Opportunism Drives CCP’s Crackdown on Macau Casinos, Analysts Say

In this photo taken on March 5, 2019, visitors take photos outside the Wynn casino resort with a view of the Grand Lisboa (top C) casino resort building in Macau. (Anthony Wallace/AFP via Getty Images)

News Analysis

China’s widely reported crackdown on the gaming industry of Macau arises from a mixture of opportunism and ideology, with the former an overriding factor, according to observers. The desire to eliminate perceived threats to Beijing’s dominance, and the economic motive of keeping gaming revenue from leaving China, are driving forces in this latest Chinese Communist Party (CCP) offensive.

The aggressive moves that the Chinese regime has taken against Macau’s casinos have alarmed Western businesses concerned about the renewal of their gaming licenses next year. Nowhere is the chilling effect more evident than in global stock markets, where Sands China, Wynn Macau, and other corporations have seen their shares plummet in value by a figure approaching $20 billion in total. China is upping the number of gaming inspectors it stations in the former Portuguese colony, with a view to rooting out alleged corruption in the casinos; setting strict limits on the number of hours per day that young people can gamble; and moving to limit the ability of casinos to extend credit to patrons.

Speculation abounds that Chinese leader Xi Jinping aims ultimately to close foreign-owned casinos altogether or severely limit their operations, thereby cutting off or vastly reducing the outflow of capital from Macau into the pockets of U.S.- and other foreign companies.

But it would be folly to imagine that Xi’s throttling of Macau casinos arises from principled ideological commitments, observers said.

Yes, ideology obviously does play a role, acknowledges Gerry Groot, a senior lecturer at the University of Adelaide with a focus on East Asian studies and a longtime observer of China and the CCP. Groot views the crackdown as partly a function of Xi’s professed commitment to Marxism and to certain values that see gambling as a social evil. Another factor, of course, is anti-Western sentiment.

“Xi seems to believe that the U.S. is in decline, the E.U. weak and divided, while China has shown itself to be resilient, growing, and unstoppable,” Groot said.

“From the point of view of CCP ideology, there has to be a time when the move back towards proper socialism takes place. Xi seems to be making moves in this direction, but carefully.”

Opportunism the Real Driver

In Groot’s view, it would be wrong to imagine that ideological factors are decisive here. Xi, the analyst said, has been notably selective in his moves against Western business interests, which suggests that he is all too willing to tolerate businesses if he sees himself and those loyal to him as the ultimate beneficiaries.

“Xi is serious about cracking down on corruption though only insofar as this doesn’t weaken his own support,” Groot said. “It is notable that potential threats [like Macau casinos] have borne the brunt of this campaign while those interests believed to be ‘on his side’ have been treated much more carefully.”

This tendency has caused some observers to note a strain of opportunistic self-interest, if not downright hypocrisy, in the inconsistency of the CCP’s campaign against foreign- and particularly Western-owned business interests.

“Xi does not seem to want to have his cake and eat it with regard to entrepreneurs. While there is strong support for business, it must support Party policy and never be seen to become a potential source of opposition,” Groot added. “The known unknown is how much the extra controls and demands on private business will curtail business initiative more generally—the perverse outcome.”

Tellingly, those businesses that can present themselves as acting in conformity with the principle of philanthropy—one of the pillars of the CCP’s program for “common prosperity”—have largely gotten off the hook while the CCP has gone after the casinos.

“Some business leaders have taken the hint and donated funds to the state and state activities in large sums and in different ways,” said David Goodman, director of the China Studies Center at the University of Sydney.

Goodman cited as examples Alibaba’s commitment of $15.5 billion, Tencent’s donation of $15 billion, and Pinduoduo’s pledge of $1.5 billion. The role of these conglomerates in supporting state activities suggests that communist ideology, as practiced by Xi and his cronies, does not at all rule out a role for business when the CCP stands to benefit. Part of the aim of this ostensible “philanthropy” is to encourage lower-profile business figures and organizations to donate at the local level, Goodman noted.

Lust for Riches

According to Arne Westad, a professor of history at Yale University with a focus on China’s economic and political scene, a big factor here is clearly greed. The economic motive of Xi and the Party is at least as powerful as the political imperative that drives Xi to tolerate some business practices and interests in China while moving ruthlessly against others.

In Westad’s view, the CCP is acting largely out of a desire to regulate and control as many areas of society as possible. In doing so, it seeks not to kill off the gambling industry in Macau, but rather “to control it, and, at least eventually, increase the government’s share of the income,” he said.

“I think they are pretty happy with the kind of control they have in Macau overall, but want tighter regulation of the industry, and, not least, more income from it,” Westad said.