The other land reverting to China Macau: This Portuguese-run enclave an hour north of Hong Kong by ferry is not as fast-paced as its modern neighbor, but it, too, is being turned over to China.

THE BALTIMORE SUN

MACAU -- Macau is what Hong Kong is not.

Hong Kong is fast, modern and brash, a world-class commercial center, blessed with one of the best deep-water ports in the world. Macau, a Portuguese-run enclave an hour away by ferry, got an airport only two years ago. It has just built its first skyscraper -- the 40-story headquarters for the Bank of China. Hong Kong makes its living off trade and international finance; Macau, from casinos and a tawdry nightlife.

But the two places have one very significant thing in common. Portuguese-controlled Macau is being returned to China, on Dec. 20, 1999, following part but not all of the model set by the return this week of British-controlled Hong Kong.

Macau, with a population of 425,000, feels more like a colony than Hong Kong did. While Hong Kong has torn down Victorian buildings to make way for new development, Macau lingers in the past. Its narrow alleys and cobblestone streets are lined by old Mediterranean-style buildings, stuccoed the color of summer melons: pink, pale green and yellow.

In the center of town, arched storefronts line Senate Square, paved with a wavy mosaic of gray and white tiles that looks like rippling water. There's an old red-light district -- Rua da Felicidade, or Happiness Street -- where Chinese prostitutes used to lean out their second-story windows to entice passing sailors. It has been restored and scrubbed up for tourists.

And clustered around the port are the casinos and showgirl revues that bring in the largest portion of the city's income.

While Britain was reluctant to see the jewel of its shrinking empire returned to China, Portugal is anxious to see Macau go -- in fact, it has been trying to give the peninsula back since the mid-1970s.

Army officers toppled Portugal's dictatorship in 1974 and then -- wanted to give up all the country's old colonies. But China was in no hurry to resume responsibility for aging, unprofitable Macau. Only after Beijing settled its plan for Hong Kong did it take up Portugal's offer. In 1987, Portugal and China agreed that Macau would be reunited with the mainland in 1999.

"Maybe we're less anxious about the handover because we don't have as much to lose," says Edmund Ho, a prominent banker and legislator, who is said to be a contender to replace the Portuguese governor after the handover.

Not that the system of government in Macau, which includes a sharing of power between the governor and Legislative Assembly, is expected to change much. The sitting legislators, two-thirds of whom were directly or indirectly elected by the people, will stay on after the handover.

Hong Kong's Legislative Council wasn't so lucky. It was replaced Tuesday by a provisional body, hand-picked by a Beijing-appointed committee.

The different treatment has to do with the fact that Portugal began building a representative government for Macau more than 20 years ago. Britain, on the other hand, waited until six years ago to speed up democratic reforms, including a broadening of direct elections.

But Macau and Hong Kong also have significantly different histories.

In contrast to Hong Kong, which Britain won from China after the second Opium War, "this place was not conquered," says Domingos Vital, a diplomatic adviser to the governor of Macau. "It was given to the Portuguese. So what you have here is a situation of mutual accommodation."

As early as 1516, Portuguese traders began stopping in Macau on their way to Japan. Portugal asked for -- and was granted -- permission from China to set up an outpost on Macau. China, however, did not relinquish its sovereignty over the port.

To this day, Macau is not a colony of Portugal, but rather a Chinese territory under Portuguese administration, an

arrangement agreeable to both sides.

Some of the good will in Macau today also stems from the fact that Chinese interests always have been stronger in Macau than in Hong Kong.

During the start of China's Cultural Revolution in 1966, pro-China sympathizers in Macau brought the Portuguese government to its knees.

The Portuguese governor was handed a list of demands from the Chinese community, including a promise to crack down on activities by Nationalist Chinese in the enclave. Humiliating the colonial rulers further, Red Guards who had infiltrated Macau took to the streets to direct traffic.

The Portuguese are solidly in control today, but local Chinese groups, as well as pro-Beijing trade unions, hold a powerful place in society.

"This is much more of a Chinese place in a way," Vital says. "Half the population of Macau came from China in the last 20 years."

The biggest worry in Macau has to do with the readiness of local Chinese to assume day-to-day responsibility for the city.

The Portuguese government has been slow to bring ethnic Chinese, who make up about 97 percent of the population, into the top ranks of power. Expatriates or mixed-blood Macanese control all important offices. They run the police department and courts, plan the economy, and map out the city's tourism campaign. None of the Portuguese governor's senior aides is ethnic Chinese.

"You're talking about a total change in government," says Ho, the banker and politician. "I think we have no choice but to be ready. It's not going to be easy. We'll have to put in people without experience."

A crime wave this year has only underscored in the minds of many how time is running out and how far Chinese locals have to go before they will be ready to run their city. Since the start of the year, 14 people have been gunned down in gangland-style killings.

The fear of some local Chinese leaders is if they don't get a grip on law and order, authorities from the mainland might feel the need to do the job for them after the handover. And if that happens, it could undermine Macau's autonomy, compromising Beijing's pledge of allowing "one country, two systems."

"A weak government after 1999 is a danger for Macau," says Antonio Ng, an elected legislator. He said the crime wave is a sign of trouble ahead. "This is an example of how Macau is not really ready to manage itself."

If it wasn't for gambling and tourism, Macau would have a hard time surviving. Almost half of the city's gross national product comes from tourism. One of three people is employed by the hospitality industry.

The outgoing government is spending $10 million this year to restore colonial buildings and clean up the city's image. City officials want to attract a variety of tourists, not just weekend gamblers.

Macau needs to build up tourism to make up for the worsening state of the manufacturing sector. Factories are struggling against cheaper competitors in China's nearby Guangdong province. One-fifth of the textile and clothing factories have closed since 1993.

At the same time, the city is burdened with 25,000 empty apartments. Mainland speculators poured millions into a property craze that went bust in 1995.

Ho says he wouldn't mind seeing Beijing get more involved in the city's economic affairs.

"This is so different from Hong Kong, where the attitude is, 'We're doing well so leave us alone,' " Ho says. "But we need the central government's intervention because Macau cannot do it alone."

Pub Date: 7/03/97

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