All politics is local

The often-quoted saying goes, “all politics is local.” As the Chinese government grapples with a slowing economy, it has to plug the outflow of national wealth to foreign shores. This applies to everything from foreign luxury products like cars, to curbing the outflow of Chinese money into overseas gambling.

To try to figure out what is pushing the increasingly vocal (and active) Chinese official crackdown on overseas gaming, you have to try to peek behind the bamboo curtain that veils internal Chinese politics from the outside world. Domestic political pressure on Xi Jinping stems from factions within the ruling Communist Party, possibly culminating in Xi’s next major leadership challenge, the Party Congress in 2022.

All media is state-controlled in China. But specific media outfits are controlled by different state entities, some of which push a more hardline agenda than others. In the case of Pogos and the Philippines, the role of The Beijing News in particular is relevant here. It was taken over by the propaganda department of the City of Beijing in 2011, and was the vehicle used for an exposé on the treatment of Chinese workers in Manila in 2018. The paper described Chinese workers operating in what it described as “slave-like” conditions, a choice of words reflected, in turn, in the recent Chinese Embassy statement this month. The point is this: Having appeared in one organ of the state media, the allegation was put on record and can’t be ignored.

Some have argued that the influx of outfits that became Pogos were made possible by the Chinese government turning a blind eye to overseas gambling, so as to expand the Chinese presence and influence in the country without entangling China in having to deal with notoriously unreliable Filipino officials (the ZTE experience comes to mind, as does Northrail). One article actually suggested that online gambling investments ought to be considered part of the Chinese investment portfolio in the country. Even if this were so, since Chinese law and policy remain firmly anti-gambling, the question then becomes, does China selectively apply the law — and pressure on foreign governments — to punish unfriendly countries and reward friendly ones?

The record suggests that even if this were previously the case, China has decided to apply pressure on everyone who harbors Chinese offshore gambling, whether in Cambodia (essentially a client state) or Vietnam (often at odds with Beijing). Combined with the ramping up of critical comments about the Philippines and gambling, the all-around pressure can be connected to domestic politics in China, as the economy slows down and the outflow of funds takes on a strategic priority to curb it.

After apparently briefly considering a Singapore-style creation of a gambling enclave, the Chinese government has been focused on arrests and trials, with the rhetoric escalating between 2018 and 2019. Again, what’s kept the Philippines in the public eye in China has been reports of extortion-related activities on the part of everyone (these reports allege) from legislators to local governments, the police and so on, with tales of criminal activities by Chinese and Filipinos alike preying on Chinese workers.

The response to social tensions created by the influx of Chinese workers, on the other hand, adds fuel to the fire: When “Pogo islands” are discussed, it fosters the idea of Chinese ghettoes, a development that is outrageous to Chinese pride.

Because Beijing is friendly to Manila, it could be argued that it has tried to temper domestic pressure in China by gently prodding Manila not to cause Beijing embarrassment. The Philippine response seems to be to pay lip service to Chinese demands for action. A survey of news from 2016 to the present reveals some trends: on the one hand, occasional official crackdowns of a modest nature, even as official hospitality to big players and the growing of Pogos is the larger, overall trend; the increasing reliance of industries such as real estate on the income generated from Pogos; local politicians cashing in on the trend (the Remullas and their island resort is the most conspicuous example, which happened in 2018 but only made it big in the news this year).

What did happen, though, was squabbling among license-issuing entities (Peza and Pagcor, for example) or one hand officially vowing cooperation (DFA) while others did the opposite (DOF). As the midterms loomed, domestic official noises on cracking down on gambling petered out; meanwhile, the DOF got what it wanted — a piece of the action, so much so that even after the Chinese embassy released its most hostile statement to date, the DOF insisted it will be business as usual, so it can tax, tax, tax.

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