Chinese President Xi Visits Macau, Urges Diversification Beyond Gambling

^{China's President Xi Jinping points to incoming Macau chief executive Sam Hou-Fai prior to an event celebrating the 25th anniversary of the handover from Portugal to China, in Macao. (Image: Eduardo Leal / AP)}

Chinese President Xi Jinping visited Macau to mark the 25^th anniversary of Chinese rule over the gambling hub on Friday, both to help swear in Sam Hou Fai as the city’s new chief executive and to urge leadership to consider further diversifying the local economy.

Over the past two decades, Macau has become the global leader in in-person gambling, far surpassing Las Vegas and other destinations. 

Xi Calls for ‘Moderate Economic Diversification’ in Macau

In 2023, Macau casinos brought in approximately $22.8 billion in gaming revenue, compared to about $10.9 billion for Las Vegas. Macau will surpass that total in 2024, as its casinos generated $23.7 billion for the year through October alone. 

However, those numbers are down from the approximately $38 billion Macau’s gaming industry earned in 2012. That coincides with the year in which Xi came into power on mainland China. Xi has made efforts to crack down on corruption throughout China and its territories, and that included stopping money laundering and other criminal activity in Macau, the only location in China that allows gambling. 

While Xi has never suggested that Macau should turn away from the gaming industry entirely, he has urged diversification, and once again made that pitch at Friday’s ceremony.

“At present the overall situation in Macau is stable, but the internal and external environment is undergoing profound changes,” Xi said. “Efforts should be made to promote moderate economic diversification and focus on cultivating new industries with international competitiveness.”

Sam, a senior judge who has been the leader of Macau’s top court since 1999, was the only candidate approved by Beijing to run in the election for Macau’s chief executive office in October. Perhaps unsurprisingly, then, he has broadly echoed Xi’s remarks on diversification.

“This situation of having one dominant industry is unfavorable to the long-term development of Macau and brings a huge negative impact,” Sam said in August, as he announced his leadership bid. 

At other times, Sam has referred to the “barbaric expansion” of the casino industry. While the mainland-born 62-year-old has not called for any shrinking of the gaming sector, he has made calls for “healthy and orderly development.”

Locals Uncertain About Macau’s New Leadership

There should be room for Macau to build other industries to complement their gaming and tourism sector, even if those businesses won’t be able to supplant the casinos. In recent months, gaming taxes have made up about 81% of the city’s government revenue, highlighting its reliance on gambling.

Expectations for Sam’s administration appear mixed, though most observers do at least expect a by-the-book approach from the former judge.

“I believe that he has much better administrative and judicial experiences, unlike his predecessors,” a retired civil servant who gave the surname Lau told Barron’s. “He will run a tighter shit and be fairer, at least that’s my hope.”

Other locals were less optimistic, while remaining open to the possibility that he could bring strong leadership to the city.

“I don’t have high expectations because he wasn’t chosen by us. He was predetermined,” retailer Jerry Ho told the Associated Press. “I just hope he’ll be better than his predecessor. That alone would be quite comforting.”