Macau After the Handover: Society, Governance, Identity and Economic Transformation Under “One Country, Two Systems”

Abstract

Macau occupies a unique position in modern China and the international system. As the oldest European settlement in East Asia and one of the two Special Administrative Regions (SARs) of the People’s Republic of China, it represents a distinctive case of institutional continuity, political adaptation and economic transformation. Since its return to Chinese sovereignty on 20 December 1999, Macau has operated under the constitutional principle of One Country, Two Systems, preserving its legal traditions, bilingual administration and open economy while becoming progressively integrated into China’s national development strategy. Unlike Hong Kong, Macau has experienced relatively limited political confrontation and sustained economic growth, supported by an executive-led system, extensive intermediary associations, and the world’s largest gaming industry.

This article examines Macau’s historical evolution, political institutions, civil society, identity formation and economic development from both historical and contemporary perspectives. Combining historical analysis with institutional and political economy approaches, it argues that Macau’s stability is best explained by four mutually reinforcing factors: institutional continuity inherited from the Portuguese administration; pragmatic cooperation between the Macau SAR Government and Beijing; the mediating role of powerful community associations; and sustained economic prosperity generated by gaming and tourism. The article further analyses Macau’s integration into the Guangdong–Hong Kong–Macao Greater Bay Area (GBA) and discusses the challenges posed by economic diversification, demographic ageing and technological transformation. Rather than interpreting Macau simply as a smaller version of Hong Kong, the article demonstrates that it has developed a distinctive governance model rooted in its own historical trajectory and social structure.