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Government slams claims that Portugal is China’s “special friend” in EU

Published on 20/01/2020

Portugal’s foreign minister has rejected the idea that the country is developing a problematic reliance on China, as Chinese companies are expected to bid to invest in a strategic port project. Augusto Santos Silva rebuked this speculation by telling press that “a myth has been created that Portugal is some kind of a special friend of China in Europe. That makes no sense at all.”

However, it cannot be denied that Chinese investment in Portugal began to accelerate after the country suffered during the financial crisis almost a decade ago, which has led Lisbon to rush through privatisations as part of a bailout deal with the EU. The inflows from this effort turned the country into one of Europe’s largest per capita recipients of Chinese investment.

The launch in October of an international tender for a new container terminal at Sines, south of Lisbon, has put Portugal’s relationship with China under fresh scrutiny. Sines is the closest European port to the Panama Canal, and as such is seen as a hub that could play an important role in the Belt and Road Initiative, China’s controversial infrastructure-building programme that has raised concerns in Europe about the industrial behemoth gaining influence over strategically important assets.

Bids are expected to be opened later on in the year, and Mr Santos Silva has said he hopes that credible bids did not come only from China, as was the case when Chinese state companies made the “only reasonable proposals” for utilities privatised in 2011 and 2012. This resulted in Chinese groups becoming the biggest single shareholders in Portugal’s leading power and national grid utilities.

Other Chinese investors control Portugal’s largest insurer and a private hospital group, while one is the biggest individual shareholder in the country’s largest listed bank. “The quality of bids will be much better” if US and European companies also compete for the Sines contract, the foreign minister said, adding that the port “represents one of the great opportunities for Europe to decrease its dependence on Russian gas”. The US is potentially interested in increasing its liquefied natural gas exports through Sines.

Moreover, the parliamentarian rejected the idea that China was unduly dominant in Portugal, and expressed that measuring the relative scale of China’s investment on a per capita basis was “a way to devalue the fact that Chinese investment in Europe is massively concentrated in the big countries like the UK, Germany and France, among others”. However, he made it clear that Portugal remains keen to attract Chinese investment, expand trade and encourage tourism.

Portugal’s exports to China, €1bn a year, are just under half the value of its imports, €2.2bn. With this in mind, Mr Santos Silva stated that: “It’s time for Chinese investors to set up industrial companies here, particularly in the automobile and electric mobility sectors. We are also very behind in opening up China to Portuguese exports. It took years to negotiate an entry for our frozen pig carcasses, for example. But that small item alone will increase our exports to China by more than 20 per cent in the first year.”

Chinese shareholders in Portuguese companies play an essential role in providing “stability and development” the minister said.  António Costa, Portugal’s prime minister, warned last year that misusing newly introduced security procedures for the screening of Chinese investments could result in Europe becoming more protectionist. “In the EU, we are working on a general rule to reduce or eliminate these risks,” Mr Santos Silva said. “As long as [companies] comply with Portuguese law, I don’t see a problem.”