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Could Hainan Open the Door to Gambling Legalization in China?

Hainan, often called China’s Hawaii, has been an attractive location for investments in recent years. But beyond the popular beach resort destination, the southern island is also seen as the most suitable place for the long-anticipated economic liberalization to soon take place. Chinese property tycoons expect the government to introduce a number of business-targeted incentives and to eventually allow casinos on the island, but could Hainan one day really open the door to gambling legalization in China?

Chinese president Xi Jinping attended the annual Boao Forum for Asia, which kicked off Sunday at Hainan’s east coast. In his speech on Tuesday, the president announced plans for greater economic freedom, market access, and new free-trade ports with greater autonomy. According to analysts, this was the perfect opportunity for Xi to show the world that China is still open for business at a moment when the country is facing a trade war with the United States. Although it did not include a lot of new initiatives, the speech focused on existing commitments and was largely seen as conciliatory and intended to lower the tensions between the two giant economies.

Xi did not mention gambling legalization but according to a local property investor, the government’s willingness to stay open and support of globalization will eventually lead to a more liberal economy where casinos will be welcomed as essential sources of revenue. In an interview with Bloomberg, Zeng Xianyun, chairman of Sanya Phoenix Island Development Co. Ltd., said that China should seriously consider the potential benefits of a full-fledged casino industry in Hainan and in the country in general.

According to him, the government should take steps towards reducing capital outflows by securing revenues generated by casino resorts. In Macau, an autonomous region in China where gambling is legal, the majority of revenue goes to foreign operators. All this revenue should go into Chinese companies and the Chinese country instead of being “eaten up all by foreign capital”, Zeng Xianyun says. He is the chairman of one of the most ambitious and impressive projects not only in China but also in the world, Phoenix Island. Dubbed the Oriental Dubai, Phoenix Island is a large artificial archipelago that is home to hotels, a ferry terminal, theme park, shopping, and entertainment areas, as well as to the world’s second seven-star hotel.

Would China Allow Casinos on Hainan?

Hainan, which is an island and a Chinese province with the size of Belgium, has been long seen as a “testing ground” for a possible liberalization of the economy. Although Xi Jinping pledged to an openness of the market, many analysts believe that no further actions would be taken by the government to open the economy to more foreign and private capital. However, the country needs to find more financial resources, solid and sustainable sources of revenue that will not end up in foreign companies as it happens in Macau.

Indeed, after years of financial setbacks, Hainan may not be the best Asian alternative to Hawaii right now. With the right initiatives, however, the government may transform it into the new Hong Kong. In order to transform it into the new Macau, however, it will need much more determination and willingness to change legislation. Should that happen, Zeng says that his company is ready to open a casino in under 30 days.

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