Tai Kin Ip faces enormous ghosts. It almost feels like a horror movie to think about diversifying a rentier economy that is increasingly reliant on gaming, or about the internationalization of a conservative, nationalist, and protectionist village. Meanwhile, consumption escapes to the Mainland, from where mass tourism comes, killing tranquility—and burying other strategic focuses—without giving life to local commerce. The crisis of SMEs worsens, the real estate sector collapses… and, as if that weren’t enough, the tariff war holds back investment, employment, and consumption worldwide—necessarily also in China. The political signal has been given: tough times are coming.
The revenues from the thriving industry are relatively good: 57.6 billion patacas in the first quarter, almost in line with the official projection for this year: 240 billion. Even so, on the eve of presenting the Policy Address at the Legislative Assembly, the Secretary for Economy and Finance issues a warning: be careful; this is not what it seems; there is the omen of lean years. Politically, he does this to lower expectations—it’s an understandable intention. But it also frightens markets and civil society and resurrects the ghost of budgetary conservatism that haunted Ho Iat Seng’s administration.
The dilemma is clear: in the current climate, the “visitors” have less leeway to burn baccarat capital that they need, and consumption tends to fall—even more so the most superficial consumption, which sustains Macau. If tourism has the current profile it does, nothing better is expected in the near future. First contradiction: theory says that it is precisely in times of crisis that it makes more sense for the State to throw money at the problem, reanimating the economy; even more so when the account is in surplus. The focus should be on productive investment and support for the export of goods and services; but it is also important to stimulate consumption, within the limits of inflationary control. It is at such times that social support, reforms in education, health, and public administration become more urgent, as well as strategic investments in the diversification and internationalization of the economy. If the world is as it is, it is essential to bet on the smartest way to deal with it. Lastly, but no less relevant: in a weakened economy, dependent on the Government and casinos, the narrative of depression neither heals nor energizes—it only deepens the pain. The grayer the diagnosis, the more debilitated the patient.
When he was here last December, President Xi surely read the conjuncture that the stars align for this year well. And, better than anyone, he knows that economic diversification and internationalization require investment, political guidance, courage, and ambition. Thus, the situation cannot legitimize the denial of structural thinking.
It is not with fear, much less paralysis, that China will achieve five percent GDP growth—projection for 2025. In the case of Macau, the central question for Sam Hou Fai’s Government is to understand how to negotiate not only in Beijing and the Greater Bay Area but also in Europe and Lusophony—clear strategies for complex objectives in a challenging context. Surely, it is not with a reduction in public investment—or containment speeches—that private investment or critical mass will be attracted, whether from China or elsewhere. Tough times are coming, and big problems demand big solutions. What is certain is that if we plunge into depression—as the previous Government did—we will drown in it.
*Director-General of PLATAFORMA
