Colonized by the Portuguese in the 16th century, Macau was the first European settlement in the Far East. Pursuant to an agreement signed by China and Portugal on 13 April 1987, Macau became the Macau Special Administrative Region (SAR) of the People’s Republic of China on 20 December 1999. In this agreement, China promised that, under its “one country, two systems” formula, China’s socialist economic system would not be practiced in Macau, and that Macau would enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years.

Before the Portuguese settlement in the early 16th century, Macau was known as Haojing (Oyster Mirror) or Jinghai (Mirror Sea). The name Macau is thought to be derived from the A-Ma Temple (traditional Chinese: 媽閣廟; Jyutping: Maa1 Gok3 Miu6), a temple built in 1448 dedicated to Matsu — the goddess of seafarers and fishermen. It is said that when the Portuguese sailors landed at the coast just outside the temple and asked the name of the place, the natives replied “媽閣” (jyutping:Maa1 Gok3). The Portuguese then named the peninsula “Macau”. The present Chinese name 澳門 (jyutping: Ou3 Mun4*2) means “Inlet Gates”.

The history of Macau is traced back to the Qin Dynasty (221–206 BC), when the region now called Macau came under the jurisdiction of Panyu county, in Nanhai prefecture (present day Guangdong). The first recorded inhabitants of the area were people seeking refuge in Macau from invading Mongols during the Southern Song Dynasty. Under the Ming Dynasty (1368–1644 AD), fishermen migrated to Macau from Guangdong and Fujian provinces. Macau did not develop as a major settlement until the Portuguese arrived in the 16th century. In 1535, Portuguese traders obtained the rights to anchor ships in Macau’s harbours and to carry out trading activities, though not the right to stay onshore. Around 1552–1553, they obtained temporary permission to erect storage sheds onshore, in order to dry out goods drenched by sea water; they soon built rudimentary stone houses around the area now called Nam Van. In 1557, the Portuguese established a permanent settlement in Macau, paying an annual rent of 500 taels of silver.

After the establishment of the People’s Republic of China in 1949, the Beijing government declared the Sino-Portuguese Treaty of Amity and Commerce invalid as an “unequal treaty” imposed by foreigners on China. However, Beijing was not ready to settle the treaty question, leaving the maintenance of “the status quo” until a more appropriate time. Influenced by the Cultural Revolution in mainland China and by general dissatisfaction with Portuguese government, riots broke out in Macau in 1966. In the most serious, the so-called 12-3 incident, 6 people were killed and more than 200 people were injured. On 28 January 1967, the Portuguese government issued a formal apology. Shortly after the overthrow of the Portuguese dictatorship in 1974 in Lisbon, the new Portuguese government determined it would relinquish all its overseas possessions. In 1976, Lisbon redefined Macau as a “Chinese territory under Portuguese administration” and granted it a large measure of administrative, financial, and economic autonomy.

Three years later, Portugal and China agreed to regard Macau as “a Chinese territory under (temporary) Portuguese administration”. The Chinese and Portuguese governments commenced negotiations on the question of Macau in June 1986. The two signed a Sino-Portuguese Joint Declaration the next year, making Macau a special administrative region (SAR) of China. The Chinese government assumed formal sovereignty over Macau on 20 December 1999. The economy since then has continued to prosper with the sustained growth of tourism from mainland China and the construction of new casinos.

Macau’s economy is based largely on tourism. Other chief economic activities in Macau are export-geared textile and garment manufacturing, banking and other financial services. The clothing industry has provided about three quarters of export earnings, and the gaming, tourism and hospitality industry is estimated to contribute more than 50% of Macau’s GDP, and 70% of Macau government revenue. Together with the liberalization of Macau’s gaming industry in 2001 that induces significant investment inflows, the average growth rate of the economy between 2001 and 2006 was approximately 13.1% annually. Starting in 1962, the gambling industry had been operated under a government-issued monopoly license by Stanley Ho’s Sociedade de Turismo e Diversões de Macau. The monopoly ended in 2002, and several casino owners from Las Vegas attempted to enter the market. With the opening of the Sands Macau, in 2004 and Wynn Macau in 2006, gambling revenues from Macau’s casinos were greatly prosperous. In 2007, Venetian Macau, at the time the second (now fourth) largest building in the world by floor space, opened its doors to the public, followed by MGM Grand Macau. Numerous other hotel casinos, including Galaxy Cotai Megaresort and Ponte 16, are also to be opened in the near future. In 2002, the Macau government ended the monopoly system and six casino operating concessions and subconcessions are granted to Sociedade de Turismo e Diversões de Macau, Wynn Resorts, Las Vegas Sands, Galaxy Entertainment Group, the partnership of MGM Mirage and Pansy Ho (daughter of Stanley Ho), and the partnership of Melco and PBL. Today, there are 16 casinos operated by the STDM, and they are still crucial in the casino industry in Macau, but in 2004, the opening of the Sands Macau ushered in the new era.

More panoramas of Macau can be seen in Arounder Macau.