The best-kept secret of Hong Kong is the Portuguese territory of Macau, an hour's skim across the South China Sea by jetfoil but a century away from the bustle and skyscrapers that give Hong Kong its cosmopolitan reputation.

The Chinese residents of Hong Kong, however, know all about this small peninsula that juts out from the southeastern coast of China. On weekends, commercial boats from Hong Kong disgorge thousands of visitors eager to indulge the Chinese passion for gambling in one of Macau's five casinos. Labor-intensive companies know all about Macau, too. In the industrial sector, pick-up trucks piled high with newly made designer jeans careen down narrow alleys between workshops. And, once, the whole world knew about this enclave. In Macau's glory days, 400 years ago, the Portuguese established Macau as a pivotal point for world trade, linking Asia and Europe as well as China and Japan.

Like Venice, Macau was built and grew rich as a world port, a town of European sea captains and Oriental traders whose common currency was silver. The Jesuits also established a college in Macau to spread Christianity to the 100 million Chinese to the north. By the late 17th century, however, the British made Hong Kong the focal point of the region, and for several hundred years Macau slept. It is only now awakening to the 20th century, realizing its possibilities as a tourist destination and gateway to China.

If visitors to Hong Kong can tear themselves away from shopping, Macau is a delightful diversion, an enchanted place for relaxing and strolling.

The six-square-mile territory consists of two rural islands and the peninsula city of Macau, where 90 percent of Macau's 420,000 citizens live and work. Hilly and verdant, this commercial and residential heart of Macau borders on southeastern China. To the south of the main part of Macau, a bridge spanning a mile and a half of water leads to the island of Taipa, and a causeway connects Taipa to the other island, Coloane.

To visit Macau is to visit a place where, for several hundred years, time stood still. The roads are all two lanes, the pace is slow, and cobblestones give parts of Macau a feeling of old Europe replicated nowhere else in Asia.

In fact, the world should be grateful Hong Kong took over Macau's role as the major port and trading center in the region. One benefit of Macau's three-century lull is that much of the Portuguese-inspired architecture of the territory's more flourishing era remains even though 95 percent of Macau's population is Chinese. It is wonderfully disconcerting to stand in the heart of Macau admiring pastel-painted, baroque building facades as Oriental men and women go about their business. Is this Lisbon? Or is this a village two miles south of China?

My first visit to Macau a couple of years ago was surreal. I went to sample the casinos, which provide Macau with one-third of its public revenue. I departed Hong Kong at dusk and returned just before dawn. Because it was dark, I saw Macau dimly and from the distorted perspective of a casino denizen.

The largest casino in Macau is in the Hotel Lisboa, a gaudy, wedding cake of a high-rise whose top is shaped like a roulette wheel. Its architecture would cause little comment on the Vegas strip, but in Macau it's an aberration.

Inside, no one would mistake the place for Vegas. There are spittoons (although, like other parts of Asia, Macau is trying to discourage spitting; signs are now posted forbidding the practice). And on the casino walls are typhoon warning signs that chart on a scale of 1 to 10 the severity of any major storms. If the needle is on three or four, no problem. But when the needle begins creeping higher, it's time for visiting gamblers to cash in their chips and race to Macau's outer harbor before high seas prevent the fast boats from running back to Hong Kong.

I also visited Macau's floating casino, frequented largely by working-class locals. Unlike the more sophisticated Hotel Lisboa casino, many of the dealers spoke no English. The big boat, permanently moored at Macau's inner harbor, was grimy and smoky, hardly living up to its name, Macau Floating Palace.

Then there was the casino located over the jai-alai courts near the outer harbor. It was a bleak place with rubber matting on the floor and naked fluorescent lights over the tables that had all the charm of a seedy downtown bus station at 4 a.m.

But even in the dark, as a cramped taxi shuttled me between casinos, I could discern buildings of pink and lime as well as cathedral steps that reminded me of Europe. I vowed to return to see this strange place in the light.

The sun was setting when a couple of friends and I returned to Macau last fall. Exiting the jetfoil, we entered a crowded customs hall for cursory passport examination, then rented a Moke, one of those little metal cars tourists drive around Caribbean islands.

If you go north from the jetfoil dock, toward China, you enter the flat industrial district of Macau, where factories produce textiles, plastics, electronics, optical goods, fireworks and Matchbox cars. To the south, toward town, is hilly old Macau, site of cathedrals, grand homes and restaurants.

Macau enjoys an unusual relationship with its giant neighbor to the north. Twice the Portuguese, in attempts to shed the last vestiges of colonialism, tried to return Macau to China. But Macau served as a kind of eye on the West for China, and the offers were spurned. (Now that China and Britain have come to an agreement on the return of Hong Kong in 1997, it remains to be seen if and when Macau might rejoin the Chinese fold, too.)

For now, though, all of Macau's water comes from China. And Macau is trying to let the world know that the easiest way to enter China is through the Portas do Cerco, a Portuguese arch that leads to the southern Chinese province of Guangdong. In the first half of 1985, nearly 13,000 Americans passed through the Portas do Cerco to visit China. Most had visas obtained in the States or through travel agencies in Hong Kong or Macau that specialize in running tours into China. Canton is a two-hour bus ride from the border, and organized tours of the Pearl River delta region conclude with a train ride back to Hong Kong through the New Territories.

On a whim, we decided to stroll into China. We had no visa, spoke no Chinese. But a border guard pointed us toward an office where we were warmly greeted by a young man in an olive green uniform with a red star on his hat.

In perfect English he asked if we had spare photographs he could use for visas. We did not, but said we'd try to find someone in Macau with a Polaroid camera before his office closed in an hour. As we turned to depart, he gave us a smile and said, "See you later!" We could hardly resist answering, "Alligator."

In downtown Macau we found a travel agency that would take our photos. We hurried back to the visa office, where a woman in a military uniform served us tea while we waited 10 minutes for our visas. The immigration officers seemed amused that we wanted to spend only a couple of hours walking through the new economic free zone called Chung San being built on the Chinese side of the border. And as we waited, we tried to imagine what kind of reception Chinese natives who couldn't speak English would receive at an immigration office on the U.S. border of, say, Mexico and Texas. We were certain they wouldn't be offered tea by anyone fluent in their native tongue.

We emerged at dusk into a city square and began walking down a major road lined with vendors displaying modest wares. Here, a woman with a basket of greens. There, a man with four live pheasants sitting in the roadside dust as if trained, waiting to be bought for dinner. I was startled to hear the theme from "Flashdance" blaring from inside a beauty salon.

But strolling Americans still seem to be a rarity, for there was barely a moment that we weren't waving and nodding to men and women on the road who shyly ventured "Helll-O!" as we walked past. The Chinese are constructing virtually an entire city on the border of Macau, complete with modern office buildings and high-tech gas stations. As darkness fell, we bought Cokes and Chinese pastries and made our way back to the border. And just as I had vowed to someday return for further investigation of Macau, this time I promised myself I'd return to see how China fared building a new town next to a little bit of Portugal.

Macau is sometimes called the "Las Vegas of the Orient" or "Monte Carlo of the East," not just because of its casinos but also because there is jai-alai betting, greyhound racing on weekends and, each November, a Formula 3 Grand Prix event that attracts cars and drivers from Europe.

If that makes gambling sound like a big part of Macau, well, it is. But there are sights, too. Most famous are the ruins of St. Paul's, a church designed in the early 17th century by an Italian Jesuit. The church caught fire during a typhoon 150 years ago, but the facade and staircase remain. Still standing is the Citadel of Sao Paulo do Monte, built about the same time as St. Paul's, also by the Jesuits. The Dutch made several attempts to take Macau when it was a booming port town, and, in one case, a cannonball fired from here saved the day. The church is perched on a hill, and telescopes offer a view of the city.

The best example of Portuguese architecture is the Leal Senado, or Municipal Council building in the center of town. Simple and white, the building looks almost Mexican. Around a fountain in front of it are other buildings, some painted pink, that give the place the unmistakable feel of Lisbon.

But it's not just the style of the buildings that gives Macau its European feel. Consider one of the best-known restaurants in Macau, Henri's. The menu is a marriage of eastern and western cooking, and the proprietor exhibits a temper and salesmanship not commonly associated with the Orient.

Our first night in Macau, Henri seemed barely patient as my friends and I asked about several dishes on his lengthy menu. Suddenly he could stand it no longer.

"Why are you here?" he very nearly shouted. "Do you know what we are famous for? Who told you to come here?"

It seems Henri is famous for his codfish balls, a spicy plate called African chicken and fresh, grilled prawns about the size of your forearm. And it turns out that -- long menu notwithstanding -- just about everyone who comes to Henri's place has codfish balls, African chicken and prawns. We declined the codfish balls, but Henri brought a plate of them anyway. We tasted two and sent them back, but they still appeared on our bill. But after a couple rounds of beers, some (what else?) Mateus, an excellent port and a dessert, who could quibble about the price of a few codfish balls? The check came to about $13 per person for a wonderful dinner for three in one of Macau's best restaurants.

Which seemed like a great bargain until we happened the next afternoon on a small restaurant off the beaten track on the island of Taipa. There, at a place called the Panda, we sampled a long procession of plates that bespoke the Brazilian, European and Asian influences on the cooking of Macau: chicken with pineapple, flavorful quails and satay, among other dishes. With beers and tea, the afternoon feast for three of us totaled about $7 each.

A lush place, Macau boasts ancient banyan trees and colorful flora thanks to a mild climate all year. Pedicabs offer the most romantic way to see the fauna, but don't expect a driver to get you up the hills; consider the pedicab for tours through the heart of town or along the tree-lined waterfront. As you stroll the narrow, hilly streets of the downtown, each turn reveals the contrast between the East and the West that tells of Macau's heritage, when the two cultures first met and decided to do business.

For example, one of the world's most romantic inns, the Pousada de Sao Tiago, is built inside an ancient Portuguese fort, the Fortress da Barra. You can feel the Jesuit origins of Macau in the 24 rooms of the inn: blue and white tiles, hand-crafted Iberian furniture, spartan, mahogany furnishings. A wonderful pool is tucked into the hotel built on a hillside; from your windows you can watch the boats ply the sea.

Climb the hill behind the hotel and you overlook part of downtown Macau and the hills of China. What you see is that after several hundred years, Macau is once again serving as a bridge between the East and the West.