Chinese records of Macau date back to the establishment in 1152 of Xiangshan County under which Macau was administered, though it remained unpopulated through most of the next century. Portuguese traders began using Macau as a staging port as early as 1516, making it the oldest European settlement in the Far East. In 1557, the Chinese agreed to a Portuguese settlement in Macau but did not recognize Portuguese sovereignty. Initially, the Portuguese developed Macau's port as a trading post for China-Japan trade and as a staging port on the long voyage from Lisbon to Nagasaki. When Chinese officials banned direct trade with Japan in 1547, Macau's Portuguese traders carried goods between the two countries.
The first Portuguese governor was appointed to Macau in 1680, but the Chinese continued to assert their authority, collecting land and customs taxes. Portugal continued to pay rent to China until 1849, when the Portuguese abolished the Chinese customs house and declared Macau's "independence." On March 26, 1887, the Manchu government acknowledged the Portuguese right of "perpetual occupation." The Manchu-Portuguese agreement, known as the Protocol of Lisbon, was signed with the condition that Portugal would never surrender Macau to a third party without China's permission.
When the Chinese communists came to power in 1949, they declared the Protocol of Lisbon to be invalid as an "unequal treaty" imposed by foreigners on China. However, Beijing was not ready to settle the treaty question, requesting maintenance of "the status quo" until a more appropriate time. Riots broke out in 1966 when pro-communist Chinese elements and the Macau police clashed. Through intervention by some of Macau's leading "patriotic" Chinese business clans, an agreement was reached which met local protestor demands and restored order under the Portuguese administration, but was widely seen as effectively ceding actual power to China. Portugal tried in 1966 (after the riots) and again in 1974 (following the fall of the Salazar dictatorship) to return Macau to Chinese sovereignty. China, still emerging from the internal turmoil of the Cultural Revolution, declined to accept.
Portugal and China established diplomatic relations in 1979. A year later, Gen. Melo Egidio became the first Governor of Macau to visit the People’s Republic of China. The visit underscored both parties' interest in finding a mutually agreeable solution to Macau's status. In 1979, Portugal and China agreed to regard Macau as "a Chinese territory under temporary Portuguese administration." Handover negotiations began in 1985, a year after the U.K. and China reached agreement that Hong Kong would return to China in 1997. The result was a 1987 agreement returning Macau to Chinese sovereignty as a Special Administrative Region (SAR) of China on December 20, 1999.
Information by U.S. Department of State
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