Analysis | Xi Jinping speech made in Macau for Hong Kong ears

Chinese President Xi Jinping used his visit to Macau last week to stress one message above all: that the benefits afforded by the ‘Two Systems’ are only made possible by first accepting ‘One Country’.

That message, a recurrent theme throughout Xi’s three-day visit, served more as a warning to neighboring Hong Kong than it did as praise for Macau.

It refers to the ‘One Country, Two Systems’ policy framework, formulated by former Chinese leader Deng Xiaoping in the 1980s, and now the guiding principle underpinning the degree of political, economic and social autonomy enjoyed by the two Special Administrative Regions of China.

President Xi used a speech delivered at the inauguration of the new Macau SAR government last Friday to stress the need for strict adherence to the framework.

‘One Country’ is the prerequisite and basis of ‘Two Systems,’ Xi said. “Only by ensuring no distortion of the ‘One Country, Two Systems’ practice can the cause of ‘One Country, Two Systems’ go far and steady.”

According to an official translation of his speech, Xi said that the policy framework was “the best institutional arrangement to ensure Macau’s long-term prosperity and stability.”

To the international observer, Xi’s visit to Macau last week served only to highlight stark differences between Beijing-friendly Macau and its more rebellious neighbor. Indeed, President Xi used a large portion of his speech on the day of the Macau SAR government’s inauguration to talk about the situation in Hong Kong, mostly in indirect terms that served to also heap further praise on Macau.

Xi said that in the past two decades, Macau has firmly upheld the sovereignty of the Central Government and has swiftly adopted legislation designed to safeguard national security, including Article 23 of the Basic Law and the National Anthem Law. Hong Kong’s attempt to pass national security legislation in 2003 was defeated by strong public opposition.

The President also contrasted the “inadequate law and order” of pre-handover Macau with its experience today as one of the safest cities in the world. Hong Kong, by contrast, has become considerably less safe since protests against the now-shelved extradition legislation erupted earlier this year.

“With a firm resolve, Macau has never wavered in the face of temporary complications or lost direction due to external interference,” said Xi in his Friday speech. “Macau’s successful experience speaks volumes about the viability and strength of ‘One Country, Two Systems’ as long as we are committed to it and act on it.”

“Macau’s successful experience proves that […] as masters of their own house, [Macau people] are fully capable of meeting the challenges of our time and achieving success in running, building and developing the Macau SAR,” added Xi.

No mention of

financial markets

President Xi Jinping also stressed the need for Macau to reduce its reliance on gambling. The economic dependency led to a catastrophic recession in 2014 that wiped more than one-third off casino revenues at its lowest point. Xi’s previous visit in that same year had kickstarted an ongoing drive in the city to diversify the economy.

The measures introduced since the 2014 visit have been largely unsuccessful in that they have not produced any single (or combined) economic activity capable of rivaling the contribution to Macau’s economy offered by casinos. Last year, gaming and junket activities accounted for over half of Macau’s industrial structure for the first time since 2014. 

The Chinese President did not acknowledge the shortcomings of these projects. He said that various emerging industries in Macau were on the rise, including the convention and exhibition sector, traditional Chinese medicine and distinctive finance.

The President also opted not to develop on this singular mention of financial activities in his inauguration day speech, nor did he use the occasion to lend his support to the development of a financial center in Macau, as various media reports anticipating his arrival had suggested he would.

The Monetary Authority of Macao announced earlier this year that it was studying the feasibility of launching a securities market in the city, which could include a yuan-based stock exchange. The market would build on other specialized financial products, such as financial leasing, wealth management and yuan clearing services, some with a view to facilitating trade between China and Portuguese-speaking countries.

Xi said that it would be best for Macau to pursue “sound economic development” by determining the “main focus and relevant key projects for the appropriate diversification of Macau’s economy.”

He added that Macau needed to carve out a role in wider national strategies like the Greater Bay Area, which seeks to connect Hong Kong, Macau and Southern China, as well as the Belt and Road trade and infrastructure initiative.

In support of this directive, financial institutions have announced several minor policies aiming to bring the financial systems of Macau and the People’s Republic of China closer together. Among them is a raise to the daily limit on individuals’ remittance from Macau to Chinese yuan accounts in the mainland to 80,000 yuan, as announced by the People’s Bank of China last week.

Lastly, Xi instructed that future economic development in Macau would need to be “fairer, more equitable and beneficial to all,” particularly in relation to the improvement of public infrastructure in the transportation, energy and environmental sectors.

Macau’s Gini coefficient stood at 0.36, according to latest government survey on income inequality held for the years 2017 and 2018, falling within the ‘safe band’ of between 0.25 and 0.40, which indicates a low level of inequality. Critics of the government regard this figure as inaccurate and say income in this city of approximately 650,000 is highly unequal by international standards.