China appears to be ratcheting up its campaign against corruption once again ahead of the Chinese Communist Party Congress later this year, a leading risk consultancy firm has warned.
The anti-corruption campaign was widely blamed for triggering a three-year slump in Macau’s gaming revenue as high rollers sought to keep a low profile. GGR has been on a strong upward trend in Q1, with the VIP sector performing unexpectedly well.
“The current revival of the anti-corruption campaign has cast a pall over China’s business environment,” the report by Steve Vickers & Associates said. “Risks are real – and worsening – yet the Chinese economy presents opportunities to foreign investors who can hold their nerve.”
It says the current target appears to be mainly the financial sector, adding that this type of campaign is often used as a means to oust rivals ahead of the key party gathering in Autumn.
It warns that anti-corruption purges appear to have become the “new normal,” with China Insurance Regulatory Commission head Xiang Junbo losing his job in April.
The report doesn’t specifically mention any likely impact on the VIP market in Macau, but does point out that it leads to stasis, with nervous officials unwilling to make decisions.
“As a result, government officials are not tackling key economic challenges, such as rising debt levels, weak regulatory standards, and a slowing economy that is too reliant on investment,” it said.
A slowing Mainland economy is also a risk for Asia’s gambling revenue potential.