By Tong Lam
Macao has long been known as the “Las Vegas of the East” and the “Monte Carlo of the Orient,” but ironically its reputation as a center of capitalist excess only really took off after it was reintegrated into a still-nominally Communist China as a Special Administrative Region. This happened in 1999 and a key part of the process was the opening of its gambling sector to foreign investors. Throughout the twenty-first century, Macao’s gambling industry has been expanding at an exponential rate. In 2012, the gambling revenue in Macao was six times that of the Las Vegas Strip.
The city has certainly come a very long way from the sleepy colonial outpost it was in the mid-1800s when gambling was first legalized there. Thanks to China’s surging economic development, it’s even come a very long way from where it was at the end of the last century. By now, instead of calling Macao the “Las Vegas of the East,” it might be more appropriate to flip the comparison and refer to the Nevada gambling hub as the “Macao of the West.”
Not surprisingly, thanks to the bustling local gambling and hospitality industries, money generated by tourism is now the driving force of the Macao economy. In addition to having casinos, shopping arcades, and hotels that are larger and more luxurious than their Las Vegas counterparts, Macao’s per capita GDP (according to the World Bank) is fast approaching $90,000, meaning it is just slightly below the world’s frontrunner Luxembourg.
Likewise, the number of mainland tourists visiting Macao is approaching 20 million per year, more than a 20-fold increase from a decade and a half ago when the city was still under Portuguese rule. Yet, significantly, leisure tourism, especially by members of China’s burgeoning middle-class, is only part of the reason for the city’s rapid income growth. An equally if not more important part of the story is the use of Macao’s casinos to launder money for China’s filthy rich. In order to bypass China’s foreign currency exchange regulation, many wealthy Chinese deposit their money with junkets in mainland China and then withdraw and use those funds in the numerous VIP gambling rooms scattered across Macao’s casinos. In a way, Macao’s economic growth is at least partially a reflection of Beijing’s inability to enforce taxation and currency, as well as its inability to curb many forms of corruption.
In light of this economic picture, two final things about Macao, which should come as no surprise, are worth noting. A rising overall per capita GDP notwithstanding, the gap between the city’s haves and have nots has been growing dramatically; and despite all the official talk by Beijing of reining in corrupt practices in government and business sectors, and occasional crackdowns linked to this rhetoric, the rise of corruption in Macao shows no sign of abating.