By CHRIS GRAEME [email protected]
Portugal and the People’s Republic of China have signed a 712 million Euro package of trade deals on the back of an official presidential visit.
President Hu Jintao and José Sócrates signed the deals over the weekend for a wide range of infra-structure, renewable energy and tourism projects worth one billion US dollars.
In his official reception address to President Cavaco Silva, Hu Jintao said that both Portugal and China boasted ancient civilisations and have made “great contributions to human progress”, mentioning the smooth settlement of the Macao issue which had “set an example for other nations to tackle outstanding historical disputes”.
He added that the two countries suffered “no conflict of fundamental interests” and that their peoples cherished “friendly feelings towards one another and had been growing steadily”.
According to English-language newspaper China Daily, the Chinese President’s visit to France and Portugal has “strengthened economic and political ties with Europe”.
“The agreements between China and France and Portugal show strong confidence and support from Peking in Europe’s economy,” he said. In the case of Portugal, “the two sides have agreed to step up efforts to double bi-lateral investment by 2015”.
Hu Jintao was the first Chinese President to be received in Lisbon on an official state visit in over a decade. Apart from meetings with Cavaco Silva and José Sócrates, the President also met with Jaime Gama, the President of the Portuguese Parliament.
The visit stood out for its four institutional cooperation agreements and nine commercial agreements involving the large companies in both countries, including agreements with Portugal Telecom, Energias de Portugal, Millennium bcp and the Industrial and Commercial Bank of China, considered to be the largest in the world.
In the first nine months of the year, trade between China and Portugal has grown by 40.7 per cent in relation to the same period last year, reaching 1.7 billion Euros (2.3 billion US dollars).
Portuguese exports to China have soared by 61.4 per cent to 391.7 million Euros (549 million US dollars), but as is the case with the vast majority of countries in the European Union the import/export balance is largely in China’s favour.
However, the visit to Portugal which ended on Sunday ended without any official declaration that China would bail out Portugal by buying up its treasury bonds.
A sovereign debt market source told the Portuguese newspaper Público that the promise to help Portugal had been understood as buying up more of Portugal’s sovereign debt but no official statements had been made.
It is known that China has purchased national debt but there are no figures available since these investments are made on the international markets.
The Minister of Finance, Fernando Teixeira dos Santos, refused to add to what had already been stated to Bloomberg in that “Portugal was trying to widen its investor base so as to improve international perception of the low risk of default with regards to its national debt”.
The hope that Hu Jintao would calm the markets with the announcement that China would purchase Portuguese sovereign debt has been floating around since China’s official state visit to Athens earlier this year when it was announced that China was prepared to buy up Greek sovereign debt. China has also recently bought treasury bonds issued by Spain and Italy.