China Is Creating a Society of Know-nothings on its Doorstep

A version of this article was published in Foreign Policy in Focus, 13 June 2014. It was also featured in the Inter Press Service News Agency and Asia Times.

Macau’s gaming boom just keeps on giving.

118888105_casino_368590cGambling revenues soared to a new high of USD45 billion last year, a whopping 18.6 percent rise over 2012 and the city’s sixth straight year of record earnings. Casinos in this former Portuguese colony, which returned to China in 1999, now earn seven times more than Las Vegas. Casino jobs, which pay 30-40 percent more than other sectors, approach a quarter of the labor force. Add in casino-related positions like retailing and hospitality, and about half the working population in a city of 600,000 is connected to the gaming industry. The result is an enviable unemployment rate of 1.8 percent.

Let the good times roll, you might say.

But it should surprise no one that the city’s gaming boom, which produces 50 percent of its GDP, has also spawned a dark side. Prostitution, triad activity, and money laundering are 02daily affairs. Not so obvious, though, are the multiple stress lines now tearing at a traditional society trying to cope with uncontrolled urban development, loss of green space, rising local gambling addiction, and a general deterioration in the quality of life.

For the average resident, the challenges created by the gaming boom now outweigh its advantages. Poor transportation, worsening air pollution from casino shuttles serving the city’s 29 million visitors, and soaring property prices are just a few of gaming’s by-products. Macau’s small and medium-sized businesses, about 95 percent of its enterprises, are also paying a price in rising rents and loss of both staff and customers to the casinos. Adding to this are higher crime rates across almost every category.

Yet Macau’s casino executives and investors, including the big American gaming houses, see unlimited possibilities for further growth and expansion. Their main complaint is that there is not enough skilled labor.

With more mega casinos scheduled to open in 2016, Macau will need at least an additional 75,000 casino and hospitality workers, officials say. Given that the city’s small and medium-sized businesses are already struggling to compete against higher-paying casinos for limited talent, Macau will have to import not only casino workers, but also professionals from every walk of life.

But neither Macau nor the Chinese government seem to have a plan to deal with the city’s soaring labor deficit, nor are they willing to slam the breaks on what has become a runaway train of unregulated growth.

Worse, Macau is turning its back on policies to prepare its future generations for a more globalized, knowledge-driven economy. If trends continue, Macau risks morphing into a IMG_0136society of know-nothings, one whose future could be devoid of educated and skilled professionals, its pool of workers increasingly drawn to the easy money in the often mind-numbing work on casino floors.

Every few months new reports present dire warnings. In December last year, one survey showed that nearly half of businesses polled “found difficulties in recruiting IT professionals” and predicted the shortage “could further worsen.” Last April, an industry report cited the lack of accountancy professionals, with “only fractional increases” since 2007. Another complained of the city’s “lack of engineers and related professions.” All this points to a society at the breaking point, and one that is mortgaging its future generations for short-term gains.

Even Macau’s lawmakers are now complaining that the boom is merely building castles in the sand. Last year, legislator Jose Coutinho told the media that, “Macau is a complete illusion of prosperity, because what we are building is only casinos, rooms and some shops with famous brands.” But he and other critics are a distinct minority in a legislature where 12 of its 33 members are indirectly elected by industry bodies and another seven are appointed by Macau’s Beijing-selected Chief Executive.

While Macau officials pay occasional lip service to the need to rebalance the economy and have floated a number of proposals, none so far have the transformative effect needed to set the city off in new directions.

One of the most talked about is boosting Macau’s role in capturing the region’s “meetings, incentives, conferences and exhibitions” or MICE business, but this has been slow to take off and is over-reliant on the gaming sector. For example, Macau’s biggest trade show is the Global Gaming Expo Asia. A plan to develop nearby Hengqin Island as a free trade zone will also do little to help the majority of Macau’s small businesses given its emphasis on large-scale projects.

But the main obstacle to a more sustainable economic model is that Macau continues to grow fat on Chinese gambling, and p1eChinese leaders still see Macau as an important outlet for the country’s wealthy and middle-class. The result is that no one in authority is even contemplating the day when China’s economy slows, the gamblers stop coming, and the boom ends, even though history has shown that the bigger the boom in a mono-economy, the greater the potential for a crash.

While China says it wants to see Macau rebalance its economy, Beijing’s reluctance to impose policy prescriptions or offer inducements to help it diversify is not surprising. That’s because Macau may be right where Beijing wants it and China’s other peripheral regions to be — societies increasingly dependent on the mainland for their prosperity and therefore less willing to make annoying demands for such things as democracy and greater autonomy.

Recommended Links:

“Academic Censorship in Macau,” South China Morning Post, 22 July 2014



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