AS China struggles to bring Hong Kong to heel, it suddenly has another problem child on its hands: Macau, the tiny island-state on China’s south coast that serves as Asia’s Las Vegas.

Workers have taken to the streets of China’s other Special Administrative Region seven times this year, demanding higher salaries and better working conditions. Activists have sponsored an unofficial referendum asking Macanese if they support universal suffrage by 2019. Poll organisers, several of whom were temporarily detained earlier this week, are explicitly trying to link their economic gripes to Macau’s unaccountable political system. The results are due to be released on Aug 31, the same day the territory’s hand-picked Chief Executive Fernando Chui will be re-elected unopposed.

To this point, authorities in Beijing have treated the rumblings of discontent in Hong Kong and Macau as aberrations, inspired by Western ideas about democracy, workers’ rights and political freedoms. That’s dangerously short-sighted. More likely, the protests are harbingers of China’s own future if it can’t bring its economic disparities under control.

Political activism among Hong Kong’s 7.2 million citizens has surged during the past decade as rising property prices and stagnant wages have exacerbated the city’s scandalous rich-poor divide. In a town often celebrated for its high concentration of millionaires, one in five lives under the poverty line. Anger over this state of affairs has coalesced around Chief Executive Leung Chun-ying. The rationale: since he doesn’t have to answer to voters, there’s no pressure on Beijing’s hand-picked man to respond to the needs of ordinary people rather than Hong Kong’s powerful and well-connected tycoons.

Unlike Hong Kongers, Macau’s 600,000 people have been largely apolitical since Portugal returned the territory to Chinese rule in 1999 (two years after the British handed back Hong Kong). But growing inequality there, too, has spurred restiveness. One protest in May drew more than 20,000 people. That’s a rounding error compared with Hong Kong’s marches, which have drawn more than 100,000 protesters. (An unofficial poll asking what system voters preferred for electing their chief executive attracted almost 800,000 respondents earlier this summer.) Still, it’s a sign of just how frustrated locals are feeling as they watch hordes of wealthy gamblers fill Macau’s casinos.

For all China’s rapid growth and success in reducing poverty, the gap between the rich and poor on the mainland also continues to widen dangerously. China’s Gini coefficient, a measure of inequality, almost doubled between 1980 and 2010. In April, researchers at the University of Michigan declared China’s income gap had even surpassed the US’s and now points to a “severe” disparity.

Surveys of China’s 1.3 billion people rank inequality as the top social ill, above unemployment and pollution. The growing divide increases the odds of social instability, and it complicates Xi’s efforts to recalibrate the economy away from exports and investment to services. To do so, he must engineer a slowdown that would put growth well under the government’s current 7.5 per cent target. That raises risks of unrest at a time when the Chinese masses — from migrant workers to farmers deep in the hinterlands — are increasingly aware of their rights, and of how well-off many of their countrymen (including Communist Party officials) have become.

To be sure, Chinese President Xi Jinping has made high-profile efforts to attack the corruption filling the pockets of Party cadres. The president has also heeded public discontent over the lavish salaries enjoyed by executives at state-owned enterprises and financial institutions. According to Caijing magazine, China may cut their pay by as much as 70 per cent.

But Xi must act faster and more assertively to build a more egalitarian China. The Communist Party’s social compact with the people has always been this: We agree to make you richer so long as you don’t show up at Tiananmen Square with protest placards. As inequality soars, so do the odds those angry marchers will show up in Beijing as well as Macau.

—By arrangement with Bloomberg-The Washington Post

Published in Dawn, August 31th, 2014