China's Next Takeover: Macao, The West's Last Foothold in Asia

The first thing residents tell you about Macao is that it is not a colony. Since 1974, it has been described officially as Chinese territory under Portuguese administration.

On Dec. 20, 1999, administration by the Portuguese ends, 442 years after they first set foot on China's coast. Portugal would have preferred to transfer sovereignty in 2007, rounding off 450 years of rule, but China insisted it had to be accomplished before the end of the century.

The origins of the enclave are obscure. No treaty gave Macao to Portugal. One historian claims that it was granted to Portugal by China for the help Portugal supposedly rendered in fighting pirates. But it is generally accepted that Portuguese traders began to settle here around 1557.

At that time, only three tiny Chinese fishing villages dotted the small peninsula, along with several Taoist temples, including the A Ma Temple, which gives Macao its name (from A Ma Gao, or the Bay of A Ma.)

The enclave grew quickly as a trading center connecting China, Japan, and India. Canton (now Guangzhou, China) was closed to foreign trading in 1522, so illegal imports moved through Macao.

Then the Dutch captured Malacca (modern-day Malaysia), Japan closed its ports to the outside world, and the Portuguese and Spanish monarchies broke their union, ending the colony's trade with Manila. Macao went slowly but graciously to seed.

Yet it has endured, its very seediness - expressed in the crumbling old buildings or in the modern gaudiness of its gambling emporiums - creating an ambiance that sets it apart from almost any other city on Asia's coast.

These days, Macao has put on a bright new look. Since 1992, the government has been working to restore older buildings, including churches and temples, to their former brilliance. The evidence is everywhere in explosions of bright pinks, yellows, oranges, and reds.

A few years ago, the heart of old Macao, the Plaza of the Leal Senado (loyal Senate), looked rundown. No longer. Portuguese craftsmen were brought in to lay the wavy blue-and-white limestone-and-basalt pavement that gives the square a distinctly Mediterranean look. The buildings have been freshly painted, too.

Macao is famous for its churches and its churchmen. Italian Jesuit scholar Matteo Ricci studied Chinese here before serving in the late Ming dynasty court of the Chinese emperor. Much care has been taken to refurbish the many churches, cathedrals, and seminaries that dot the city.

The most famous religious site in Macao is a ruin. St. Paul's Cathedral was built in the early 17th century and destroyed in a fire in 1835 that left only its stone faade standing. The look of the ruins is so distinctive that nobody would dream of trying to rebuild the church.

The oldest structures are fortresses, such as the imposing Monte Fort. They were not built to repel the Chinese, who have never been particularly bothered by the Portuguese presence there, but to keep out other Europeans. A victory over Dutch invaders on June 24, 1622, is still celebrated here.

The Chinese aspects of the city emerged comparatively late. Only in the 19th century were Chinese welcomed inside the boundaries in large numbers. Now they make up about 95 percent of the population, far dwarfing the Portuguese and the mixed-blood Mecanese, whose faces bear witness to Macao's unique cultural mlange.

Macao is so tiny and compact - only about 6 square miles, including the peninsula itself and two outlying islands - that a visitor can easily visit many of these famous sites on foot in a single day.

But the restoration work is not just for tourists. A political motive is at work too.

"They want to preserve the evidence of Portuguese influence under the handover," says Hong Kong-based architectural historian Cherry Barnett. With about half a million people, Macao could easily be swallowed up by greater Zhuhai, the Chinese city just across the ornate frontier arch gate, which already has some 600,000 people. Macao could lose its distinctive character and become just another Chinese city.

Still, most of Macao's citizens seem to have a relaxed view toward the impending handover. One reason is that anyone born here is eligible for a Portuguese passport (which provides entry into any European Community country) and thus could leave quickly if life under Chinese rule grows difficult.

These days there are more pressing issues. One is a recent rash of murders that have been attributed to triads, a Chinese version of the mafia gangs, who are fighting to control aspects of Macao's gambling casinos. So far, 14 people have died in a gang war reminiscent of Chicago in the 1920s, while only 21 murders were reported all of last year.

Also feeding insecurity among the population is a recession caused by an overbuilt real estate market. Real estate and legal gambling combine to make up two-thirds of the economy. With gamblers scared off by the crime wave, both these economic pillars are in trouble.