50 China The EconomistAugust 31st 2019
2 Red Cross and programmes to help the el-
derly and poor. Players who win over
10,000 yuan must hand over a fifth of their
winnings to the state in taxes.
There is also a widespread belief that
lotteries help eradicate other forms of gam-
bling. As Wang Xuehong, an academic who
advises the Ministry of Finance, puts it,
“The government does not want to be held
responsible if anything goes wrong.” It
therefore tries to make sure there is just
one regulated outlet for gambling. One
strand of its efforts to supervise lotteries
more closely, says Ms Wang, was a pause
imposed four years ago on online ticket
sales, in the wake of the embezzlement
scandals. Last summer it reinstated that
ban. The promotion of state lotteries by
television celebrities and through smart-
phones has also been quashed under Mr Xi.
The anti-gambling campaign may have
curbed some illegal betting. Hans Stein-
müller of the London School of Economics,
who has studied rural gambling, suspects it
has had an impact on small-stakes mah
jong parlours frequented by housewives
and the retired. It has become “very sensi-
tive” for local officials to be seen to be in-
volved with these, he says. Still, many vil-
lagers continue to place bets with local
bookies on the numbers that will win Hong
Kong’s lottery. In winter peasant farmers
while away the day playing popular card
games, including dou dizhu (“struggle
against the landlord”) and zha jinhua
(“bash the golden flower”), for money.
The law is “flexible” on whether to pros-
ecute such games, says Ms Wang. A few
years ago the police said that they would
penalise players staking more than 500
yuan. In reality regulators play a cat-and-
mouse game with gamblers and app devel-
opers, says Mr Steinmüller, as semi-legal
options pop up that are not covered by
gambling regulations. Yaoji Poker, the
world’s largest maker of playing cards, says
rural sales are robust. Still, last year it
bought an online-gaming startup that sur-
vived the purge. It is now looking for ways
to attract players to its virtual dou dizhu,
among other card games, without falling
foul of the crackdown.
Ms Wang estimates that, all told, the
money spent on unofficial gambling is at
least five times that wagered on the state
lottery. The International Centre for Sport
Security, a Qatar-based outfit, reckoned in
2016 that illegal sports gambling in China
alone attracts $600bn a year—of a global il-
legal market worth between $750bn and
$1trn. In the hope of luring these punters,
the state lotteries have jazzed up their of-
ferings. The Sports Lottery, for instance, of-
fers virtual car-racing and football games.
China’s tech titans are tempting their
fortunes. agTech, which runs four-fifths of
the state’s lottery terminals, was bought in
2016 by Alibaba, an e-commerce giant. It re-cently received a contract to develop aug-
mented-reality products. Tencent has a
stake in China Lotsynergy, which builds
“video lottery terminals” for the Welfare
Lottery. These closely resemble slot ma-
chines, but involve betting on which ran-
dom numbers the terminals will generate.
They have become among the lottery’s
most popular products. On a recent Friday
afternoon one such lottery hall in central
Shanghai was packed, though mostly with
older customers.
But the hopes of private firms seem at
variance with state aims. John Sun, the
boss ofagTech, has grumbled that the lot-
teries could double their returns if they re-
opened online sales. Officials recently an-
nounced that they were slowing down a
popular “fast-paced” lottery-ticket game
from ten-minute playing intervals to 20,
because of worries about money-launder-
ing. Any bets that legal gambling will flour-
ish in China must surely have long odds. 7State-sponsored decadenceSource: Wind InfoChina, lottery sales, yuan bn01002003004005001990 95 2000 05 10 15 18WelfareSportsF
or researchersdevoted to the rule of
law, the end was fitting. Drawing on
patchwork regulations that appear to vio-
late the Chinese constitution, local au-
thorities in Beijing at last found a pretext to
ban the Unirule Institute of Economics,
that rarest of things in China, an indepen-
dent think-tank known for criticising the
government. For years Unirule had faced
pressure, including evictions from multi-
ple offices, to quiet down, and yet had man-
aged to go on functioning. But it saw no
way around the ban, issued last month,
and so on August 26th announced that it
would stop all activities.Founded in 1993, Unirule always resided
on the fringes of Chinese policy discus-
sions, bringing together a collection of lib-
eral economists who were strong believers
in free markets. It published a series of
books about institutional reform, includ-
ing on how to slim down state-owned
firms. It delved into topics such as the de-
sign of China’s health-care system and
land-ownership rules. It also convened fo-
rums every two weeks; its last, the 600th,
was a theoretical discussion about network
effects in economics. A steady stream of
eminent economists and senior officials
came through Unirule’s doors over the
years, eager to hear its perspectives, so dif-
ferent from those propagated by right-
thinking state-affiliated institutions.
Unirule’s scholars tried to avoid land-
mines. For instance, they refrained from
criticising Xi Jinping, China’s president, by
name. But their dislike of China’s state
model always made them vulnerable. As
far back as 2004 Unirule lost the support of
a government agency that had sponsored
it, forcing it to reorganise as the research
unit of a consultancy. One of its founders,
Mao Yushi, earned admirers abroad: the
Cato Institute, an American think-tank,
awarded him a prize in 2012 for his advoca-
cy of a more open political system in China.
At home, though, he faced attacks. Some
bloggers branded him a traitor.
Over the past few years, as Mr Xi has
tightened his grip, Unirule has been in-
creasingly boxed in. Its website was shut
down, although it later reopened, hosted
abroad. In the past its members could pub-
lish articles in more liberal newspapers
such as Southern Weekly; these days their
submissions are rejected. Their accounts
on Chinese social-media platforms such as
WeChat are frequently blocked. The au-
thorities have also stepped up harassment
of the institute. Last year its landlord brief-
ly welded steel bars across the door to its
office, a cramped converted apartment,
while staff were inside.
Sheng Hong, Unirule’s director, main-
tained his stubborn belief in rules-based
governance even as his think-tank met its
end. The ban, he says, is a violation of arti-
cle 35 of China’s constitution, which prom-
ises freedom of speech and assembly. But
he is under no illusion about what truly lies
behind Unirule’s woes. “Leaders today
don’t believe that different voices are good
for society and good for government,” he
says. “That will really come to hurt China.”
Tellingly, though, he was still more
guarded than scholars outside China. “Xi’s
tolerance for independent voices and criti-
cism is absolutely zero. It’s non-existent,”
laments Minxin Pei of Claremont McKenna
College in California. “Forty years after the
Cultural Revolution, this is absolutely the
worst period.” It is a wonder that Unirule
survived as long as it did. 7SHANGHAI
The government bans a think-tank that
was critical of its policiesFreedom of speechGhost at the feast