Peeling paint ... cobbled lanes winding through rows of terrace houses .... wooden shutters and a Mediterranean architecture. But it's not in Europe. The inhabitants help identify this as Macao -- the Portuguese enclave on the South China coast.

Officially ruled by a Portuguese governor, a handful of Portuguese administrators and a small Portuguese garrison, its' home for about three-hundred-thousand Chinese -- most of them from adjoining Kwangtung Province.

The oldest European outpost in the Orient, Macao was founded by Portuguese traders in 1557. For a century they grew rich on trade with China and Japan but thereafter the enclave's power declined. Today, the visual presence and unseen political control of China rule hand in hand with nominal Portuguese power.

For one weekend a year, Macao comes out of its sleepy past as the hydrofoils from Hongkong pour in with thousands of visitors for the Macao Grand Prix. It's weekend filled mostly with touring car and handicap events for drivers -- and a weekend of gambling for the visitors.

The casinos have given Macao a reputation as the Las Vegas of the Far East. They are the true mecca for the thousands of Chinese from Hongkong and other parts of Asia. For many, it seems, the blackjack, roulette and dice games are far more than the Grand prix the following day.

The gambling even continues to mahjong games beside the grand prix circuit -- a 3-point-eight mile course winding through the narrow streets and green hills of Macao.

In the world of major motor races, the Macao Grand Prix hardly deserves a mention. It's not open -- or suitable -- for the big cars. This year's entries included a handful of Brabhams, four Marchs, some Porsches, a Chevron Ford and a Lola and a couple of saloon cars.

Many drivers, like Hongkong's veteran Albert Poon, find themselves checking their machines in open pit areas with poor facilities. Some are lucky enough to get under cover.

Most of the drivers are amateurs living in Hongkong or Macao. some come from Japan but the Japanese are more interested in the motor-cycle events.

The purse is also small by world standards with just 7,000 dollars (U.S.) to be shared among the top three places. The winner receives 4,000 dollars (U.S.).

In past years, the Macao Grand Prix earned a reputation as the premier contest on the Asian circuit. Today, however, similar events in Singapore, Malaysia and even the Philippines are attracting bigger fields.

Facilities are haphazard. For the press, there's a bamboo stand. Spectators are allowed to pack some sections of the course but strong safety fences are few. Many sections, like the long straight where German driver Dieter Glemser ploughed off the course killing a child, are protected by only a few sandbags and bamboo railing.

For the Chinese spectators, numerous noodle stalls operate around the track throughout the weekend. For the few Europeans attending, a long hot dog stand provided service in the pit area.

As for the race itself, it took the winner just under two hours to complete the forty laps at an average speed of 81.92 m.p.h. -- slower than last year's since the drivers were slowed down by rain in the final half and hour. It was the first victory in three attempts for Australian Vern Schuppan. Second place went to English driver David Purley in his Chevron Ford and third to Hurbert Adamczyk of Hongkong in his Porsche Carrera RSR.

Victory points in Macao do not count towards the World Driver's Championship ... nor are they likely to. But for those who do take part in Asia's equivalent of Monte Carlo, the Macao Grand Prix is serious racing.