Taking the Mickey

Is Hengqin going to emerge as China’s new Disneyland?


On a future trip they may also take in the theme parks of Hengqin

Theme parks are pretty popular, even with former leaders of the Soviet Union, it seems. In fact, when Nikita Krushchev made his famous American tour in 1959 there was a minor diplomatic incident when his hosts cancelled a visit to Disneyland.

US officials blamed security concerns but Krushchev considered this absurd, writing to the American Ambassador to the UN: “I understand you have cancelled the trip to Disneyland. I am most displeased.”

In a speech at the studios of Twentieth Century Fox, Krushchev again vented his anger at missing out on the Magic Kingdom.

“Just now I was told I could not go to Disneyland. I asked ‘Why not? Do you have rocket-launching pads there? Is there an epidemic of cholera? Have gangsters taken hold of the place?’ That’s the situation I find myself in. For me, such a situation is inconceivable. I cannot find words to explain this to my people.”

So had he been alive today, Krushchev might have been excited about the latest news from Macau. The gambling capital of China – which, like Hong Kong, is run as a special administrative region – has ambitions to broaden its appeal with a series of theme parks.

But Macau is tiny – less than 30 square kilometres – which is requiring some creative thinking. The solution: leasing a nearby island from the Chinese authorities.

Land is abundant in nearby Hengqin, an island three times Macau’s size. Better still, the area is virtually uninhabited, with a residential population of just 4,000. That compares with more than 500,000 people in Macau plus millions more tourists every year.

In 2009 Chinese legislators approved a little-publicised resolution that allows Macau to lease land on Hengqin.

The addition of Hengqin’s oyster beds to the world’s casino capital, according to the magazine, The Economist, is a “game changer” for the gambling hub, which has been “too minuscule to support mass tourism”. The administrative committee of Hengqin has big plans. It envisages a population of 280,000 by 2020, with facilities to handle up to 30 million visitors every year.

Cheap land and labour, complete with tax breaks and policy incentives, are already luring investors to Hengqin. Galaxy Entertainment, a Macau casino operator (with a share price up more than 100 times from its 2008 low) is planning to buy a large tract of land there for non-gaming businesses. Others will follow. At least 10 theme parks will be built in Hengqin, The Economist reported, turning it into “the Orlando of China”.

So far, developments in Hengqin have been of a more educational bent. A new campus of the University of Macau was completed in July and handed over to the Macanese. The project comes with a bit of extra territory, symbolising that the area has become a “special economic zone” belonging to the Macau SAR. (The Macanese government has paid $150 million for the land lease which runs to 2049 – the date when Macau’s special administrative status is set to expire.)

State-run media haven’t been slow in hyping up the prospects for the island. By extending Macau’s territory, the Hengqin deal is “a significant milestone in the cooperation between Guangdong and Macau”, says China Daily, as well as “an unprecedented innovation under the ‘One Country, Two Systems’ framework”.

Hong Kong should borrow a lesson from the new arrangements, the newspaper suggested.

“The Hengqin model can also serve as an important reference for the Hong Kong SAR, where development has come to a bottleneck. Shenzhen can consider leasing portions of its land to the Hong Kong SAR.”

In fact, a land lease between Hong Kong and Shenzhen has already been signed. Again, the deal has attracted little attention. Hong Kong’s immigration control point at Shenzhen Bay is actually built on a site leased from Shenzhen. The lease runs until 2047.

A cross-border industrial zone between Macau and Zhuhai is also being planned under similar arrangements.

Land leases like these are practical measures to extend Hong Kong and Macau’s space-constrained territories. But the implications could be more far-reaching, especially if residential land use is involved. Runaway home prices in Hong Kong and Macau mean they carry a hefty premium over properties just a few kilometres away in mainland China.

Other questions beckon. If the mainland is parting with cheaper land for its neighbours, will the bulging fiscal reserves of Hong Kong and Macau be used to subsidise China’s infrastructure development in a quid-pro-quo?

Such an idea may not go down well in Hong Kong. As WiC has earlier reported, relations between Hongkongers and the citizens of its mother country have been strained (see WiC136). Sixteen years after Hong Kong’s return to China, resentment of mainlanders is on the rise in the city.

Meanwhile, some visitors to Hengqin have been less impressed by the prospects for the plan. “Hengqin Island, not to put too fine a point on it, consists of a half-disused gravel pit and a half- reclaimed mud hole,” quipped Jake van de Kamp, a columnist in Hong Kong’s South China Morning Post. He added that Hengqin “had the look of another big impending non-performing loan.”

Of course, Hengqin will also have to battle with a number of other “special zones” in China in which capitalist ideas and socialist planners collide. A free trade zone will shortly be established in Shanghai (see WiC202), while cities including Tianjin and Xiamen are lobbying for similar benefits. The central government also wants to turn an area called Qianhai, itself a stone’s throw from both Hong Kong and Shenzhen, into another special zone too (see WiC180).

In many cases it’s not clear exactly what these zones could offer or what distinguishes the rival candidates from one another. But at least Hengqin has Macau, a genuinely unique enclave because of its gambling monopoly. And a special zone for amusement parks may be one of the more creative initiatives yet.

No doubt Krushchev would have been keen to visit…

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