The Macao R.A.E.M., a former Portuguese overseas province located in the South China Sea 35 miles (56 km.) southwest of Hong Kong, consists of the peninsula and the islands of Taipa and Coloane. It has an area of 14 sq. mi. (21.45 sq. km.) and a population of 415,850. Capital: Macao. The economy is based on tourism, gambling, commerce and gold trading ? Macao is one of the few entirely free markets for gold in the world. Cement, textiles, vegetable oils and metal products are exported. ,Established by the Portuguese in 1557, Macao is the oldest European settlement in the Far East. The Chinese, while agreeing to Portuguese settlement, did not recognize Portuguese sovereign rights and the Portuguese remained largely under control of the Chinese until 1849, when the Portuguese abolished the Chinese custom house and declared the independence of the port. The Manchu government formally recognized the Portuguese right to perpetual occupation of Macao in 1887. In March 1940 the Japanese army demanded recognition of the nearby ?puppet? government at Changshan. In Sept. 1943 they demanded installation of their ?advisors? in lieu of a military occupation.,, ,Macao became a special administrative area known as Macao R.A.E.M. under the Peoples Republic of China on December 20, 1999.,, Rulers:,,, ,Portuguese from 1849-1999,, Monetary System:,,, ,1 Pataca = 100 Avos,,