Portugal fetes China, risking tension with Western allies

While some powerful European Union governments are uneasy about China possibly taking more control of the bloc's critical energy and transport infrastructure, one of western Europe's smallest economies is grabbing the opportunity with both hands.

Chinese President Xi Jinping began a state visit to Portugal on Tuesday, receiving full military honors on his arrival. His 24-hour stopover in the capital Lisbon has raised Portuguese government's hopes that Beijing will invest heavily in the country's biggest Atlantic port and help expand national energy company Energias de Portugal overseas.

For Portugal, which in 2011 was near-bankrupt and had to be bailed out by its partners in the 19-country eurozone, further Chinese investments will help get it back to financial health.

However, others in Europe, such as France, have deep misgivings about Portugal possibly signing up to China's "One Belt, One Road" initiative that seeks to link Asia to Europe and beyond, saying Beijing's strategy could contribute to a fracturing of the EU. Portugal's neighbor Spain refused last week during Xi's visit there to sign a memorandum of understanding expressing interest in joining that arrangement.

But Portuguese Foreign Minister Augusto Santos Silva said earlier this year that Portugal is "very interested" in the multi-billion-dollar infrastructure loan scheme and aims to contribute to a "new maritime Silk Road."

Also, Portuguese President Marcelo Rebelo de Sousa said in a statement that Xi's visit illustrates how the two countries "have been able to take full advantage of the enormous potential of their strategic partnership."

And Prime Minister Antonio Costa says his government won't stand in the way of China's ambition of taking majority control in the national energy utility, where it currently has a 23.27 percent stake.

Xi is no less enthusiastic. His byline was on a 1,500-word guest article Sunday in Portuguese daily Diario de Noticias that gushed with admiration for his host country's vibrant economy and culture, which he signaled could be a friendly voice for Beijing in the EU.

China and Portugal, he wrote, "need to jointly take forward the Belt and Road Initiative."

EU voices aren't the only ones leaning on Portugal over its warm ties with Beijing. Washington, through its Lisbon ambassador George Glass, has voiced displeasure at the possibility of the third-largest provider of clean energy in the United States — a company which is controlled by Energias de Portugal — falling into Chinese hands.

Portugal is also trying to persuade Beijing to make the deep-water port of Sines, 150 kilometers (90 miles) south of Lisbon, a key trans-Atlantic logistics hub.

Lisbon officials had hoped the port could be developed to receive U.S. exports of liquid natural gas to Europe. But France, whose blessing Portugal needed for a gas pipeline into the heart of Europe, was cool on that idea.

Beijing wants access to technology and markets and is ready to spend billions of dollars to get it. Portugal — whose annual GDP of around $217 billion compares with Germany's of about $3.5 trillion — wants to punch above its financial weight.

"Portugal has been struggling (to find) money for infrastructure, which it needs," says Bruno Macaes, a former Portuguese government minister who is now a Beijing-based analyst for business advisory company Flint.

For China, having Portugal on board "would be a nice way to normalize the Belt and Road in Europe" and would help "chip away" at European resistance to the project, Macaes said in a telephone interview.

China's investment footprint in Portugal has grown in recent years to around 12 billion euros ($13.7 billion), according to the Chinese embassy. It began buying up assets in southern Europe, including in Italy and Greece, during the recent eurozone financial crisis when cash-strapped governments swooned over Chinese money. In Portugal, Chinese companies grabbed important stakes in banking, insurance, health care, the media and the national airline.

China Three Gorges bought its share of EdP in 2011 and the following year bought a 25 percent stake in Portugal's national grid operator REN.

EdP and CTG say their goal is "to become worldwide leaders in renewable energy generation, by means of a strategic partnership in renewable generation projects."

During Xi's visit, Portugal and China aim to sign 19 cooperation agreements in areas such as energy, infrastructure, science and technology, culture and education, according to China's official Xinhua News Agency, quoting deputy foreign minister Wang Chao. Portuguese officials say they are also close to concluding a deal for pork exports to China.