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Overseas Gambling Ventures a Lucky Strike for China’s Power Projection

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China Power | Diplomacy | East Asia

Overseas Gambling Ventures a Lucky Strike for China’s Power Projection

How overseas gambling enterprises double as power projection tools for China.

Overseas Gambling Ventures a Lucky Strike for China’s Power Projection
Credit: Wikimedia Commons/ Slleong

The Belt and Road Initiative (BRI) is China’s largest push toward projecting hard and soft power into foreign nations. The BRI’s goal of infrastructure construction and corresponding economic growth has been especially enticing for developing nations, many of whom take on overwhelming loans in pursuit of such economic growth. From that end, the “port, park, city” model pursued by China has proven highly effective, allowing Beijing to exercise economic control, and in some cases, direct full ownership, of critical pieces of infrastructure throughout the world, with one prime example of this phenomenon being the 99-year lease of Sri Lanka’s Hambantota Port to a Chinese company. While the hard infrastructure of the BRI gains most attention, China is also utilizing gambling enterprises to project both hard and soft power into other countries.

While Chinese law prohibits gambling on China’s mainland, gambling remains very popular among many Chinese, with Macau being a prime destination for both domestic and international gamblers. As a result, China’s mobile-first approach to internet development has given rise to online gambling venues. With registered headquarters as far afield as Costa Rica and others predominately in Cambodia and the Philippines through institutions such as the Philippines Offshore Gaming Operators (POGOs), the online gambling industry targeting Chinese consumers has experienced an intense boom in the recent years. Gamblers and gambling operators in these legally hazy environments have generated so much income that small economic booms have been caused in the areas where these operators are headquartered. Small and mid-level enterprises are ones that experience the most growth, having the necessary capital and service capacity to create Chinese-specific housing, restaurants, and services. However, this often comes at the ire of local citizens, who blame the Chinese for increasing prices for daily goods and services. In spite of these detracting factors, the influx of income into these developing nations is one that simply cannot be ignored. Chinese-specific online gambling venues continue to operate in the face of any legal challenges and the growth of Chinese infrastructure within nations hosting online gambling enterprises showcases Chinese hard and soft power projection in these countries.

In spite of online opportunities, gambling tourism continues to be popular, which is why Chinese organizations have also established physical gambling entities to facilitate such tourism. One example of this phenomenon is the Kings Romans casino complex, formed in the government-backed Golden Triangle Special Economic Zone (SEZ) in Laos. The Kings Romans casino has undoubtedly significantly contributed to the Lao economy, but at the price of Lao sovereignty. The casino has been targeted with U.S. sanctions since 2018 over allegations that the casino owner, Zhao Wei, facilitates narcotics trafficking, money laundering, bribery, and human trafficking, among other things. This notion is backed by known illegal activities such as prostitution, which is illegal in both Laos and China yet is booming within the Golden Triangle SEZ to the point of regular distribution of Las Vegas-esque cards advertising such services. Illegal wildlife-trade tourism has also flourished in the region, with NGOs Environmental Investigation Agency (EIA) and its partner Education for Nature Vietnam (ENV) documenting the normalized sale of endangered wildlife products and parts in the region. That includes the consumption of live animals specifically raised for the purpose of sale to Chinese tourists.

A developing example of utilizing special zones to facilitate gambling enterprises to project power can be seen in Panama through the Colón Free Trade Zone (FTZ). Chinese-Panamanian relations increased significantly after the cutting of Panamanian diplomatic ties with Taiwan in June 2017, with China and Panama signing numerous trade deals focusing on infrastructure development and tourism soon after in 2018. The opening of Chinese flag carrier Air China’s direct flight routes to Panama in conjunction with Panama’s open courting of Chinese tourism have both furthered Chinese investment in Panama, with gambling enterprises such as the Golden Lions Casino specifically catering to Chinese players. The PRC has placed a direct emphasis on developing the Colón FTZ, an area that has been continuously implicated as a hub for illegal activity, to include ventures such as the transportation of unlicensed Chinese pharmaceuticals, money laundering, and even the trafficking of illegal Chinese immigrants. As the Colón FTZ grows, there is no doubt that local casinos with a Chinese emphasis will grow as well, particularly as the Chinese community faces issues such as cultural and social alienation from their newly-adopted homeland. With Chinese multinational organizations like Hikvision and Huawei already establishing presence in the Colón FTZ, it does not take a great leap of imagination to envision the future groundbreaking of Chinese-owned and operated gambling enterprises amid other Panamanian-based and Chinese-owned infrastructure.

China’s BRI in Africa highlights another approach to power projection through the direct and indirect use of gambling enterprises to do so. African infrastructure has been heavily developed by the Chinese, owing to the port-park-city model in parallel with the building of critical infrastructure such as roads, dams, and telecommunications infrastructure. Alongside these developments, the proliferation of Chinese gambling machines in Africa has become a significant problem within countries like Ghana and Uganda.

With a low upfront cost for Chinese operators and local gambling den owners and an even lower cost for player participation, these machines have siphoned increasingly large amounts of cash from local Africans. This is particularly concerning given the fact that many of these small communities and villages subsist on mere dollars a day. These “one-armed bandits,” in addition to online gambling venues, have already raised significant concerns over social issues such as gambling addictions and youth tardiness.

On a strategic level, many African countries have sought out Chinese-backed casino development as a path to increased economic development. Some examples include Mozambique, Guinea Bissau, and Cape Verde. Historic ties between Mozambique and Macau have resulted in trade between the two being as high as $2.5 billion dollars, with local leaders seeking further growth by courting Chinese casino development in the Mozambique capital of Maputo. The late Stanley Ho, most famous for his government-approved monopoly of the Macau casino market, invested in a casino in Guinea Bissau while simultaneously purchasing a 60 percent stake in that country’s only viable bank, the Banco da Africa Ocidental (BAO). Gaming services Macau Legend Development has been developing an entire casino complex in the western African island nation of Cape Verde, with a scheduled opening for late 2021. These relatively high-profile investments directly project both Chinese hard and soft power in Africa, even while enabling the economic growth of the countries they impact.

Typically used to exclusively describe military and political forces, power projection has reached a new peak in the era of great power competition. China’s BRI has enabled it to leverage countries economically, with gambling enterprises being a particularly new avenue for China to project both hard and soft power. Whether this be through physical infrastructure investment and Chinese workers, or through the funneling of Chinese cash through offshore gaming operators, there is no doubt that gambling enterprises facilitate bases of power for China.

Hugh Harsono is currently serving as an Officer in the United States Army. He writes regularly for multiple publications about cyberspace, economics, foreign affairs, and technology. He can be found on LinkedIn @HughHarsono. The views expressed here are the author’s alone and do not represent the official position of any government, organization, or group.