Macau SAR, China: Overview, History, Examples

What Is Macau SAR, China?

Macau, like Hong Kong, is a special administrative region (SAR) of greater China that operates under the “One Country, Two Systems” principle. Similar to Hong Kong, the One Country, Two Systems policy allows Macau broad but limited autonomy in most of its governing and economic activities. Its currency is called the Macanese pataca (MOP).

Key Takeaways

  • Macau, also known as Macao, is a small, special administrative region (SAR) of China that operates under the "One Country, Two Systems" principle.
  • The currency of Macau is the Macanese pataca.
  • A wealthy region, Macau is known as the "Las Vegas of Asia" and rakes in more than US$50 billion in GDP, largely fueled by the tourism, gaming, and service industries.
  • Macau is also known to many investors as a tax haven, although the Chinese government has made efforts to stem capital outflows to the region.

Understanding Macau SAR, China

Macau thrives as a second gateway for international trade into mainland China particularly for Portuguese-speaking countries, located on the country's south coast next to Hong Kong. The service sector, specifically the tourism and gaming industry, dominates Macau's economy contributing over 90% of GDP output. From a financial standpoint, some investors also know Macau as a tax haven.

History of Macau SAR, China

In 1557, the Portuguese settled in Macau, then a small fishing village on the South China Sea. In 1887, the Friendship and Trade Treaty between Portugal and China was signed, but the ownership of Macao was in dispute, and remained that way until 1987. In 1987, Portugal and China signed an agreement for Macau to become a SAR of China and, in 1999, China assumed formal sovereignty of the region.

Macau is synonymous with gaming and tourism—in fact, Macau is the highest volume gambling center in the world. Like Hong Kong, Macau is a free port city with no tariffs or quotas. Macau has a free market economy with very low taxation, and its currency trades freely in the open market. With less than 700,000 residents, Macau's per capita GDP was $43,774, as of 2021. and an unemployment rate of 3.7% as of the April 2022-June 2022 period.


Macau SAR is one of the wealthiest regions in Asia, with a per-capita GDP of $81,000 before the coronavirus pandemic.

Its top trading partners are Hong Kong and mainland China, but trade with Europe and America, particularly Portuguese-speaking nations, is also important. Chinese and Portuguese are the official languages, and Cantonese is the primary language.

Government of Macau SAR

Under the Basic Law of Macau SAR, Macau is given a considerable degree of economic autonomy, although policies are ultimately controlled by the central government in Beijing. It is prohibited to advocate secession from China, and candidates who fail to uphold the Basic Law may be disqualified from office.

Macau's government consists of an elected Chief Executive, and a 33-member Legislative Assembly, which is chosen in a similar manner to Hong Kong's Legislative Council. Fourteen members of the Legislative Assembly are directly elected, twelve are chosen indirectly by important influence groups, and seven are appointed by the region's Chief Executive.

The Chief Executive is indirectly elected, through a 400-person Election Council chosen from different professional constituencies. After the election, the Chief Executive is officially appointed by the central government, giving Beijing the final say in the region's government. The Chief Executive serves for five years and can be re-elected for a second term.

Economy of Macau SAR

Tourism is a major source of income for Macau, and its economy is largely supported by its casinos and entertainment industry. Foreign casinos were first allowed in Macau in 2002, and the industry exploded with the region soon exceeding Las Vegas as a gambling destination.

The GDP of Macau was $7 billion in 2002 and reached $55 billion in 2019, according to the World Bank data. In 2021, Macau received 7.7 million tourist visits according to the Macau Government Tourism Office.

These figures suffered in the following year's COVID-19 pandemic, with GDP falling by more than half, and tourism by more than 85%, according to the region's government. In addition, the mainland government has also clamped down on capital outflows and money laundering, with measures that have impacted the region's gaming industry.

Article Sources
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  2. Edifício do Instituto Cultural, Macau-Department of Cultural Heritage. "The Sino-Portuguese Dispute Over the Holder of Sovereignty of Macao and the Friendship and Trade Treaty Between China and Portugal From an International Law Perspective."

  3. United Nations-Treaty Collection. "No. 25805 China and Portugal-Joint Declaration on the Question of Macao (With Annexes). Signed at Beijing on 13 April 1987," Page 229.

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