Scholar questions Hengqin effects on local economy

1 Chen Guanhan 1

During a symposium organized by the University of Macau (UM) yesterday, Prof Chen Guanhan from Sun Yat-sen University said that some Macau enterprises will barely survive in Hengqin because of their inability to compete with mainland ones. He also said that the Macau government should make sure Macau’s development in Hengqin benefits homegrown small and medium-sized enterprises (SMEs) and local young people.
The symposium was set up to discuss the relationship between the Macau economy and China’s new economic normality. Prof Chen, director of Sun Yat-sen University’s Centre for Hong Kong, Macau and Pearl River Studies, questioned what the SMEs can achieve even if they were able to enter Hengqin. “Where is their market? You cannot just sell your products to Macau,” he said.
He then used the printing industry as an example, saying that while some printing houses from Macau can enter Hengqin, their market is still restricted to the city, as many other printing houses in the Pearl River region can provide a higher quality of services. He said SMEs that enter Hengqin in the future may end up barely surviving, like some manufacturers in the Zhuhai-
Macau Cross Border Industrial Zone.
Moreover, Prof Chen pointed out that land lots in Hengqin that were reserved for Macau have all been taken by powerful individuals or firms with government connections. He even suggested that some of them have changed their projects’ scopes to property development and have profited from them already. Therefore, ordinary residents will not benefit.
“SMEs, residents and young people in Macau were never involved or benefited in regional collaboration (…) Therefore, Macau residents would say that it does not matter what [the central government has offered to Macau], they would not have felt anything anyway,” he said.
Furthermore, he suggested that local young people are far less competitive compared to their counterparts on the mainland. “There are a lot of young people who have a Master’s or even a PhD degree. But their future in the job market is still not guaranteed and cannot survive if they do not find a living. [On the other hand], those young people in Macau and Hong Kong are in a very advantageous position. How can they compete [with mainland youth]?” he said.
On the sidelines of the symposium, Prof Chen urged the government to resist the pressure of the local business sector and to direct the development of the local industry. “If you adopt a laissez-faire approach, it is almost impossible for the local industry to adjust [by itself],” he said.
The professor suggested that the government has to request that casino operators  help diversify the economy through methods such as investing in non-gaming sectors. He also advised the autho-
rities to provide venues for SMEs to start their businesses, especially for young people. He added that some youngsters in Macau do have the talent but lack opportunities.

Region has to adapt to ‘new normal’

Prof Chen Guanhan said that Macau should realize that it will never experience another period of high speed economic growth such as that driven by the gaming industry and mainland tourists. He said that Macau, like the mainland, has to rely on internal factors to grow in the future.
He also believes that the decline in gaming revenue is crucial for economic diversification. “Macau has been talking about economic diversification for years. The major reason [it has not been done] is that there is no motivation for diversification. When an industry is so profitable, it is inevitable for resources to flow in that direction. Therefore, if Macau wants to diversify its economy, it takes the gaming industry to have a lower profit. Once profitability has declined, the capital will then flow to other industries and thus push them to develop,” he said.
Another scholar, Prof Qiu Xiaohua, from the Institute of Economic Research of the City University of Macau, explained that the new economic normality of China consisted of three characteristics. First, the growth rate of the Chinese economy will remain in the single digit range. Second, the Chinese economy will have to rely on the development of quality and efficiency instead of emphasizing quantity and productivity. Third, the main propeller of the economy will have to change from massive investment and dumping products into foreign markets to creativity in technology, business models and commercial regimes.
“It is crucial to properly handle the relationship between the development of Macau and the development of the Chinese economy. We have to find the new breakthrough of the Macau economy in the development of China,” said Prof Qiu.

Categories Macau