Our Desk | Fake it until you make it

Daniel Beitler

Macau’s approach to becoming a service platform for Sino-Lusophone trade most closely resembles the saying, “fake it until you make it.”

It’s unclear how effective Macau has been in facilitating trade, even as every public organization in the city – and most private ones – pledge to stand behind the so-called “One Platform” directive. In fact, from the rhetoric, you might think that the directive has already proved a major success.

The idea was for Macau to tap into its historical, social and cultural resources to facilitate trade between the mainland and the approximately 280 million people who live in Portuguese-speaking countries.

But China hardly needs Macau’s input to develop trade links; the whole world – with the exception perhaps of US President Donald Trump – is itching for closer trade ties with China. Instead, the Platform concept was gifted by China as a helping hand in the city’s economic diversification plan – and, as a gift, how much is Macau expected to do to earn it?

The Macau Trade and Investment Promotion Institute boasts that local initiatives have made a significant impact in increasing bilateral trade between China and the Portuguese-speaking world to a total of USD90.9 billion by 2016. This, the Institute says, represents a nine-fold increase in trade volumes compared to 2003, when the Forum (Macao) was first held.

It’s hard to tell how much of this can be accredited to Macau.

A good place to start is by examining trade volumes between China and other world economies of a similar size to the combined economies of the Lusophone sphere.

The total gross domestic product of the Lusophone sphere is approximately $3 trillion, on par with the world’s fourth, fifth and six largest economies – according to IMF estimates from last year – Germany ($3.42 trillion), the UK ($2.5 trillion) and India ($2.45 trillion).

Trade between China and the UK stood about 8.2 times higher in 2016 than in 2000, while trade between China and Germany grew 5.6-fold in the same period. On the other hand, Sino-Indian trade volumes grew from less than $3 billion in 2000 to $70.7 billion in 2016, representing a whopping 23-fold increase.

Though there are clearly country-specific factors in determining how fast the relative trade volumes have grown – namely the relative distance, types of goods and services produced by the countries, as well as the political incentives for Chinese investment – the similar pace of growth seen in other major world economies surely diminishes the role that Macau is supposed to have played.

Brazil is an obvious example. Accounting for about 55 percent of the Lusophone economy, it is Beijing’s single most attractive target among the nine countries, not least because of its natural resources.

But despite several attempts since the 1980s, Brazil has had little success in developing cultural and economic ties to Macau, even as trade between China and Brazil has been on the rise.

As Paul Spooner of the Macau University of Science and Technology wrote in a 2016 paper, bilateral trade relations between China and Brazil appear to have developed “without any involvement of Macau or any effort to insert Macau in the China-Brazil link.”

As for Macau’s personal participation in Lusophone trade, that too has been very limited. In 2017, the trade volume between Macau and Portuguese-speaking countries amounted to approximately MOP649 million (about $80 million), or not quite 0.01 percent of all China-Lusophone trade.

In per capita terms, the average person in Macau engaged in only twice as much trade with Portuguese-speaking countries as the average person on the mainland. Given the close links to the Portuguese-speaking world, that can only be described as disappointing.

In the meantime, the Platform will continue to be hailed as a success and Macau will go on faking it.