Former Colony Prepares for Chinese Rule. Critics of the Portuguese-administered Macao government say that basic freedoms and democratic institutions have been ignored in advance of the anticipated 1999 handover to mainland China. Government supporters say their conciliatory approach toward China helped to give Macao residents a better deal than their more prosperous British-administered neighbor, Hong Kong.

Portuguese authorities in Macao soon plan to remove the statue of Gen. Joao Maria Ferreira do Amaral, a man who symbolizes the imperial swagger of Portugal at the height of European colonialism.

For several decades, the late colonial governor was eulogized by Portuguese officials as a courageous patriot who forced open new inroads to China trade and who annexed nearby Taipa Island.

His whip-wielding bronze image atop a rearing horse has commanded a plaza overlooking the port for a half century. The statue recalls the Aug. 22, 1849 melee between General Amaral and Chinese peasants. Amaral was killed by the peasants who had hoped to secure a bounty for his head which had been offered by disgruntled mandarins in mainland China.

Portuguese officials will lower his statue and ship it back to Lisbon, bowing to the complaints of mainland officials who must confront the upraised whip of the general each time they survey the Pearl River Delta from their new, granite-and-glass Bank of China headquarters.

The first and final retreat of Amaral is a fitting denouement for Lisbon's steady disavowal of the stern rule and fierce convictions the one-armed soldier died for. (Amaral lost an arm fighting natives in an earlier posting in the Portuguese colony of Brazil.)

Although Portugal will not yield its administration of Macao to China until 1999, it began withdrawing from the territory and repudiating the gritty legacy of Amaral a quarter-century ago.

Lisbon's slow retreat has left Macao in the hands of a weak administration that increasingly is becoming a puppet for the communist mainland, independent legislators and government critics say.

The Macao government is so eager to satisfy Beijing and ensure a smooth transfer of power that it forgoes potentially destabilizing efforts to resolve growing problems in education, politics, industry, human rights, and the environment, the legislators and critics say.

"Many problems will remain unsolved after 1999 that people want solved today," says Alexandre Ho, a legislator and leader of Macao's small pro-democracy movement. "The government simply wants to maintain the status quo. It doesn't want to undertake too many initiatives because change brings the risk of disagreement."

Macao government officials declined several requests for interviews.

Macao has the stunted economy and ramshackle appearance of neglect that is common to territories run by outsiders on their way out.

The Lisboa, a gaudy privately owned hotel and casino, seems to express the territory's political decay by exuding a heavy odor of mildew and rancid grease. Taxes on gambling provide more government revenue than any other source and are expected to outstrip export earnings.

Much of Macao is fretted by dark, gray cobblestone streets, where taxis brush by pedestrians and skirt dilapidated shops streaked black with mildew.

Amid the warren of winding alleys are bright reminders of the grand but exploitative Amaral years: former colonial residences painted with white trim and soft pastel shades of lemon, rose, and lime. Inside the homes are quiet green courtyards that hold out the din of Macao's raucous traffic.

Since 1557, Macao had flourished as the main avenue for European traders and missionaries into China. But after the Opium War, when Britain defeated China and wrested away the port city of Hong Kong in 1842, Macao began a slow decline.

Portuguese officials first resolved to cut and run from Macao in 1966 after Red Guards, the fanatical Chinese shock troops of Mao Zedong, stormed into the colony in support of popular riots. Portugal offered to withdraw from Macao but Beijing turned down the offer, perhaps because of repercussions in nearby Hong Kong.

In vain, Lisbon renewed the proposal in 1974, this time as part of its sudden and sweeping disavowal of colonialism after the Portuguese revolution.

Beijing and Lisbon finally reached agreement over Macao's status when they normalized relations in 1979. They redefined the enclave as Chinese territory under Portuguese administration.

The two countries later agreed that China would assume full control of Macao in 1999 and the territory would retain its capitalist economic and social system for at least 50 years thereafter.

Although Portuguese officials have repeatedly bowed to Chinese pressure during their ongoing withdrawal from Macao, they took a comparatively firm stand against Beijing in the 1987 negotiations over the hand-over of the territory.

The Portuguese calculated that Beijing would go easy on Macao so as to minimize the chances of instability spilling over into the far more valuable territory of Hong Kong, Western diplomats say.

The strategy seems to have paid off: Beijing imperiously has demanded the return of Hong Kong from Britain but quietly has refused to accept offers of a swift return of Macao from Portugal.

By virtue of Lisbon's clever negotiating, the Macao government has managed to open 35 percent of the seats in its legislature to direct election, compared to the 30 percent that China allows in Hong Kong's legislature.

Lisbon has also compelled Beijing to honor dual citizenship for all residents born in Macao before 1979 and to children of Portuguese passport holders. Residents of Hong Kong have no automatic right to British passports.

Still, the Macao government today usually defers to China. After his appointment last year, Macao Gov. Vasco Rocha Viera said he would take a "triangular approach" to decisionmaking based on consultations between Lisbon, Beijing, and his administration.

Governor Viera's open recognition of a condominium with Beijing marked a turnabout from the stand of his immediate predecessor. Former Gov. Carlos Melancia repeatedly chided Beijing and Lisbon for interfering in Macao's affairs.

Government supporters say Viera has merely tailored his approach according to China's obvious grip on civil society and much of the economy.

China holds powerful interests in banking, insurance, hotels, real estate, and manufacturing. It dominates politics at the grass-roots level through leading labor unions and citizens' groups. The Macao government aids this process by providing funds for the Chinese-controlled organizations.

Macao citizens have made little effort to agitate for democratic government and upstage Beijing officials. (See story, right.)

Consequently, Portuguese authorities are chiefly concerned with appeasing China and maintaining a guise of national honor before their withdrawal. They feel little compulsion to make the urgent changes that could ruffle Beijing and provoke instability.

Lisbon so far has not signaled an intent to make good on its duty to ensure direct legislative elections for the 450,000 citizens of Macao when China's officials take over in 1999, government critics say.

Moreover, Portugal should ensure that China honors the basic freedoms Portuguese enjoy at home and does not extend its death penalty to the territory, the critics say.

The government says it is laying the foundation for a more balanced economy by constructing an international airport, bridge, container port, and an expressway to the mainland. The airport is scheduled to open in 1995.

Yet the authorities are apparently making no effort to reverse Macao's growing dependence on gambling. And the government has made little effort to improve schooling and bolster industry. Investors increasingly are putting their money into factories in neighboring Guangdong Province, where labor costs are lower.

The repudiation of Amaral and his iron-fisted style affirms what several Portuguese residents say is the better part of their four-century legacy in Macao: amity between the colonial overlords and Cantonese.

"The best thing Portugal will leave behind is the way we understand Chinese and Chinese understand us," says Fernando Gomes, owner of a Portuguese restaurant set amid pine trees along Hac Sa Beach.

"We respect each other," Mr. Gomes adds as the raucous twang of Cantonese diners overruns the bright melody from a concertina. "They accept our philosophy and we accept theirs."

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