Macao (or Macau) is a tiny peninsula of eight square miles located 40 miles west of Hong Kong on the southern China coast. It became a Portuguese settlement and trading center in 1557; Portugal paid the Chinese government rent for the land until 1849, after which it became a de facto Portuguese colony.
By the late 20th century Macao had just under half a million people, about 96 percent Chinese, 2–3 percent Eurasians of mixed Portuguese-Chinese ancestry, and 1 percent Portuguese from Portugal. Despite long Portuguese control, few Chinese residents learned Portuguese, the official language of the colony. As a result few Chinese worked in the government. Most Eurasians, called Macanese, were bilingual; many of them worked for the government bureaucracy.
The government was nonelected until 1974, when a revolution in Portugal brought in a liberal government there that enacted new laws established by a partially elected legislative assembly. The main sources of government revenue were tourism, light industry, and gambling casinos.
Negotiations for the return of Macao to China began in the 1980s. However, China gave priority to its negotiations for the return of the much more important British colony of Hong Kong, and it was not until agreement had been reached for Hong Kong’s rendition that talks between Portugal and China began in earnest.
Because of the asymmetry of power between China and Portugal the Chinese government imposed most of the terms of Macao’s rendition. A Joint Declaration was signed in April 1987, and a Sino-Portuguese Joint Liaison Group was created in 1988 to manage the transition and prepare for the handover in 1999.
As in the case of Hong Kong, Macao was given the status of a Separate Administrative Region (SAR) and assured of autonomy governing many aspects of its life for 50 years. However, China could control its foreign affairs and defense, a Chinese-appointed chief administrator would head its administration, and the Chinese People’s Congress would have final say in judicial decisions.
The handover took place at the end of 1999. According to Macao Basic Law, the government of Macao consists of a Western-style partially elected legislature, with a framework of separation of power among the executive, legislative, and judicial branches of government, an independent judiciary, and freedom of expression and the press.