President Xi Jinping will visit Macau next week to announce a raft of new policies to make China's casino city a financial centre as anti-government protests continue to grip nearby Hong Kong.
Beijing has directed state-owned banks and enterprises to help set up infrastructure in Macau to aid financial diversification. The move is seen as a contingency plan if the situation in Hong Kong worsens.
The policies include the establishment of a yuan-denominated stock exchange and the acceleration of a renminbi settlement centre already in the works, as well as the allocation of land for Macau to develop in neighbouring mainland China, sources told Reuters.
Xi Jinping has made very clear that he wants a diversified Macau economy"
Two officials who helped develop the Shanghai stock exchange moved to Macau to help establish its yuan-based stock exchange. Chinese officials, and bankers in Hong Kong, say the push to develop financial infrastructure in Macau is part of a plan to avoid any major market disruption in Hong Kong that could impact Chinese businesses.
"The financial industry used to be an idea that we reserved for Hong Kong. We used to give all the favorable policies to Hong Kong. But now we want to diversify it," one Chinese official told Reuters.
The idea is not for Macau to replace or undermine Hong Kong but for China to have an alternative in case the situation in Hong Kong escalates, the sources added.
"Xi Jinping has made very clear that he wants a diversified Macau economy," said another Chinese official who declined to be identified. "The future focus will be on tourism and finance, to make it a centre to host international meetings like Singapore."
Xi's trip to mark the 20th anniversary of Macau's return to China from Portuguese rule comes as the central government has praised the city for upholding the "one country, two systems" framework that governs Hong Kong and Macau.