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CANBERRA — Macau presents the last outpost of European colonial empire remaining anywhere in the Asia-Pacific region. Apart from Hawaii, now a state of the United States, and leaving aside Australia and New Zealand, no other territory in the Asia-Pacific region will be held or ruled by a European state after today. Portuguese Macau becomes Macau, China, just as Hong Kong (Britain) became Hong Kong, China, on July 1, 1997.

Macau used to be a place of considerable importance. In the 16th, 17th and early 18th centuries, it was the biggest entrepot trading port in East Asia and the starting point for shipping routes to Goa and Lisbon, Nagasaki and Mexico via Manila. It was a trading center until its decline with the rise of Hong Kong in the mid-19th century.

In sharp contrast to the recent history of Portugal’s other former Asian colony of East Timor, Macau has been peaceful and it has prospered. Today, Macau’s GDP is about 5 percent of Hong Kong’s, but its per capita income is not far behind.

Overshadowed by Hong Kong, Macau does not feature on the diplomatic or trade agenda of many countries. It is too small, with just 23.5 sq. km of territory and a population of about 450,000 people, mostly Chinese, with about 11,000 Portuguese.

Macau is best known for its gambling industry and picturesque early European architecture, including the instantly recognizable landmark of the facade of St. Paul’s Church, built in 1638.

Not much is expected to change when China takes over Macau. It intends to apply the “one country, two systems” formula used — so far successfully — to manage Hong Kong. Under this hands-off arrangement, Macau’s capitalist values as well as its social, legislative, judicial and economic systems are to remain unchanged for at least another 50 years.

Macau’s gambling industry, which contributes 40 percent of Macau’s GDP and is the mainstay of the economy, is to remain untouched. Private property will be protected. So too is freedom of religion and freedom of the press and freedom of assembly, unless of course the law is contravened. Portuguese will remain as an official language, alongside Chinese. Macau’s Portuguese laws are to be basically unchanged and Macau’s courts are to have the power of final adjudication. The only exception is that China will replace Portugal as the sovereign power responsible for foreign affairs and defense.

In terms of location and the cycle of history — at the mouth of China’s Pearl River estuary and as the last European colony on China’s doorstep — Macau rates high in China’s national psyche and sense of self-esteem. A public holiday has been declared and every important Chinese leader will be present in Macau for the official handover ceremony.

The recovery of Macau will reinforce a Chinese perception that the long cycle of history is turning in China’s favor. Macau was occupied by the Portuguese as a trading post in the mid-16th century, and under the 1887 Sino-Portuguese Treaty of Amity and Commerce, Portugal acquired the right “to permanently govern Macau.” The colony’s return to China on Dec. 20 thus marks the end of over four centuries of Portuguese colonial history in China. It is the last bit of the once far flung Portuguese empire that included Goa, seized by India in 1961, and East Timor, seized by Indonesia in 1975.

It is noteworthy that China did not follow the example of India or Indonesia in its recovery of Macau. Beijing’s method of recovering Macau, as with Hong Kong, has been much more considerate, patient and, in a word, civilized. China did not even threaten to use force but instead negotiated a mutually satisfactory settlement with Portugal. Agreement was reached on April 13, 1987 for the gentlemanly return of Macau 12 years later, on Dec. 20. So much for the argument that China is a frustrated power and is not interested in playing by the rules.

From Beijing’s perspective, the return of Macau marks another historic step in the recovery of what used to be regarded as “lost territories,” that is, territory detached from a weak China by strong imperial powers.

The recovery of Macau means Taiwan is next on Chinese President Jiang Zemin’s shopping list. That much bigger contest will be the most serious diplomatic and security challenge for China, Taiwan, the U.S. and the rest of the Asia-Pacific community in 2000.

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