MACAU • Chinese President Xi Jinping will visit Macau next week to announce a raft of new policies aimed at diversifying the city's casino-dependent economy to a financial-centred one, according to over a dozen interviews with officials and corporate executives.

The move is seen by officials in Macau as a reward for having avoided the anti-government protests that gripped nearby Hong Kong over the past six months.

The policies include the establishment of a yuan-denominated stock exchange and the acceleration of a yuan settlement centre already in the works, as well as the allocation of land for Macau to develop in mainland China, they said.

While there has been speculation about the proposals in recent months, the fact that they have been officially approved has not been reported previously.

"The financial industry used to be an idea that we reserved for Hong Kong," said one Chinese official who requested anonymity. "We used to give all the favourable policies to Hong Kong. But now, we want to diversify it."

Mr Xi's visit to mark the 20th anniversary of Macau's return to China comes as the central government praises the city for upholding the "one country, two systems" framework that governs both Hong Kong and Macau.

In contrast, China has condemned anti-government protests in Hong Kong and accused demonstrators in the financial centre of undermining national stability.

Beijing has instructed state-owned banks and enterprises to help set up infrastructure in Macau to aid financial diversification, four sources familiar with the matter told Reuters.

Two officials who helped develop the Shanghai stock exchange moved to the territory this year to help set up its yuan-based stock exchange, one of the sources said.

Chinese officials, and bankers in Hong Kong, say the push to develop financial infrastructure in Macau is part of a plan to prevent Chinese businesses from being hit by any major market disruption in Hong Kong.

The idea is not for Macau to replace or undermine Hong Kong, but for China to have a contingency plan in case the situation in Hong Kong worsens, they said.

"Xi Jinping has made very clear that he wants a diversified Macau economy," said another Chinese official, who declined to be named. "The future focus will be on tourism and finance, to make it a centre to host international meetings, like Singapore."

Macau's new exchange will initially be focused on bond trading to encourage local and Chinese companies to issue debt in the city, according to a Chinese official familiar with the matter.

Macau, which has a population of 600,000, was a Portuguese colony until it was handed over to China in 1999.

An announcement that Macau will join the Beijing-backed Asian Infrastructure Investment Bank is expected during Mr Xi's visit, two Chinese officials said.

Mr Xi is expected to announce policies to further integrate Macau with mainland cities in the Greater Bay Area, the region around the Pearl River Delta that includes Hong Kong, according to Chinese officials and Macau executives.

As part of that effort, Macau will be allocated more land on the mainland island of Hengqin to develop in areas such as education and healthcare, they said.

"This is the candy that Hong Kong did not want," said Mr Larry So, a political commentator and retired Macau university professor. "It is a gift for Macau, for Macau being a good boy."

REUTERS