Macau was the first European settlement in the Far East, when it was colonized by the Portuguese in the 16th century. In 1979, Portugal and China agreed to make the region ‘a Chinese territory under temporary Portuguese administration.’ Then, subsequent to the handover of Hong Kong to China in 1997, Macau officially became the Macau Special Administrative Region (SAR) of the People’s Republic of China on December 20, 1999. With this transition China agreed that, under its ‘one country, two systems’ formula, Macau would not be held to the socialist economic system of the mainland and instead have a high degree of autonomy in all matters except foreign and defence affairs for the following 50 years.
Macau has a largely tourism-based economy focused on casino gambling. When in 2002 the industry was transitioned from a highly monopolized domestic sector to a more competitive international market system, new investment in casinos, hotels and related facilities significantly rose by tens of billions of dollars. By 2006, Macau’s gaming revenue was higher than that of Las Vegas, and industry-related taxes contributed to 75 per cent of the government’s total revenue. The gambling industry alone contributed almost 55 per cent of Macau’s GDP in 2007. The rise in gambling and tourism in Macau is due mostly to visitors from mainland China and Hong Kong. Mainland Chinese tourists account for about 58 per cent of all tourism. Macau saw over 30 million visitors in 2008.
Macau’s future strategy involves becoming a regional centre for gambling, tourism, conventions and corporate travel. Once pillars of the country’s economy, the textile and garment manufacturing industries have greatly declined and have branched out into specialized areas such as footwear, machinery and mechanical appliance production.