The ‘Golden Visa Scheme’, launched in Portugal in October 2012, grants residence authorizations to foreigners who invest 500,000 euros or more in the country. China has been a prime beneficiary of the scheme, with almost 4,000 permanent visas awarded to Chinese citizens. With the Portuguese passport being one of the strongest in the world, as it allows travel to 186 out of 199 world countries (besides being a EU document), the purchase of real estate is the underlying motivation for 95 percent of the requests filed with the Portuguese authorities.
In Beijing’s eyes, Portugal is not just a medium-sized European country that has recently hosted China’s supreme leader for a state visit. Since 2004, it has been engaged in a “strategic partnership” with the People’s Republic of China (PRC). The financial crisis, which hit Portugal between 2008 and 2013, served as a catalyst for a Chinese offensive, as Lisbon, under the terms of external creditors, was forced to privatize state-owned assets. Thus, a few months ago, a Chinese state-owned company, China Three Gorges, offered to take a majority stake in the capital of EDP, the country’s formerly state-owned top grid company, where it currently holds a 23.3 percent stake, acquired gradually since the 2011 bailout.
To fully understand the magnitude of the problem, EDP also owns several subsidiaries in the field of renewable energy in Spain, Brazil, and in the United States. In addition, the company still receives subsidies from the Portuguese government. Therefore, this attempted takeover raised eyebrows in Europe and in the United States. While the Brazilian competition authorities have already granted a green light to the operation, the current US ambassador to Portugal, George Glass, has criticized the deal, warning that “having another country control part of your critical infrastructure” is “a dangerous path to go down.”
Just recently, shortly before Chinese President Xi landed in Lisbon, a number of new initiatives were announced, notably in Matosinhos and Peniche, where a new technological laboratory, STARLab, jointly funded by Portugal and China, would be launched before March 2019 to focus on the construction of microsatellites and the observation of the ocean. But many more projects were announced during the state visit. Last October, the Portuguese foreign minister referred to the completion of a memorandum of understanding between the two nations containing five new cooperation projects.
Does this mean that Portugal is willing to remain an active member of the European Union and NATO while becoming an “aircraft carrier for Chinese investments in Europe?” At a time when the EU needs more consolidation and solidarity and, importantly, has just introduced a screening mechanism for Chinese investments in infrastructures and IT, such weighing of priorities is the fundamental dilemma that Portuguese authorities face. According to a recent Carnegie survey, 90 percent of individuals in Portugal view the EU as the most important institutional link and platform for their country today. The same sample, nonetheless, indicates that the gap in perceived relative importance of the United States and China narrowed noticeably after 10 years.
Arguing that the two countries have 500 years of mutual knowledge and pointing to the successful handover of Macau in 1999, Portugal’s government believes the partnership with China can continue to flourish, despite international skepticism, all while Portugal remains a member of the Western community. That is the pressing question that lead many to have their eyes on Portugal today. China’s “golden” partnership with Portugal is already well underway – so it remains to be seen how the latest state visit will define (or redifine) the future of the partnership? Hopefully, it won’t chart a path where whoever has the gold makes the rules.
‚China’s Golden Era in Portugal‘ – Commentary by Philippe Le Corre – Carnegie Endowment for International Peace.