Since the handover of Macao to the People’s Republic of China in 1999, the European Union and its Member States have closely followed political and economic developments in the Macao Special Administrative Region (SAR) under the ‘one country, two systems’ principle. The European Union adheres to its ‘one China’ policy and supports the ‘one country, two systems’ principle and its implementation. This annual report on developments in Macao is issued in line with the commitment given to the European Parliament.