(Bloomberg) -- Chinese President Xi Jinping reiterated calls for Macau to diversify its economy, praising its efforts to promote cultural tourism as the Chinese gaming hub seeks new growth drivers beyond casinos.
Macau government should “promote the appropriate diversification of the local economy,” boost policy support and investment to cultivate new industries with international competitiveness, Xi said in a speech on Friday during his first visit to the city since 2019.
Xi spoke after swearing in Sam Hou Fai as the chief executive of the former Portuguese colony on the 25th anniversary of its return to Chinese rule. Previously president of Macau’s top court, Sam has warned against the outsize influence of the gambling business and called for reducing the city’s reliance on the industry, echoing Beijing’s long-held request.
A Bloomberg gauge of Macau casino shares fell 0.9%, with Sands China Ltd trading 1.4% lower as of 11:35 a.m. local time.
For years, Beijing has sought to control an industry that’s enriched the only Chinese territory where casinos are legal but also provided an avenue for capital outflows for the country’s elite. The Chinese leader has instructed Macau to diversify its economy as early as 2009 after the Asia financial crisis, when he was China’s vice president.
Xi’s government has stepped up a crackdown on gambling since 2021, arresting major Macau junkets who helped bring in high rollers and provided them with credit, as well as tightening regulations over casino operations. This year, Macau passed a new law against a range of crimes involving illegal gambling, including criminalizing unlicensed money exchanges that helped mainland Chinese gamblers circumvent capital controls.
In his speech, Xi lauded Macau for becoming a “check-in hot spot” — meaning it’s popular on social media — citing motor racing and an international music festival as successful attractions.
Beijing also hopes closer integration with the Greater Bay Area will bring more opportunities, although gaming-related taxes still make up more than 80% of the government’s revenue.
During his three-day trip, Xi toured labs for traditional Chinese medicine and space technology at a university, and met with business people in the Guangdong-Macau cooperation zone in Hengqin, the state media reported. The area in neighboring Zhuhai city has been earmarked for Macau to develop new industries including technology, health care and finance.
Xi told Hong Kong’s leader John Lee that Beijing has “very high expectations” in a closed-door meeting on Thursday afternoon, urging the city to “vigorously promote the economy and seek development,” according to Xinhua.
Xi called on both special administrative regions to better integrate into the country’s development plans. The Chinese leader linked the semi-autonomous cities to nine mainland Chinese cities in his blueprint for the Greater Bay Area, which seeks to eventually rival San Francisco as a tech hub.
--With assistance from Shirley Zhao.
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