By Guan Zhaoyu    Source: CGTN    Published: 2018-12-4

The 40th anniversary of the establishment of China-Portugal diplomatic relations next year will be an important moment for further and broader cooperation between the two countries.

Since 2005, when China and Portugal established a comprehensive strategic and cooperative partnership, the two countries have developed closer business ties and cultural exchanges.

Since the Belt and Road Initiative (BRI) was put forward five years ago, Portugal has become an active participant, hoping to take this opportunity to revitalize its economy and promote the continuous development of bilateral economic and trade cooperation with China.

From Age of Sail to BRI, from Lisbon to Beijing

Sino-Portuguese economic and trade relations have a long history. As early as 1514, Portuguese businessmen came to Guangzhou, China, exchanging ivory and other materials for Chinese silk.

Because of historical reasons, Macao has a close relationship with Portugal, which has been a key channel for friendly exchanges and business ties among China, Portugal and Portuguese-speaking countries.

Portugal is located in the westernmost edge of Eurasia and it once started the Age of Sail. Portuguese navigator Vasco Da Gama made great efforts to reach India and achieved interconnection of Eurasia from west to east.

Today, the BRI creates another transcontinental passage connecting Asia and Europe, promoting complementarity in Eurasia.

In recent years, isolationism and unilateralism have been on the rise and international trade fractions have increased, hindering the process of globalization. Since the financial crisis in 2008, global trade growth has slowed, and in particular, the global trade value fell by -13.2 percent and -3.2 percent, respectively, in 2015 and 2016.

In Europe, populism has emerged and the conservative parties have taken this opportunity to fight against the European Union, posing a great threat to the EU and the political and economic development of EU member states.

In spite of this, bilateral trade among China, Portugal and Portuguese-speaking countries continues to grow rapidly. The China-Portugal trade value stood at 5.6 billion U.S. dollars in 2017, 29 percent higher than the previous year.

Meanwhile, from January to October 2017, the trade value between China and Portuguese-speaking countries rose by 29.81 percent year-on-year, reaching 97.9 billion U.S. dollars.

Within these 10 months, China imported 68.4-billion-U.S.-dollar's worth of goods from eight Portugal-speaking countries, while exporting goods worth 29.6 billion U.S. dollars to them. In general, trade development has fared well.

China, Portugal seek win-win cooperation

Since the BRI was proposed, most overseas infrastructure projects have been undertaken by China's state-owned enterprises, which some foreign companies find it hard to compete with.

Some western companies then push their governments to accuse China of unfair competition and “debt-trap diplomacy,” saying that China offers credit to impoverished countries to construct infrastructure, and when debtors are unable to pay the bill, demands control over the infrastructure and influence in the region as compensation.

Such doubts have also arisen in bilateral cooperation between China and Portugal. The media of a third country even accused China of taking over key sectors of Portugal in accordance with a "Master Plan."

However, it is an undeniable fact that, affected by the European debt crisis in 2011, Portugal suffers increased unemployment rates and debt levels and negative economic growth. Due to a lack of confidence in the Portuguese economy, international investment sharply decreased.

What's worse, under the request of international institutions, the Portuguese government has to implement tight fiscal policies. Portugal's domestic economics face troubles and dilemmas.

When Portuguese enterprises were faced with disadvantages like a shortage of funds, high financing costs etc., Chinese enterprises came. Since 2011, a number of Chinese enterprises including China Three Gorges Corporation and State Grid of China have invested in Portugal.

According to incomplete statistics, until now, China's enterprises and citizens have invested more than 9 billion U.S. dollars in Portugal, and Portugal has become the fifth largest destination for Chinese investment in Europe.

Manuel Cabral, Portugal's economy minister, once said that the Portuguese government was sincerely grateful for the great support from Chinese enterprises, which would be a strong motivation for them to get out of trouble.

Even though the two countries have yielded fruitful results, there is still broad space in exploring new areas of bilateral and multilateral cooperation, especially in information technology, where the two countries share many common interests and can realize knowledge sharing.

Guan Zhaoyu is an associate research fellow at the Chongyang Institute for Financial Studies at Renmin University of China.