Asia Economy

China's answer to Las Vegas has one of the world's biggest per-person economies

Why is Macau so rich?
Why is Macau so rich?

Macau, known as China's answer to Las Vegas, is one of the wealthiest places in the world.

In fact, according to the International Monetary Fund, it's expected to surpass Qatar in 2020 as the location with the highest gross domestic product per person on a purchasing power parity basis.

Macau is located on China's southern coast about 40 miles from Hong Kong. Both cities are known as special administrative regions, which is a designation that grants them distinct rules and economic freedoms from the rest of China.

Over the years, Macau has become a hotspot for China's high rollers: Its gaming revenues are five times higher than those of Las Vegas. Macau's gaming revenue and overall economy thrived as visitors from Mainland China began to surge in 2003 as travel restrictions loosened and Chinese citizens became increasingly wealthy.

The city's small population of 650,000 relative to its large economy means its GDP per capita is already one of the world's highest. By 2020, Macau's GDP will reach around $143,000 per person, according to the IMF. At that time, it's set to top Qatar's projected figure of $139,000 and Luxembourg's expected $118,000.

Macau, known as China's answer to Las Vegas, is wealthy and it's only getting wealthier. 
 Sean3810 | Getty Images

The gaming industry in Macau has brought in more money than Las Vegas for the past 10 years. In fact, the majority of profits for both Vegas-based Las Vegas Sands and Wynn Resorts come from Macau. In 2017, the Chinese gambling hub accounted for a whopping 53 percent of adjusted earnings for Las Vegas Sands and 71 percent for Wynn Resorts.

Chinese President Xi Jinping began cracking down on corruption after coming into power, and that's been blamed for several years of gross gaming revenue declines in Macau. In 2016, however, those numbers began to pick up again.

Macau is now hoping to diversify its revenues beyond gaming by taking after Vegas and upping its entertainment business. The non-gaming sector in Macau accounts for just 12 percent of the region's total revenue, compared to 65 percent in Las Vegas.