When poet W.H. Auden visited Macau in 1938, he saw mostly the gulf between the languid Portuguese colonials and a China being pummeled by war: This city of indulgence need not fear, he wrote, the major sins by which the heart is killed/ And governments and men are torn to pieces. The tiny enclave dripping off a peninsula in the Pearl River Delta may indeed have escaped the ravages visited upon its behemoth neighbor this century. But in most other ways the divide between the two is not so great--and is closing fast. When China assumes administrative control of Macau on Dec. 20, it will win a city in many ways indistinguishable from the quick-buck metropolises of Guangdong province just to the north. The majority of Macau's population now hails from the mainland. Its skyline is dominated by buildings at once gaudy, imposing and drab; through its veins runs a flood of slightly dubious cash. Its supposed colonial masters would have given the territory back 25 years ago if Beijing had been willing to take it. Macau, in fact, has formally admitted to being on Chinese soil since 1979. Still, the city--23.5 sq km taken up by peninsular Macau and the islands of Taipa and Coloane--will be new to the People's Republic. And Macau's status as the oldest--and only--European colony left in Asia means Beijing will embrace something equally novel: a testament to multiplicity, as well as a history of cultural exchange that belies the sameness and insularity that often marks modern China. Macau reached its apogee, after all, by serving as a middleman. The Portuguese navigators who had daringly rounded Cape Bojador in west Africa in 1434 did not take long to seize Goa and then Malacca--the center of a lush trade in cloth and spices. By 1513 they had reached the shores of China, and when after nearly 50 years of sporadic tolerance Beijing finally approved their presence on the remote peninsula of Ah-Ma-Kao, the foreigners found the richest trade to be that within the region itself. Their massive, India-built carracks, riding monsoon winds from the Spice Islands, would unload upriver at Canton and take on Chinese silks and porcelain. These would be shipped not to Europe but mostly to Japan--blocked by Beijing from direct trade with China--where they would be exchanged for the silver that was worth as much as gold to the Chinese. On return the lucre would pay for goods destined for Lisbon and silks for the next voyage to Nagasaki. For nearly a century, between 1560 and 1640, this bilateral trade would earn Portugal fabulous wealth and make Macau a linchpin in her globe-straddling network of trade. Of course, Vasco da Gama had sailed east in search of more than spices, and Macau served admirably, too, as a launch pad in the quest for Christian souls. The spiritual mission helped doom the enclave's material prosperity, when the Jesuits' spreading influence finally prompted Japan to shutter itself from the world by the early 1640s. (The Dutch cut off trade from the other direction by seizing Malacca in 1641.) But over the next century the effort gave Macau a purpose, as a center of learning and a bridge to the Middle Kingdom. Those friars who followed Matteo Ricci into China brought with them the technology that mesmerized the Ming and Qing courts--clocks, celestial globes, telescopes. In Macau they also immersed themselves in Chinese language and culture, so that influences were traded, not merely imposed, and a tolerance established that would be lacking in later colonial encounters. Within 100 more years that comfortable relationship would enable Macau's second flowering--as a refuge for European and American traders banned from living in Canton itself. Twice a year those merchants would participate in great trading fairs from their warehouses in Canton; for much of the rest of the time they laid up in Macau, strolling the elegant Praia Grande and dressing for a whirlwind of balls marked mostly by an overabundance of rich, eligible bachelors. I cannot conceive of people calling this a dull place, Harriet Low, an American woman, would write to her sister in 1829. I am the only spinster in the place, and I am pulled about in every direction. These new traders, though, had a more rapacious edge: their fortunes rested on the opium they proffered instead of silver. Macau would prove too soft for the new age. When the Chinese threatened military action to bring an end to the opium trade in 1839, Governor Silveira Pinto ordered the entire British community to vacate his city. The Royal Navy would offer Beijing a sterner response, and the island won in the ensuing first Opium War--Hong Kong--would in turn eclipse Macau as a base for trade with the mainland. From then on bright Macau entered that state of perpetual decline--dissoluteness, really--that is its hallmark even now. For a few decades the city survived on an abhorrent trade in Chinese coolies, nearly half of whom were shipped through Macau to places like Cuba and Peru. Around the same time the government licensed gambling, now its biggest money-spinner. By early this century, its intimacy with the raffish arts--gambling, prostitution, drugs--had made a mockery of Macau's formal title, The City of the Name of God in China. A visitor in 1934 described the place as hell. But, he added, to those who whirl in its unending play, it is the one haven where there is never a hand raised or a word said against the play of the beastliest emotions that ever blacken the human heart. That backhanded compliment, like Auden's, well describes Macau's elusive charm. Its determined casinos and ticky-tacky nightspots have spawned a gangland war in recent years that has scared residents far more than the impending handover. Yet that demi-monde, which basically funds the government, also supports an unspoken libertarianism: most things are allowed here, most of the time. Four centuries of Portuguese influence have thus produced more than a playpen for the debauchees who arrive on the jetfoils from Hong Kong. The fading pastels of its remaining colonial buildings reflect a creole past as well as a certain decrepitude (just as the famous façade of the São Paolo Cathedral, decorated by Japanese craftsmen with dragons and Chinese lettering, remains evocative even without a church behind it). The food for which the enclave is renowned traces the route by which the Portuguese came to Macau--past Africa, the southern Middle East, Goa and Malacca--and by the ingredients available on the south China coast. And while only 4,000 self-described Macanese now remain among a population of 450,000, the racial mixing that distinguished the Portuguese in their empire from, say, the British in theirs has bequeathed the onetime colony an air of acceptance, and of variousness. Whether that fragile character will survive much past December is a valid question. Its passing, though, would deprive China of a lesson in indulgence that it might do well to learn.