China’s investments in Portugal open up the way for a special relationship

16 January 2012

Lisbon, Portugal, 16 Jan – China’s investments in the Portuguese energy sector are opening up the way for a special relationship between the two countries, which could even redesign the “strategic geography” of Lisbon, according to analyst Paulo Gorjão.

“Consolidation of two-way relations between China and Portugal would open up a range of new possibilities, and China could be Portugal’s chosen gateway to Asia and vice versa, the researcher from the Portuguese Institute for International Relations and Security (IPRIS) said in an analysis published this month.

This privileged relationship, he said, would be a “significant change in the way Portugal understands its strategic geography,” and the “classic strategic triangle between Portugal, Brazil and Portuguese-speaking African countries,” would be complemented with a fourth angle in China.

In the analysis entitled, “Portugal and China: The Ascension of a New Strategic Geography,” Gorjão noted the growing importance that the latest Portuguese governments have given to political and economic relations with China.

For the current government, the Asia Pacific region is one of the great priorities, set against a background of increased exports in order to diversify markets beyond the traditional European Union, which is facing a period of recession.

Since 2005, Portugal has been a “strategic partner” of China and the importance given by the two capitals to the two-way relationship has grown and in economic terms the signs are positive. Portuguese exports to China have doubled over the last two years and in 2011 are expected to have exceeded US$1 billion for the first time.

“Unexpected situations notwithstanding, it seems likely that over the next few years China will become one of Portugal’s top ten export markets,” Gorjão said.

The acquisition of 21.5 percent of power company Energias de Portugal (EdP) by China Three Gorges (CTG), at the end of last year, was a special moment for business relations and may be followed by the State Grid Corporation of China (SGCC) taking a static in Portugal’s national power grid, Redes Energéticas Nacionais (REN).

“The acquisition by CTG is a starting point for a strategic type of investment by China in Portugal. For the first time a Chinese state company has invested in a strategic sector of the Portuguese economy. The result would be different if mutual trust between governments was not established,” said Gorjão.

“Thus, it is reasonable to assume that, of the opportunity appears, the Portuguese government will allow more Chinese investments in other strategic sectors of its economy, such as banking, telecommunications, or transport,” he added.

The interest of Chinese companies in Portugal is largely driven by ties with Brazil and Africa. (macauhub)