China is taking the fight to corruption from the outside in. A restriction and control operation is currently underway in Macau, one of China’s two “Special Administrative Regions,” along with Hong Kong. New Party Secretary XI Jinping didn’t hold back when denouncing corruption at his inaugural speech. He echoed the farewell words of his predecessor, Hu Jintao: ““[corruption] could prove fatal to the party, and even cause the collapse of the party and the fall of the state.” Macau represents a destination for illicit funds. Massive amounts of capital flow via macau’s illegal export and gambling channels. An operation – the details of which are not fully defined, but consistent – is currently unfolding there against the so-called ”junket operators,” intermediaries who collect money on mainland China and make it available to gamblers in Macau in exchange for a commission both from the customer and the casino. In fact, Chinese law forbids the export of capital worth more than $50,000, but the sheer size of gambling in Macau makes it easy to imagine much bigger transactions taking place. Since the introduction of new legislation in 2002 allowed for extended operations, traditional gambling in Macau has skyrocketed, attracting thousands of visitors per year, primarily Chinese from Hong Kong, Taiwan, and the prosperous neighboring province of Guangdong. The volume of business going on is stratospheric. Macau surpassed Las Vegas in revenue in 2006, and it continues to put space between itself and the Nevada city. Gambling represents nearly the entire economic structure of Macau, and the wealth that has been generated is looked upon fondly by Beijing. Gambling has created income and jobs, avoiding the kind of democratic ambitions that can be found in nearby Hong Kong. Additionally, activity by organized crime groups like the Chinese Triads has diminished noticeably, thought to be a side effect of Beijing’s involvement. Doubts have been raised regarding the transparency of operations and money laundering, and Macau’s government is preparing more severe legislation against it. Chinese police have arrested some middlemen to verify the lawfulness of their transactions. There have been more stringent controls on the movement of people and capital; Macau’s biggest hotels have been forced to reveal the identities of VIP customers. Doubt has been cast on the development model set forth by Macau, a peninsula of only 350,000 inhabitants, and the silent money-generating machine may break down thanks to the bigger problems of its client, far away Beijing. China’s new leadership appears determined, and as always the gravity of the commitment should reflect the seriousness of the problem. This may only be possible until the fight leads to higher levels of responsibility, and by then the “junket operators” being accused today may seem like only an instrument.
