Alipay, one of China’s primary online payment platforms, has become the first digital wallet to provide cross-border remittances between Macau and the mainland. The latest development comes as Beijing pushes for greater integration between mainland China and the special administrative regions.

Starting on Tuesday, Alipay Macau users can make transfers in Macau patacas, the city state’s official currency, after completing an identity verification process. They will be able to receive money, which will be converted into yuan, on bank cards linked to mainland Chinese Alipay accounts registered under the same name.

Users with an intermediate level of authentication will be able to remit a maximum of 10,000 patacas (US$1,249) per day, according to Macau Business. Users with advanced authentication will be able to remit up to 30,000 patacas a day.

Closer business cooperation between the Greater Bay Area cities around China’s Pearl river delta has opened up opportunities for cross-border remittance services, which would provide a new channel for capital flows in the zone, said Venetia Lee, general manager of Alipay in Hong Kong, Macau and Taiwan, as reported by the South China Morning Post.

“It’s also a new attempt at collaboration between AlipayHK, Alipay Macau and Alipay, and a milestone for our Greater Bay Area services after we made AlipayHK available across mainland China,” Lee added.

Special administrative region Macau

Alipay’s announcement comes a few days after the Chinese government revealed plans to improve integration between Macau and Guangdong province’s Hengqin Island. Under the plan, Macau residents can work and freely cross the border into the Hengqin area.

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By GlobalData

Over the weekend, the Chinese government announced plans under which the island will become a special economic zone that aims to bring together talent from all of Guangdong Province, the region that encompasses Hong Kong and Macau.

The zone will have a mission “to promote the interconnection of innovation chains between Hong Kong, Macau and the mainland”. Chipmaking and silicon design are among the desired innovation chains, as are AI, the Internet of Things, financial tech and health services innovation.

The 106 square kilometre cooperation zone – three times the area of Macau – will be run under a dual-leadership model via a committee co-led by Macau’s chief executive and the governor of Guangdong province. The committee will decide on significant plans, policies and essential personnel appointments within the zone.

But in an unprecedented move, the daily governing and management of projects will be overseen by Macau, which can decide on the details of land development, project construction and management of people’s livelihoods, as well as the promotion of investment and international cooperation within the zone. This will mark the first time a special administrative region has taken charge of an area on the mainland.

Additionally, China’s State Council said that the enterprise income tax rate for companies in Hengqin will be 15%, lower than the 20 to 25% rate charge in mainland China, while personal income tax for Macau residents working in Hengqin will be kept at the same rate they pay in Macau, also capped at 15%.

In an effort to better regulate data security, the Guangdong province said in July that it plans to build a big data centre for the Greater Bay Area, which includes Shenzhen, Hong Kong and Macau, to help the “orderly circulation” of data in the region.

Like Hong Kong, Macau is governed under China’s “one country, two systems” constitutional principle, which acknowledges the territory’s own system of governance, established before Portugal ceded it to China in 1999. China committed to allowing Macau’s governance model to persist for 50 years beyond the return date and promised a “high degree of autonomy”.

Under the “one country, two systems” principle, Macau has its own government, legal and financial affairs. It has its own local currency and differing local laws, including legal gambling, which makes up a prominent part of the economy.

The region’s leader, the chief executive, is chosen by a 400 person Beijing-approved committee comprising of politicians and business people. Ordinary citizens do not have a direct say in the appointment of the chief executive. Macau has been hailed by President Xi Jinping as the poster child for China’s “one country, two systems” model.

Due to the region’s long history of close ties with Mainland China, Macanese people are far more pro-Beijing than the citizens of Hong Kong. Pro-Communist groups have controlled and influenced Macau for over half a century. According to the Mercator Institute for China Studies, Macau’s citizens not only identify more strongly with mainland China but are also more trusting of Beijing.

One reason may have to do with wealth. Since its handover in 1999, Macau’s GDP per person has more than quadrupled to US$122,435 in 2018—nearly double that of Hong Kong and seven times that of the rest of China. Now affluent after years of bumper budget surpluses, its government provides yearly cash hand-outs of around US$1,250 to its permanent residents.

This does not mean that all residents of Macau are rich, as wealth inequality remains high. However, they are much better off on the whole than their mainland compatriots, who, along with Hong Kong, endure a far greater wealth gap.

Identity also plays a key role. While Macanese people identify as much with the People’s Republic of China as with Macau itself, local identity in the former Portuguese colony remains underdeveloped.

Like Hong Kongers, people in Macau speak Cantonese as their first language and still use traditional Chinese characters in writing. But unlike its neighbour, Macau has a tiny population of just 680,000 and has neither had an acclaimed cultural industry nor a unified education system to help foster a strong sense of collective identity. As a result, its citizens tend to use both Hong Kong and the mainland as cultural reference points.

Additionally, unlike Hong Kong – one of the world’s most prominent financial hubs – Macau’s economy mainly relies on tourism. The territory has become a major resort city and is a top destination for gambling tourism, with a gambling industry seven times larger than that of Las Vegas. Since Macau has little arable land and few natural resources, it depends on mainland China for most of its food, freshwater, and energy imports.