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Macau's economy two years after reversion to China remains one of the most open in the world, according to the World Trade Organization. The government collects no duty on imports and sets no restrictions on exports beyond those required by international agreements. The territory's net exports of goods and services account for 35% of GDP, with tourism and apparel exports as the mainstays. The territory therefore has been hit hard by the 2001 downturn in its key US and EU export markets. Tourism remained strong, however, driven by a surge in visitors from mainland China. In response to the expected contraction of the economy in 2002, the government has announced a stimulative income tax cut and public works program that will push the budget into deficit. China already has extended support by easing restrictions on travel to Macau and is proposing a China-Hong Kong-Macau free trade area. China's economic weight is increasingly felt, with the mainland now holding more than 50% of assets in the financial, real estate, and construction sectors. Mainlanders, however, have been excluded from bidding on the gambling industry licenses that Macau is offering to break up the territory's four-decade-old gambling monopoly. Gambling taxes account for up to 60% of revenue, and the government with Beijing's backing intends to revitalize the industry.
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