services by itself, which means that there is little spillover effect on other industries. Indeed, it is believed that the gam- bling industry usually produces a “cannibalizing” effect, which means that it eats up other industries by driving up production costs. Thus, if there is little policy support to help non-gambling industries defend themselves from direct or less direct threats from the gambling industry, they will defi nitely be crowded out from Macao’s eco- nomic scene. After the liberalization of gambling, a signifi cant proportion of busi- nesses were forced to close because of rising rents, salaries, and other production costs. If this process is not halted and more non-gambling businesses are driven out, the discrepancy between the development of the gambling industry and non- gambling industries will become acute. Then, not only would the goal of achieving economic diversifi cation become elusive, Macao’s economic vitality and sustain- ability will also be weakened. Third, there is the discrepancy between social expectations and social reality. After the opening of the gambling industry, especially after the implementation of the Individual Visit Scheme, as the economy boomed and public revenues soared, social expectations were stoked. People from nearly all walks of life thought that their chances of getting a better job would improve and their income would increase. However, the drastic expansion of the gambling industry had only a limited spill- over effect on the economy as a whole. In other words, in reality only the group of residents engaged in the gambling industry enjoyed large benefi ts from its expan- sion. Those who worked in gambling-related industries also benefi ted to some degree. But, for most residents who were employed in non-gambling industries, except for those working in the public sector, few benefi ts trickled down. As such, the social expectations of common residents far exceeded the social reality. This led to a strong sense of relative deprivation—the conscious experience of a negative discrepancy between legitimate expectations and present actualities (Schaefer 2008 , p. 69) that is primarily based on a comparison to others in a society. A reasonable speculation is that if such negative feelings are not promptly and properly addressed, and the gap between social expectations and social reality keeps growing, such frus- trating sentiment may turn to anti-social or anti-government behaviour, which may fi nally affect Macao’s economic prosperity and threaten social stability. Fourth, a discrepancy exists between the haves and the have-nots. Without doubt, the dramatic economic development that took place after the deregulation of gam- bling is lopsided. In other words, those working in the gambling industry and those in better positions have generally been able to benefi t more than those working in non-gambling industries and those in less favourable positions. Such socio- economic inequality becomes greater if we add more elements for comparison, such as the skilled and the unskilled, or the propertied class and the property less class. For instance, in the construction industry, because of the serious shortage of labour of various kinds, salaries and wages were driven up but in different proportions. Far larger increases in wages and salaries were given to skilled labourers than to unskilled labourers, with the latter having received only very slight increases in remuneration. Of course, the large importation of non-local labour—illegal and legal, skilled and unskilled—restricted the levels to which wages and salaries were 186 8 The First Decade and the Road Ahead hiked, which inevitably provoked resentment among local workers. Also, as the property market boomed in the past few years, those residents who owned fl ats became increasingly rich, but those residents who owned no property not only received no benefi t from the wealth effect, but also had to pay higher rents. As such, their feelings of frustration and dissatisfaction inevitably grew. Again, if the gap between the haves and the have-nots is not addressed, social resentment could certainly grow. Fifth, there is the discrepancy between economic progress and social progress. As discussed in Chaps. 3 and 4 , after gambling was liberalized, as new concessions were issued and new investments were brought in, the economy boomed nearly at once. In other words, economic development is responsive to policy as well as to the fl ow of capital. However, social progress is believed to be less responsive to policy or fl ows of capital. The social institutions, trust, ethics, and morality that support a society are not easily established. As such, any transformation of social systems or social values will take time. For example, in the past decade Macao’s economy has more than quintupled in size, if calculated in terms of GDP. But there seem to have been few changes to Macao’s socio-political systems. Hence, we should bear in mind that because the pace or pattern of development in a society is very different from that of its economy, attention must be paid to narrowing the gap between economic and social progress to prevent socio-economic dissonance. Based on the aforementioned discrepancies, we can see that the rapid economic growth of the past decade has not been without problems. If the Macao government wants to consolidate the economic achievements of the past or to bring development to a higher level, the relevant policies must be adopted to correct or adjust these disparities. Otherwise, not only will the pursuit of sustainable economic growth become a myth, social stability will also be threatened.

8.5 Challenges and Opportunities in Government and Politics

Like the Hong Kong British government, who put a strong emphasis on the princi- ple of “free markets” and offered little in the way of social welfare and public ser- vices during the colonial period, the Macao Portuguese administration also adopted a “small government, big market” policy and did not assume much responsibility for providing social welfare. Also, because of colonial rule there was little room for local residents to participate in government and politics. Under the “one country, two systems” model applied after the handover, the Basic Law clearly states that Macao can enjoy the special privileges of “Macao people governing Macao” and with “a high degree of autonomy”. As such, large-scale government restructuring is required and social expectations of the government and the political environment have changed completely. To be more specifi c, it is not possible for the Macao SAR government to adopt the colonial administration’s ruling philosophy of laissez- faire , or to turn a blind eye to the political demands and aspirations of residents. 8.5 Challenges and Opportunities in Government and Politics 187

Without doubt, after the handover the challenges to the government and to politics in Macao from all directions have became greater and more numerous. When the SAR government was fi rst founded, the most important challenge was to ensure a smooth transition. Then, the focus shifted to stimulating economic growth to create more jobs to bolster an economy that was in the doldrums. After the deregu- lation of gambling, when Macao’s economy boomed, demands to limit imported labour (legal and illegal) to protect the interests of local labourers became more strident. The pressure to diversify the economy to avoid over-dependence on the gambling industry also grew stronger. However, such demands and pressure were not heavily weighted with anti-government sentiment or demands for more political participation. The sudden arrest of Ao Man-long in 2006 and the disclosure of his corruption brought about a drastic change in Macao’s political atmosphere. From that year onwards, as distrust of the government and dissatisfaction with its performance grew, demonstrations or protests on the streets during special days became common (see Table 6.4). Such protests included pragmatic demands of a socio-economic nature, such as demands to protect the interests of local labourers, to build more public housing, and to speed up the screening process to allow the mainland family members of Macao residents to be reunited in Macao. They also included political demands such as mass protests against business–government collusion and corrup- tion, and calls to speed up the process of democratization. Clearly, appeals for improvements in governance as well as for opening up room for political participa- tion were increasing. Hearing the growing political outcry, the SAR government responded with more piece-meal, ad hoc, and unplanned social welfare measures, public subsidies, and more direct “cash handouts”. There was also restructuring on a limited scale of the government and the political system. Although some of these measures did lead to a certain “pain-killing effect”, the fundamental governmental and political problems went unanswered. In order to better address the growing public concerns, the following recommendations for reforming the government and opening up political channels or platforms for encouraging more participation by residents seem to be necessary. Regarding reforms in government, the Macao government should have a strong determination to reform the administrative system by promoting accountability, transparency, and effi ciency. Although the current Chief Executive, Fernando S. O. Chui, put forward the concept of a “sunshine government” in his 2010 policy address and introduced various measures to improve accountability, transparency, effi ciency, and clean government, little of real substance was achieved.4 The government still receives a great deal of criticism for its opaque administration and ineffi cient handling of social confl icts. Without doubt, the reforms are moving in the right direction, but measures for achieving the goal do not seem to be fully enforced.

4 The major achievements in 2010 were the establishment of a government spokesperson system and the promulgation of the Code of Conduct for the Principal Offi cials and the Rules for the Principal Offi cials (Government Information Bureau 2011 , pp. 44–48). 188 8 The First Decade and the Road Ahead

One reason for such an outcome is the half-hearted attitude toward reform. Other reasons seem to be a lack of political will and strength to bring change to Macao, and a fear of affecting vested interests that might lead to strong opposition to the reforms. However, as mentioned before, social expectations and demands of the govern- ment and the political environment have changed after the handover. As stated by Angel Gurría (2007 ), the Secretary-General of the OECD, “governments are more important today than ever” and “governments in today’s world have very little margin for error”. The Macao government can no longer follow the policy of “non- intervention” and stand aloof from society. Apart from providing more services and protection, the government has to be a strategic planner and a “competent state”. It has to be able to pursue fi scal conservatism, create wealth by offering an open and attractive environment for domestic and global capital, play an impartial, active, and even leading role in promoting economic diversifi cation and regional integration, achieve profi ciency in governance, ensure that market mechanisms and globalization result in win-win outcomes for all, be endowed with political legitimacy and accountability, and so forth. If the Macao government does not take the abovementioned matters into full consideration by putting the concept of a “sunshine government” into actual practice, the inherent socio-political problems will not be easily solved. As Macao’s economy remains prosperous, this is obviously a good time for the SAR government to undertake the said reforms. Otherwise, when the economy enters a downturn and social confl icts intensify, the outcome could be devastating. On the matter of encouraging more participation by residents, the Macao govern- ment should take the initiative to strengthen “consultative democracy” and open up more channels for direct political participation. As a society that has traditionally put a strong emphasis on pragmatism and multi-cultural/racial co-existence, Macao residents were in the past accustomed to the practice of “consultative democracy”. Political decisions were made and consensus on social issues was reached through consultations with the elites in society, who usually came from various civic associations. This explains the high density of registered civic associations in Macao even today. Although the “consultative democracy” model worked well during the period of the Portuguese administration, after the handover, as social expectations and the political environment changed, while most “traditional” civic associations main- tained past ways of operating, voices began to be raised that these civic associations were not truly representative of society. In contrast, probably due to the infl uence of Hong Kong and Taiwan, the desire for more direct political participation through greater democratization seems to have grown. In order to better address the growing demand for political participation, and given the uniqueness of Macao’s political design in the Basic Law, the SAR government should try its best to introduce more democratically elected seats in the Legislative Assembly (with the arrangement of course complying with the 29 February 2012 resolution of the National People’s Congress) (Macao SAR Government 2012 ). In addition, more incentives should be given to the civic associations to encourage them to undergo reforms, especially to ensure that they can keep abreast with the pace of progress in society. 8.6 Challenges and Opportunities from Regional Integration 189

In short, after the policy to liberalize gambling, although various objective indicators were showing that Macao’s economy was achieving impressive growth, different types of subjective indicators were showing that social confl icts had become increasingly acute and social cleavages had widened. A far slower than expected pace of democratization that stifl ed the direct political participation of local residents, and the less than satisfactory performance of the government led to the eruption of political grievances. In order to better solve intertwined socio-political problems, the Macao government should adopt more proactive policies to ensure that the administration becomes more transparent and accountable and should speed up the process of democratization to give local residents more opportunities to participate in politics. As Macao’s economy keeps growing, this seems to be a good time for the SAR government to introduce political reforms because they will likely not have to pay such a great price at this juncture to achieve great results. Otherwise, as socio-economic-political developmental disparities became increas- ingly acute, political grudges might turn into large-scale collective anti-government or anti- social action, which might ultimately jeopardize the foundations of sustain- able economic growth and social stability.

8.6 Challenges and Opportunities from Regional Integration

Unlike development prior to the handover, which featured a lack of socio-economic cooperation among Macao, Hong Kong, and mainland China, development in the post-handover period clearly stresses regional integration. Through regional integration, it is generally believed that the cities (members) involved will be able to reduce malicious or wasteful competition as well as to better utilize their resources and better share the prosperity or advantages arising from interaction, collaboration, and economic specialization. As a small city that lacks almost all kinds of resources and relies heavily on the gambling industry, Macao always wel- comes—or, more accurately, Macao cannot be resistant to—regional integration. Compared to other efforts at regional integration in other parts of the world, the most distinctive feature of regional integration in the Pearl River Delta and pan- Pearl River Delta regions is that it has been planned by the central government. As such, the whole arrangement is fully backed by the state and has strong national strategic considerations and implications. Although Macao is small in terms of pop- ulation, territory, and economy, its strategic position in the region is fully respected. To be more specifi c, Macao’s unparalleled status as a regional gambling hub—or the sole gambling playground in China—is strengthened by a regional economic “division of labour”. In fact, through regional integration not only could Macao’s position as an inter- national gambling hub be enhanced, but its economic capability and comprehen- sive competitiveness could also receive a tremendous boost. Three points are worth noting in the regional integration process. First, after the building of the Hong Kong–Zhuhai–Macao Bridge as well as its feeder superhighways and a high- speed railway network, Macao’s accessibility in the region will greatly improve. 190 8 The First Decade and the Road Ahead

The fl ow of goods and people will be made easier, faster, and more cost-effective. Macao’s economy will become more vibrant, and the people of Macao will also have more choices to live, work, and relax in neighbouring areas to avoid over-crowding, over- competitiveness, or other problems in Macao. Second, after the establishment of Hengqin as a strategic economic area, Macao will have a large “hinterland” to support its development in tourism, leisure, and sporting activities, conventions and exhibitions, and other areas. More economic advantages or synergies could be generated among industries as well as between Macao and Hengqin. Hence, Macao’s attractiveness to visitors and investments of all sorts will be enhanced and its base for economic further development will broaden. Third, although the market demand for gambling goods and services in mainland China is huge, if visitors from the mainland come to Macao without proper planning or restrictions, as a small city Macao could very quickly fi nd itself overwhelmed. Through state planning and also with full consideration of Macao’s actual socio- economic status and affordability, tourists from the mainland should be allowed to come to Macao at a measured pace.5 This will allow the tourists themselves to receive better services, and give service providers in Macao access to better arrange- ments to tap business opportunities. Also, there would be less disruption to the daily lives of local residents. Therefore, through state-planned regional integration, Macao’s development could be more healthy and sustainable. Apart from embracing regional integration with its close neighbours in the Pearl River Delta, Macao should fully grasp and take full advantage of its unique posi- tion as a gateway between greater China and the Portuguese-speaking world. Macao should play a key role in promoting Sino-Portuguese investment, trade, and economic cooperation. Macao should also serve as an agent or platform for invigo- rating Sino-Portuguese educational and cultural exchanges. More importantly, Macao’s endeavours to be a bridge between China and the Portuguese-speaking world would fi t well with the state’s foreign policy, which would enhance Macao’s favourable position. Through such a strategy, Macao could strengthen its economic diversifi cation efforts and make its socio-economic development more global and sustainable. Although regional integration will bring tremendous benefi ts to Macao, the benefi ts will not come without costs. As a general economic rule, industries that enjoy comparative advantages will get more room to expand in the process of regional integration. However, industries without comparative advantages could wither as regional integration deepens. If the rapid growth of the gambling industry could be cited as a good example to illustrate the former economic phenomenon,

5 In Hong Kong, the people have already rejected further expansion of the Individual Visit Scheme. For example, a plan announced by the Shenzhen government in August 2012 to allow the city’s non-permanent residents to apply for multiple-entry visas to visit Hong Kong starting from 1 September 2012 was suspended indefi nitely on 7 September 2012 after a huge outcry from the Hong Kong people. 8.6 Challenges and Opportunities from Regional Integration 191 the sudden contraction of the manufacturing industry could be mentioned to show the latter outcome. Compared to neighbouring cities such as Zhuhai, Zhongshan, or Dongguan, rents, wages, and other production costs are higher in Macao. Since Macao enjoys an absolute advantage in the gambling industry, the process of regional integration has had little adverse effect on the development of the gambling business. However, the manufacturing industry is defi nitely at a comparative disadvantage. To a very large extent, if the opening up of the gambling industry in Macao had occurred without the back-up of regional integration, Macao’s growth would not be as remarkable as it has been. After the deregulation of gambling, although the gam- bling business has become increasingly prosperous, production costs have risen, which has further weakened the competitiveness of Macao’s manufacturing indus- try. In the past decade, the gambling industry boomed while the manufacturing industry shrank as regional integration gained pace. According to census data recently released by the DSEC, in 2001 the recreational, cultural, gambling, and related industries contributed 10.9 % of employment in Macao, while the corre- sponding fi gure for the manufacturing industry was 21.8 %. In 2011, the fi gure for the former had risen rapidly to 25.0 % while the latter had plummeted to 3.9 % (DSEC 2012 , pp. 87–88). The big contrast in the fate of these two industries clearly shows the double-edged sword of regional integration. Obviously, regional integration triggers economic transformation, which means that the structure of the labour market needs to change accordingly. In expanding industries, since more businesses are established and more jobs are on offer, wages could be pushed up, and few social problems would arise. However, in those indus- tries that are withering, as more businesses close and workers lose their jobs, social problems might emerge if these workers are not able to establish suitable businesses or fi nd suitable jobs. In other words, although regional integration has brought tre- mendous benefi ts to Macao, the Macao government should be highly alert to its negative effects. In order to prevent socio-economic confl icts or strife from intensi- fying because of economic restructuring, possibly ultimately undermining social stability, great attention must be given to promptly resolving all possible problems as they appear. On the whole, we agree that fi nding an appropriate strategy that takes advantage of the opportunities offered by globalization and the rise of China while reducing the negative impact of capitalizing on such opportunities is not an easy task. In hindsight, the gambling liberalization policy initiated by the SAR government under the stewardship of Edmund H. W. Ho was a critical strategy that brought tremen- dous impetus to Macao’s economic growth in the new millennium. Standing on the solid ground enlarged by his predecessor, if Fernando S. O. Chui seizes the golden opportunities offered by greater regional integration in a timely manner, he will have more resources or ways to solve Macao’s intertwined socio-economic-political problems and be able to push Macao to another plane of development in the coming decades. On the question of how to exploit such opportunities, political strength and leadership will be critical. 192 8 The First Decade and the Road Ahead

8.7 Conclusion

As explained throughout this book, the desire to engage in games of chance seems to be a basic human instinct as it appears almost in every society, past or present. As an overall conclusion, we argue that although certain kinds of casino gambling were made lawful before the 1970s in some parts of the world, such activities were not promoted like ordinary goods and services. A negative label was also imposed not only on individual gambling behaviour and on the running of gambling businesses, but also on governments that raised revenues from registering (or monopolizing) gambling businesses. After the 1970s, under a wave of liberalism, casino gambling was presented as a natural business that could offer entertainment or leisure to participants, generate income for the government, and create jobs for people. In the 1990s, moves to make casino gambling a lawful business to achieve various goals as suggested by liberals reached a peak, especially in the US. Like any other business, which usually follows a boom-bust cycle, from the mid- 1990s onwards casino gambling in Western economies entered a downturn after a period of rapid growth. At around that period, the market demand for gambling goods and services in mainland China grew rapidly, even though gambling was still strictly unlawful. One reason for the growing demand was the gradual release of pressure after a prolonged period during which gambling had been suppressed, and the growing affl uence of the people after a period of continuous economic growth following the launching of economic reforms in mainland China. As a small city in southern coastal China, Macao enjoyed a liminal position during the period of Portuguese administration and had made gambling lawful for over one and a half centuries. Such a background was highly favourable for maintaining Macao’s unique status as the sole casino playground in Chinese territory under the framework of “one country, two systems”. After the return of sovereignty, casino gambling in Macao was not only allowed to remain lawful but was offered better chances for development as the central government agreed to let the Macao government open up the industry. It has been speculated that the deregulation fi t well with national developmental strategies—particularly with the desire to intercept gambling money that would possibly otherwise fl ow to Western economies. With an extremely supportive environment for development, Macao made enviable progress, although certain socio-political problems did simultaneously emerge. In order to ensure sustainable economic growth, the Macao government should formulate relevant policies to solve the aforementioned socio-political problems promptly and effectively, and also try its best to diversify the economic structure to reduce Macao’s over-dependence on the gambling industry as suggested. The Pearl River Delta and Pan-Pearl River Delta regional integration strategies outlined and supported by the State Council may help Macao to solve most of the abovemen- tioned intertwined problems, as well as serve as an impetus for Macao’s economic diversifi cation and continuous growth in the coming decades. References 193

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1810 January 5: The government authorizes the fi rst Portuguese-style lottery for charitable purposes June 15: The government establishes the fi rst lottery-issuing centre 1842 Horse racing is introduced 1845 Horse racing is suspended 1846 February 16: The government legalizes fantan 1847 January: The government authorizes the fi rst Chinese-style lottery (baige piao ) July: The government includes a tax on weixing gambling in its revenues 1849 April: The government launches a licensing system for fantan gambling houses 1850 April: The government invites tenders for a fantan gambling houses franchise 1851 June 17: The government invites tenders for a baige piao franchise 1882 The government invites tenders for a fantan gambling boats franchise 1892 The government ends the monopoly on lotteries held by the Santa Casa da Misericórdia (Holy House of Mercy) 1927 The Club Internacional de Recreio e Corridas de Macau, Limitada introduces organized horse races in the new racecourse in Areia Preta 1930 The government launches a monopoly franchise system for gambling houses Hou Heng Company wins the monopoly concession to operate gambling houses 1931 August: Fan Che-pang et al., who later form the Macao Canine Club, introduce greyhound racing 1937 The government passes a law to integrate the operations of different games Tai Heng Company wins the monopoly concession to operate gambling houses and intro- duces new Western types of games 1941 Horse racing is suspended 1942 Greyhound racing is suspended 1961 February 13: Governor Marques designates Macao a “permanent gambling region” July 4: The government decides to liberalize gambling operations and put them up for public bidding October: Stanley Ho et al. win the monopoly concession to operate casinos and lotteries 1962 May 26: Stanley Ho et al. transfer their concession to STDM STDM’s fi rst casino, Casino Estoril, opens 1963 Yat Yuen Canine Club resumes greyhound racing (continued)

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 195 DOI 10.1007/978-3-642-40749-9, © Springer-Verlag Berlin Heidelberg 2014 196 Chronology of Gambling Events in Macao

(continued) 1970 STDM’s fl agship Casino Lisboa opens 1975 June 15: Sociedade de Pelota Basca de Macau, S.A.R.L. introduces Jai Alai betting 1976 April: STDM is granted a contract extension 1977 August: Macau Trotting Club is granted a 20-year concession to operate harness racing 1980 September: The fi rst harness race is held 1982 May 12: The Assembleia Legislativa (Legislative Assembly) passes Law No. 6/82/M, stipulating that the operation of casino gambling activities will be subject to a monop- oly franchise or special concession system (up to four concessionaires) 1984 December: The government introduces an instant lottery 1985 May: The government terminates the Pou lottery 1986 September: STDM is granted a contract extension September 12: The Legislative Assembly passes Law No. 10/86/M, stipulating that the number of concessions granted to be limited to three 1987 Macau SLOT Co. Ltd. is granted the franchise to operate instant lottery 1988 February: Harness racing is suspended April 5: The government establishes the DICJ 1989 Macau Trotting Club is transformed into the Macau Jockey Club for fl at-racing September 10: The fi rst horse race is held Macau SLOT Co. Ltd. is granted the franchise to operate an instant lottery on Hong Kong–Macao ferries 1990 July: Jai Alai betting is suspended August 24: Wing Hing Lottery Company is granted the concession to operate Chinese lotteries STDM takes over the Macau Jockey Club 1993 Article 118 of the Basic Law , promulgated on 31 March, stipulates that Macao “shall, on its own, make policies on tourism and recreation in the light of its overall interests” 1998 June 5: Macau SLOT Co. Ltd. is granted the franchise to run football betting STDM introduces 2000 March 8: Jiang Zemin, then President of the PRC, announces that no state-related enter- prises would be allowed to participate in the Macao gambling business April 27: Macau SLOT Co. Ltd. is granted the franchise to run basketball betting June 17: Macau SLOT Co. Ltd. launches Asia’s fi rst legal online football betting operation July: The government establishes the Macao Gaming Committee August: The Committee hires Arthur Andersen Worldwide to study the development of the gambling industry December 5: Macau SLOT Co. Ltd. is granted the franchise to run online basketball betting December 29: Macau SLOT Co. Ltd. launches Asia’s fi rst legal online NBA basketball betting operation 2001 May 23: DrHo.com begins operations August 30: The Legislative Assembly passes the Legal Framework for the Operations of Casino Games of Fortune (Law No. 16/2001). It stipulates regulations governing the number of concessions, the conditions, and the processes for open bidding, the operating models and qualifi cations of shareholders and concessionaires, and issues concerning the gambling tax and contributions to charity. It also legalizes the long-existing gambling promotion system November 1: The government decides to grant three gambling concessions December 18: The government extends STDM’s concession to 31 March 2002 2002 March 28: The government signs an 18-year concession agreement with SJM April: SJM takes over 11 casinos run by STDM June 24: The government signs a 20-year concession agreement with Wynn (continued) Chronology of Gambling Events in Macao 197

(continued) June 26: The government signs a 20-year concession agreement with Galaxy December 19: The government authorizes Galaxy to enter into a sub-concession contract with the Venetian 2003 August: The government approves horse and greyhound betting via the Internet September 29: Mocha Slot Group Limited opens the fi rst Mocha slot machine lounge 2004 February 19: Forbes ranks the Mandarin Oriental among the world’s 10 “Best Casinos” April 24: The government approves baige piao betting via telephone and the Internet May 18: Sands Macao, the fi rst American-run casino in Macao, opens May 31: The Legislative Assembly passes the Law on Regulating Credit Related to Gaming and Betting in Casinos or Other Gaming Venues (Law No. 5/2004) to regulate gambling-related loan activities June 7: The government begins to accept applications for gambling promoter licences 2005 January: The government approves the Macau Jockey Club’s application to simulcast races in Hong Kong April 19: The government authorizes SJM to enter into a sub-concession contract with MGM 2006 January 1: Macau (Yat Yuen) Canidrome Co. Ltd. is granted a 9-year contract extension March 23: Forbes ranks Hotel Lisboa, the Mandarin Oriental, and Sands Macao among the world’s 13 “Hottest Casinos” May 9: Melco acquires Mocha Slot Group Limited September 1: The government establishes the Departamento de Investigação de Crimes relacionados com o Jogo e Económicos (Gaming-related and Economic Crimes Investigation Department) under the Polícia Judiciária (Judiciary Police) September 8: The government authorizes Wynn to enter into a sub-concession contract with Melco December: The government approves the Macau Jockey Club’s application to simulcast races in Malaysia 2007 October: The government approves the Macau Jockey Club’s application to simulcast races in Singapore 2008 April 22: The Chief Executive announces new measures to limit the numbers of casinos, gambling tables and slot machines, e.g., the number of gambling licences will not be increased in the foreseeable future 2009 July 28: The six gambling concessionaires and sub-concessionaires form the Chamber of Macau Casino Gaming Concessionaires and Sub-concessionaires September 12: The government sets the upper limit on junket commissions at 1.25% of bets 2010 March 23: The Secretário para a Economia e Finanças (Secretary for Economy and Finance) announces a cap on the number of gambling tables, i.e., not to exceed 5,500, until the end of 2012 The government approves the Macau Jockey Club’s application to simulcast races in South Africa 2011 There are a total of 34 casinos in Macao, with 23 casinos located on the Macao Peninsula and 11 casinos on Taipa Island Sources: Basic Law of the Macao Special Administrative Region of the People’s Republic of China; DICJ (2012a , 2012b , 2012c ); Forbes (2004 , 2006 ); Government Information Bureau (vari- ous years); Leung and Lo (2010 ); Macao Government (1961 , 1982 , 1986 , 1998 ); Macao SAR Government (2000a , 2000b , 2000c , 2001a , 2001b , 2001c , 2004a , 2004b , 2009); Macao Trade and Investment Promotion Institute ( 2004); Macau Jockey Club ( 2011 , 2012); Macau SLOT Co. Ltd. ( 2012 ); Macau (Yat Yuen) Canidrome Co. Ltd. (2012 ); MacauNews (2010 ); Wu ( 2009 ); Wu et al. ( 2009 ); Zhang (2011 ) Notes: For details of the gambling concessions from 1873 to 1910, see, for example, Zhang ( 2011 , pp. 224–233). For details of the casinos in Macao, see DICJ (2012b ) 198 Chronology of Gambling Events in Macao

References

Basic Law of the Macao Special Administrative Region of the People’s Republic of China. http:// bo.io.gov.mo/bo/i/1999/leibasica/index_uk.asp . Accessed 23 Oct 2012 DICJ (2012a) Concession contracts. (In Chinese) http://www.dicj.gov.mo/web/cn/contract/index. html . Accessed 23 Oct 2012 DICJ (2012b) Information of casino address and websites. http://www.dicj.gov.mo/web/en/infor- mation/contacts_casino/index.html . Accessed 23 Oct 2012 DICJ (2012c) Macao gaming history. http://www.dicj.gov.mo/web/en/history/index.html . Accessed 23 Oct 2012 Forbes (2004) World’s best casinos, February 19. http://www.forbes.com/2004/02/19/cx_ cv_0219feat.html . Accessed 23 Oct 2012 Forbes (2006) Hottest casinos, March 3. http://www.forbes.com/2006/03/22/casinos-travel- gambling- cx_sb_0323feat.html . Accessed 23 Oct 2012 Government Information Bureau (Various years) Macao yearbook. Government Information Bureau, Macao Leung KF, Lo SH (eds) (2010) Casino development and its impact on China’s Macau SAR. City University of Hong Kong Press, Hong Kong (In Chinese) Macao Government (1961) Legislative regulation no. 1496. (In Chinese) http://bo.io.gov.mo/ bo/i/99/41/desp196_cn.asp?mobile=1 . Accessed 23 Oct 2012 Macao Government (1982) Law no. 6/82/M. (In Chinese) http://images.io.gov.mo/bo/i/82/22/lei- 6- 82.pdf . Accessed 23 Oct 2012 Macao Government (1986) Law no. 10/86/M. (In Chinese) http://bo.io.gov.mo/bo/i/86/38/lei10_ cn.asp . Accessed 23 Oct 2012 Macao Government (1998) Order no. 49/SAASO/98. (In Chinese) http://bo.io.gov.mo/bo/i/98/22/ despsaaso49_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2000a) Chief Executive order no. 62/2000. (In Chinese) http://bo.io. gov.mo/bo/i/2000/18/despce_cn.asp#60 . Accessed 23 Oct 2012 Macao SAR Government (2000b) Secretary for Economy and Finance order no. 77/2000. (In Chinese) http://bo.io.gov.mo/bo/i/2000/26/despsef_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2000c) Secretary for Economy and Finance order no. 115/2000. (In Chinese) http://bo.io.gov.mo/bo/i/2000/50/despsef_cn.asp#115 . Accessed 23 Oct 2012 Macao SAR Government (2001a) Chief Executive order no. 217/2001. (In Chinese) http://bo.io. gov.mo/bo/i/2001/44/extra2/despce_cn.asp#217 . Accessed 23 Oct 2012 Macao SAR Government (2001b) Chief Executive order no. 259/2001. (In Chinese) http://bo.io. gov.mo/bo/i/2001/51/despce_cn.asp#262 . Accessed 23 Oct 2012 Macao SAR Government (2001c) Legal framework for the operations of casino games of fortune (Law no. 16/2001). (In Chinese) http://bo.io.gov.mo/bo/i/2001/39/lei16_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2004a) Law on regulating credit related to gaming and betting in casi- nos or other gaming venues (Law no. 5/2004). (In Chinese) http://bo.io.gov.mo/bo/i/2004/24/ lei05_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2004b) Secretary for Economy and Finance external normative order no. 48/2004. (In Chinese) http://bo.io.gov.mo/bo/i/2004/18/despsef_cn.asp . Accessed 23 Oct 2012 Macao SAR Government (2009) Secretary for Economy and Finance order no. 83/2009. (In Chinese) http://bo.io.gov.mo/bo/i/2009/38/despsef_cn.asp#83 . Accessed 23 Oct 2012 Macao Trade and Investment Promotion Institute (2004) Macao’s liberalised gaming industry is breaking all records and upgrading its facilities. Macau Image, 40. http://www.ipim.gov.mo/en/ publication/macauimage/40/1.htm . Accessed 23 Oct 2012 Macau Jockey Club (2011) A history of racing in Macau. http://www.mjc.mo/race_en/info/group_ news.php?id=66&news_id=16054 . Accessed 23 Oct 2012 References 199

Macau Jockey Club (2012) Fact sheet. http://www.mjc.mo/NEWMJCPAGE/INFO/MJCINFO/ EN_MjcInfo.html . Accessed 23 Oct 2012 Macau SLOT Co. Ltd. (2012) Company background. (In Chinese) https://members.macauslot. com/hr/Company_info.php . Accessed 23 Oct 2012 Macau (Yat Yuen) Canidrome Co. Ltd. (2012) History of Canidrome. (In Chinese) http://www. macauyydog.com/aboutus/history.php . Accessed 23 Oct 2012 MacauNews (2010) Government to limit growth of gaming tables in casinos. 16 November. http:// www.macaunews.com.mo/content/view/1105/13/lang,english/ . Accessed 23 Oct 2012 Wu G (2009) Contemporary history of gambling in Macao. Guangdong People’s Publishing House, Guangzhou (In Chinese) Wu Z, Tang K, Jin G (2009) Chronicle of Macao. Guangdong People’s Publishing House, Guangzhou (In Chinese) Zhang T (2011) A study of the monopoly on fantan gambling in Macao during the late Qing dynasty. Jinan University Press, Guangzhou (In Chinese) Glossary

Ao, Man-long 歐文龍 baige piao 白鴿票 caipiao 彩票 Centro Democrático de Macau 澳門民主協會 Coloane 路環 corporate voters 法人選民 Cotai 路氹 Cotai Strip 路氹金光大道 dadu baijia 大賭敗家 dailou 大佬 daisiu 大小 diaolou 碉樓 Fan, Che-pang 范潔朋 fantan 番攤 Fok, Chi-ting 霍芝庭 Fok, Henry Ying-tung 霍英東 Fok, Kai-cheong 霍啟昌 Fu, Tak-iong 傅德榕 General Union of Neighbourhood 澳門街坊會聯合總會 Associations of Macao Guanzha Incident 關閘事件 Hengqin New Area 橫琴新區 Ho, Chio-meng 何超明 Ho, Edmund Hau-wah 何厚鏵 Ho, Lawrence 何猷龍 Ho, Lin-vong 何連旺 Ho, Pansy 何超瓊 Ho, Shap 何十 Ho, Stanley Hung-sun 何鴻燊 Hou Heng Company 豪興公司 Ip, Hon 葉漢

V. Zheng and P.-s. Wan, Gambling Dynamism: The Macao Miracle, 201 DOI 10.1007/978-3-642-40749-9, © Springer-Verlag Berlin Heidelberg 2014 202 Glossary

Ip, Terry Tak-lei 葉得利 Jornal do Cidadão 市民日報 Kiang Wu Hospital 鏡湖醫院 Kou, Ho-neng 高可寧 liangdian 亮點 Lo, Kau 盧九 Lui, Che-woo 呂志和 Macao Chamber of Commerce 澳門中華總商會 Macao Federation of Trade Unions 澳門工會聯合總會 Macao Daily News 澳門日報 minben 民本 New Hope 新希望 New Macau Association 新澳門學社 Ng, Kuok-cheong 吳國昌 paikao 牌九 piao du yin chui 嫖賭飲吹 Pou lottery 鋪票 qinshou zhiyu 禽獸之域 Resilience Centre 志毅軒 shi , nong , gong , shang 士農工商 Sociedade de Turismo e Diversões de Macau, S.A. 澳門旅遊娛樂有限公司 Tai Heng Company 泰興公司 Taipa 氹仔 Treaty of Wangxia 望廈條約 Wan, Kuok-koi 尹國駒 weixing 闈姓 The Women’s General Association of Macau 澳門婦女聯合總會 Xiao, Yingzhou 蕭瀛洲 xiaodu yiqing 小賭怡情 Zheng, Guanying 鄭觀應