CHINA-MACAO: CURRENT STATUS AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01058R000201670001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: October 13, 2009
• Sequence Number: 1
• Publication Date: July 15, 1985
• Content Type: REPORT

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Central Inte igenc AAgency
Washington. D. C. 20505
China-Macao- Current Status and Prospects C
15 July 1985
Summary
China has announced that it wants negotiations
on the future of Macao to begin early next year--
sooner than expected. We believe China wants an
agreement on Macao's future, following its success
on Hong Kong, in order to keep the issue of China's
reunification in the public eye and portray Taiwan
as isolated and unreasonale. Beijing also wants
ample time to ensure Macao's, and Hona Kong's smooth
transition to Chinese rule.
With Portugal having ceded sovereignty to China
in a secret 1979 agreement and the Honk Kong
agrement as a model, the negotiations probably will
proceed quickly. An agreement on Macao may be less
generous than Hong Kong's because of Portugal's
longstanding willingness to defer to China on
important political, security, and social issues.
We believe, however, that the Chinese will reasure
more volatile Hong Kong audience that the results of
the Macao negotiations do not imply a retreat from
Beijing's commitments to London t g
Kong's social system after 1997.
China's Role in Macao
China has been the dominant influence -in Macao since riots
This memorandum was prepared byl I China
Foreign Affairs, Office of East Asian Analysis. Research was
completed on 30 June 1985. Comments and questions are welcome
and should be addressed to the Chief, China Division, OEA
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inspired by the Cultural Revolution in 1966 caused Lisbon and
Beijing to begin regular, informal consultations in Macao.
China, for its part, has been restrained and indirect in
exercising its influence, allowing the Portuguese administrators
to handle routine affairs. After Portugal's revolution in April
1974, the new military regime attempted without success to give
Macao back to China. China's perception. of Hong Kon.g's greater
importance and its sensitivity to political stability there led
Beijing to let Portugal retain Macao until "the time is ripe."
Portugal formally recognized Chinese sovereignty over Macao in a
written secret agreement signed when Lisbon and Beijing
normalized relations in 1979. Only in the past year have both
y referred to the existence of this 1979 agreement.
The Timetable Changes
We believe that favorable international reaction to the Hong
Kong agreement is stimulating China's leaders to accelerate
negotiations on Macao. From the.Chinese view, an early agreement
on Macao puts additional political pressure on Taiwan to discuss
Deng's "one country, two systems" formula. It could help China
portray Taiwan as isolated and unreasonable and keep the issue of
China's reunification in the public eye.
Prior to the visit of Portugal's President Eanes this May,
China had declined to include the question of Macao on the agenda
for the visit. Deng Xiaoping surprised Eanes when he proposed
setting the timetable for negotiations on Macao's future in front
of reporters. The autumn before, Deng had said China could wait
seven or eight years to resolve Macao's future. Although Eanes
probably preferred delaying talks until later because of a
brewing political crisis back home, Portugal and China agreed to
start negotiations through diplomatic channels next year.
President Eanes has announced that preliminary talks would
begin later this year and formal negotiations would start after
the first half of next year. Events in Portugal could delay
negotiations though. Portugal faces parliamentary elections in
October and possibly presidential elections in December or
January 1986, which could result in the appointment of
governor for Macao who will need time to settle in.
The Macao Special Administrative Region
China plans to establish Macao as a separate special
administrative region (SAR), distinct from Hong Kong. Ji
Pengfei, director of the Hong Kong and Macao affairs office, made
the first formal statement to this effect in June. The Macao SAR
would be set up under the "one country, two systems" formula
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first used in Hong Kong, and frequently mentioned by Bei.iing as
the key to the reunification of China and Taiwan.
To improve chances for a smooth Hong Kong transition,
Beijing plans to time Macao's transition to political
developments in Hong Kong.
Chinese in Macao would be invited to participate in the people's
congresses of their respective native provinces in China at the
same time as those in Hong Kong. The basic law of a Macao SAR
would be approved by China's National Peoples' Congress at the
same time as Hong Kong's. The organization of a Macao SAR would
also be ready when Chinese officials are prepared to take their
posts in Hong Kong.
Local Reaction
The quick Sino-Portuguese agreement to begin talks took both
Chinese and Portuguese in Macao by surprise. In a report just
before President Eanes's visit in late May, prominent Portuguese,
Macanese, and Chinese including Ma Mankee, the highest-ranking
"unofficial" Chinese representative in Macao, expressed hope that
Macao's future would not be raised during Eanes visit. Ma Mankee
said that Macao needed time to address economic issues such as
Macao's status under GSP, GATT, quotas, continued MFN treatment,
and access to technology before making the transition to Chinese
administration.
Another problem is the need to develop a pool of ethnic
Chinese able to administer Macao. Only 2 percent of Macao's
civil service is ethnic Chinese and, unlike Hong Kong, very few
hold positions in the upper levels of the'civ.il service. Maw
legal profession lacks Chinese barristers or solicitors.
Beijing's Presence in Macao
China exerts its influence in Macao through key local
personalities and organizations. Ma Mankee, as president of
Macao's Chinese General Chamber of Commerce, is a member of the
17-man Macao assembly and also has been selected by Beijing as a
delegate to both the Chinese National Peoples' Congress and the
Chinese Peoples' Political Consultative Conference. The Nam
Kwong (Nan Guang) Trading Company, headed by Ke Zhenping, serves
as China's representative organization, issuing visas and
carrying out other official functions. Like the New China News
Agency in Hong Kong, Nam Kwong recently divided itself in half,
with one part concentrating more formally on representational
duties and the other on trade. Nam Kwong has announced that it
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will set up a department to collect the views of Macao residents
when negotiations begin with China. Also linked to China, the
Macao Federation of Trade Unions includes the vast majority of
Macao's workers as members of its unions.
Secondary unofficial figures include He Houhua, son of Ho
Yin (the previous president of the Chamber of Commerce, who died
in December 1983) and general manager of the Banco Tai Fung, a
bank owned in part by the Bank of China; and Liao Zeyun, chairman
of the Macao management speciality association.
Local elections in Macao late last year for the first time
gave Macao's Chinese a majority in the legislative assembly,
reducing the former influence of the mixed-blood Macanese, 3
percent of Macao's population. Since the election, both the
Portuguese and Macanese have sought China's support before
undertaking any new legislative initiatives. In turn, China has
used the ethnic Chinese majority through Nam Kwong to firmly
support Macao's governor.
Macao provides an important outlet for Zhuhai, one of
China's special economic zones (SEZ). Trade between Macao and
Zhuhai is booming, mostly in consumer goods purchased in Macao
and sold in China through middlemen in Zhuhai. Much of this
trade is not reported to Macao authorities and therefore not
reflected in official trade statistics. This fast and loose
trade is encouraged by the lax control of borders on both
sides. The Portuguese often do not man their side of the Macao-
Zhuhai border or stamp the documents of incoming travelers.
China has not established effective customs control on the
h n county border.
Outlook
Because of the extent of Beijing's influence in Macao and
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demonstrated Portuguese acquiescence, the terms of a future Macao
agreement could be less generous than Hong Kong's. Ji Pengfei
has already stated that the Hong Kong agreement cannot be
copied. The administrative institutions of the Macao SAR and the
language of its basic law may differ. The Macao agreement might
incorporate less concrete language concerning local autonomy in
administration, finances, and education. The Portuguese may be
less concerned about preserving an independent judiciary than the
British were.
Local activists in Macao are not likely to be allowed as
much scope as those in Hong Kong. The Portuguese governor in
consultation with pro-Beijing ethnic Chinese representatives will
be able to pass any legislative initiatives associated with a
Macao agreement without significant opposition.
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SUBJECT: China-Macao: Current Status and.Prospects
Distribution:
1 - Chris Szymanski, Office of Chinese Affairs,
Bureau of East Asian and Pacific Affairs, Room 4318,
Department of State
1 John J. Taylor, Director, Office of Analysis for East
Asia and the Pacific, Bureau of Intelligence and
Research, Room 8840, Department of State
1 - Mark Pratt, Director, EA/RA/Taiwan Coordination, Room
4312, Department of State
1 - Mark Nicholson, Officer in Charge, Spain, EUR/WE, Room
5230NS, Department of State
1 - David Laux, National Security Council, Room 302, OEOB
1 - Ronald Montaperto, JSI-3A, Room 2C238, Pentagon
1 - John Sloan, DIO for East Asia, Room 2C238, Pentagon
1 - Byron Jackson, Office of Intelligence Liaison, Room
6854, Department of Commerce
1 -.Executive Director (1E12)
1 - DD I (/E44)
1 - NIO/EA (IE62)
1 - C/EA/RR (5D10)
1 - C/EA/CO (5D38)
1 - C/PES (1F24)
1 - PDB Staff (/F30)
1 - CPAS/ILS (IG50)
5 - CPAS/IMC/CB (IG01)
1 - D/OEA (4F18)
1 - Research Director/OEA (4G32)
2 - C/China Division (4G32)
1 - C/China Division/FOR (4G32)
1 - C/China Division/DOM (4G32)
1 - C/China Division/DEV (4G32)
1 - C/China Division/DEF (4G32)
1 - C/China Division/SEA (4F38)
1 - C/China Division/NEA (4G43)
1 - EURA/WE/Iberia-Aegean Branch (6G28)
2 - OCR/C/RS 1H19)
1 - DDO/EA (5054)
1 - OCR/CH/ 8)
1 - NIC/Analytical Group (IE41)
1 - C/DO/PPS (3010
1 -
1 -
. 1 -
DDI/OEA
CH/FOR)
(15 July 1985) 25X1
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