as its first leader after the handover to China in December, is Europe's last colonial outpost in Asia with a history of Portuguese administration dating back nearly 450 years. The tiny South China Sea territory across the Pearl River estuary from Hong Kong was settled by the Portuguese in 1557 after their warships routed local pirates.
Macau became a major trading post between East and West until Hong Kong, occupied by the British since 1841, began to surpass it as a commercial centre.
In the 1960s the territory faced its worst crisis when China's Cultural Revolution spilled over into its streets.
Leftists clashed with police in huge protests and the violence only ended when a shaken Portuguese administration agree to outlaw the activities of pro-Taiwan elements.
The episode marked the start of a decline in the authority of the colonial administration. After the 1974 revolution in Portugal, the new government tried to return Macau to China but Beijing declined.
However, when Portugal and China established diplomatic relations in 1979 it was agreed to redefine Macau as a "Chinese territory under Portuguese administration."
Under a 1987 accord that status ends on December 20 when Macau becomes a Special Administrative Region of China, with a promised high degree of autonomy and its capitalist lifestyle guaranteed for 50 years.
The deal is similar to that given to Hong Kong, which returned to China on July 1, 1997.
At the time China praised its negotiations with Portugal over Macau's future as an example of fruitful cooperation. But China has since been expressed mounting concern at a wave of violence as triad gangs fight for control of gambling and prostitution rackets in Macau.
China angered Portugal when it announced late last year that it would station up to 1,000 soldiers in Macau after the handover to deter triad violence, which has claimed more than 20 lives since 1997.
Macau, with an overwhelmingly Chinese population of around 450,000 crammed into 21 square kilometres (eight square miles), relies heavily on its gambling industry. This brings in some five billion patacas (641 million US dollars) a year for the government -- about half its revenue.
The bulk of the clientele for the territory's garish casinos comes by ferry from Hong Kong, where casinos are banned.
But the number of tourists, including day trippers from Hong Kong, has been hit by the gang warfare. The number of arrivals fell 18.7 percent to 585,538 in the first eight months of 1998, according to Xinhua news agency.
The future chief executive promised after his election to make the fight against gang crime a priority. [AFP]
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