Year ends with trade between China and the Portuguese-speaking countries on a high

26 December 2012

The 2012 year has seen a rise in trade and investment between China and the Portuguese-speaking countries, involving large companies from the group of countries and which had Lisbon at the centre of the action.

The beginning of the year was marked by China’s investment in the energy sector in Portugal, with the acquisition of 21.5 percent of power company Energias de Portugal (EDP) by China Three Gorges (CTG), followed by the State Grid Corporation of China (SGCC) taking a stake in Portugal’s national power grid company, Redes Energéticas Nacionais (REN).

“The acquisition by CTG,” said analyst Paulo Gorjão, “is a starting point for a strategic type of investment by China in Portugal,” in which a state company invests, “in a strategic sector of the Portuguese economy,” demonstrating the “mutual trust between governments.”

The interest of Chinese companies in Portugal is largely driven by the ties Portuguese companies have with Brazil and Africa.

The creation of two joint ventures in Angola and Mozambique, owned equally by REN and China Grid, is one of the commitments that the Chinese group made in its offer of 387.15 million euros for 25 percent of REN, after CTG committed to investing8.7 billion euros.

The economic and financial crisis in Portugal and the privatizations underway as a result also attracted Angolan companies, which are closely following processes such as that of television company RTP and will soon take a stake in the new telecommunications operator that will be the result of a merger between Zon and Sonaecom.

Bilateral investment has been intense over the last few years, with Portuguese companies having a dominant position in the financial sectors, in banks such as Banco Fomento, Millennium Angola and Banco Espírito Santo Angola (BESA).

At the same time, Angolan companies and particularly oil company Sonangol, have increased their stakes in key Portuguese companies, such as Galp Energia.

In 2010, 4 percent of companies listed on the Portuguese stock exchange were owned by Angolan investors, to a total value of 2.2 million euros (US$2.9 million).

Angola’s BIC bank recently concluded its acquisition of Banco Português de Negócios (BPN) and there have been press reports of other potential acquisitions of Portuguese banks by Angolan investors.

Brazilian companies have also been taking advantage of the situation in Portugal, with the acquisition of cement company Cimpor, which is in Angola, Mozambique, Cape Verde and many other countries, and also getting involved in aeronautical manufacturing and the hospital business.

Brazil is already the biggest foreign investor in Mozambique due to a coal mining project implemented by Vale, and the country has also boosted its position in other Portuguese-speaking countries.

A new credit line worth US$2 billion was set up by the Brazilian government for Angola and, during a visit to Angola Brazil’s president Dilma Rousseff said that the principles of Brazil’s involvement in Africa were to make efforts to hire Africans, to make technology transfer a priority, to set up partnerships with local partners, and to respect local laws.

With the Angolan economy strong once again the country has set up a Sovereign Fund, which will help to reduce the risk the economy is exposed to from oil price changes.

The long-awaited Angolan Sovereign Wealth Fund, which was presented this month in Luanda, was set up with initial funding of US$5 billion to be channelled into projects with potential for growth in Angola and abroad, particularly in sub-Saharan Africa.

The Mozambican economy continues to expand at a rapid rate, bucking the global trend, and may soon become one of the most dynamic in the world, thanks to development of the mining sector and an increased influx of investment.

According to official figures, trade between China and the Portuguese-speaking countries from January to October 2012 rose 12.3 percent year on year to US$103.636 billion.

With Brazil, which is China’s main Portuguese-speaking trading partner, trade rose by 2.91 percent to US$68.862 billion.

With Angola trade rose 41.89 percent to a total of US$31.709 billion. China exported 48.73 percent more goods to Angola year on year, with a total of US$3.314 billion and imported 41.13 percent more, or US$28.395 billion.

With Portugal, which is China’s third biggest trading partner amongst the Portuguese-speaking countries, trade totalled US$3.368 billion, which was a rise of 3.21 percent overall in which Chinese exports fell 11.18 percent and Portuguese exports rose 40.31 percent. (macauhub)

MACAUHUB FRENCH