In 1997, the British returned Hong Kong to Chinese rule. In Dec. 1999, what other European country returned what other small region, not far from Hong Kong, back to the Chinese?

It was Portugal that returned the small territory of Macao to Chinese rule in December 1999, concluding another significant chapter in the history of European colonial presence in Asia. This handover followed Hong Kong's return by just over two years, marking the final transfer of sovereignty of a European-administered territory back to China.

Portugal's connection to Macao stretches back much further than Britain's to Hong Kong. Portuguese traders first settled in Macao in the mid-16th century, around 1557, making it the oldest continuous European settlement in East Asia. Over centuries, what began as a leased trading post gradually evolved into a de facto colony, officially recognized as Portuguese territory by China in the late 19th century. This long history made Macao a unique blend of Chinese and Portuguese cultures.

The transfer of sovereignty on December 20, 1999, mirrored the "one country, two systems" framework established for Hong Kong. Under this principle, Macao became a Special Administrative Region (SAR) of China, maintaining its own currency, customs territory, legal system, and a high degree of autonomy for 50 years. This arrangement was designed to preserve Macao's distinct identity and economic success, particularly its renowned gambling industry, which has since grown to become the largest in the world.