2PropertyInternational Institute of MacauRua de Berlim, 204 Edf. Magnificent, 2nd Floor (NAPE) MACAU Tel: (853)28751727 Fax: (853)28751797 www.iimacau.org.moe-mail iim@iimacau.org.moPublisher International Institute of MacauEditorial Coordination Gonçalo César de Sá Assistant Coordinator José Mário TeixeiraContributors Allan Salas, Ana Correia, Fernando Correia, José Carlos Matias dos Santos, Gao Ming, Guilherme Dias, Luís Ortet, Marco Moreira, Maria João Belchior, Mércia Gonçalves, Paula Machava, Rafael Bié, Raquel Albuquerque, Tam Kam VengProduction Macaulink Agency/Delta EdiçõesProduction and Graphic Design Victor Hugo DesignPrinting Tipografia WelfareCirculation 1500 CopiesVolume I, Number 5, December 2010Price 50,00 MOP (Macau) US$ 10,00 (outside Macau)ISSN 1606-5808

304 INTRODUCTION:Economic and cultural platform08 to 23 MACAU:Gateway to the Portuguese-speaking world24 to 33 CHINA:The “big leap” to the Portuguese-speaking world34 to 43 BRAZIL:Giants of Business44 to 57 ANGOLA:Reconstruction in “Angola Mode”58 to 67 MOZAMBIQUE:“China is very welcome!”68 to 77 CAPE VERDE:From small retailers to Chinese economic area78 to 83 GUINEA BISSAU:After peace, investments?84 to 89 SAO TOME AND PRINCIPE:Economy ahead of diplomacy90 to 97 TIMOR LESTE (EAST TIMOR): Sea of Opportunities98 to 105 PORTUGAL:Strategic Partner01020304050607080910

4Economic and cultural platformJorge A. H. RangelPresident of the International Institute of Macau

5This issue of Macau Focus is especially dedicated to the role of the Special Administrative Region of Macau (MSAR) as an economic and commercial platform between China and the Portuguese-speaking countries and to the important achievements in this area.The pragmatism shown by the PRC’s highest authorities in entrusting the MSAR Government with this responsibility is a reaffirmation of the territory’s historical vocation, made possible by a working language and common roots.The Forum for Economic and Trade Cooperation between China and the Portuguese-speaking countries is already a success story. This is also the case for the MSAR itself as it enters its second decade at a time of significant local and international challenges. These challenges are of a financial and economic nature as well as social and political. And they have become more evident in a globalised world with borders that, after advances and retreats, have become less defined through the development of foreign trade and the crucial conjunction of increasingly transnational interests.The rise in economic contacts and events also inevitably brought along more cultural events and an enhanced interest of PRC universities and academics in studying the history of those relations. At the same time, the authorities and the young people of Macau are sincerely defending its cultural and architectural heritage, which was materialised by UNESCO granting the city’s historical centre World Heritage site status.Macau was also the venue for the 1st edition of the Lusophone Games in 2005 and has strong academic, cultural, scientific and sporting ties with Portugal and other Portuguese-speaking nations. The Association of Portuguese-language Universities has also continued to regularly hold meetings in Macau with the participation of institutions of higher learning based in all the 8 Portuguese-speaking countries and those from Macau. The International Institute of Macau, in accordance with its charter, is on the frontline of those concerns, promoting those objectives and the cooperation with CPLP – Community of Portuguese-speaking countries, making full use of its position as Macau’s only accredited consultative observer within this international organisation.We believe that the success of the policies defined will largely depend on the consistency of the public-private partnerships that can be established and extended in space and time between the Governments and the most prestigious institutions of civil society in both the economic and the cultural areas. And after assessing the results obtained, we know that there are good reasons for us to look ahead with even greater confidence and determination.

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8MACAUGateway to the Portuguese-speaking world

9The creation in 2003 of the Forum for Economic and Trade Cooperation between China and the Portuguese-speaking Countries, with its Permanent Secretariat headquartered in Macau, has given the Special Administrative Region a special global dimension. The Forum also became a new feature of international relations, which opened up an infinite number of possibilities, in an overall positive way. Macau is a gateway for both Chinese companies that want to invest in Portuguese-speaking countries, and for companies from Portuguese-speaking countries that want to do business in China or use the region to enter the Pearl River Delta and China.The choice of Macau as the headquarters of the Permanent Secretariat of the Forum is due to several reasons. Portuguese is one of the official languages of Macau, as a result of what is stipulated in the MSAR’s Basic Law, which in itself can serve as a bridge for companies from Portuguese-speaking countries to enter the Chinese market. As the legal system in Macau is based on the Portuguese system, there are conditions that can make it easier to use the MSAR as a platform for Chinese-Portuguese-speaking economic relations. Specifically, companies from Portuguese-speaking countries can find various legal experts and other agents that can provide consulting and marketing services and which have a good knowledge of both the market in China and the markets of Portuguese-speaking countries. In order to make trade and investment with Portuguese-speaking countries easier, the MSAR has already signed two agreements to prevent double taxation, one with Portugal and another with Mozambique. The aim is to extend these agreements to other Portuguese-speaking countries.The government of Macau has the Institute for Promotion of Trade and Investment (IPIM) as an instrument to support the business owners who invest in the MSAR. On IPIM’s official website a business Contact List is available, where information can be inquired to find business partners. Integration into China December 20th, 1999Official languages Chinese and PortugueseCurrency Pataca (MOP)Time zone MST (UTC+8)Telephone code +853Internet country code .moArea 29.2 square kilometresGDP USD 21.17 billions (2009)Population 542.2 thousand (2009)MACAU

10Macau has also been the venue for Chinese-Portuguese exchange on several levels. In sports, in 2006, the MSAR was the venue for the first edition of the Lusophone Games, as Macau is the headquarters for the Association of Olympic Committees with Portuguese as an Official Via the support office to the Permanent Secretariat of the Forum it is possible to gain access to a vast array of information for investment in Macau and in China and take part in activities for economic promotion such as trade fairs, conferences, business missions and high level contacts in Macau, China and Portuguese-speaking countries. Since 2003, around 2,000 businesspeople from China, Macau and the Portuguese-speaking countries have taken part in the business meetings organised by IPIM and by the Secretariat of the Forum in Luanda, Lisbon, Maputo and Cape Verde. According to Ip Kuai Peng, professor of the Macau University of Science and Technology, it has been clear that the MSAR “has a unique role in this process as local businesspeople are quite familiar with the markets of mainland China and of the Portuguese-speaking countries.” Since 2003 dozens of government officials from Portuguese-speaking countries have visited Macau, whilst the Chief Executive of Macau has travelled to Portugal twice, once to Mozambique and once to Brazil on official visits. Language. During the first decade of the MSAR events such as the China Airports Conference and the Portuguese-speaking Countries Conference, the meeting of governors of central banks and of television stations from China, Macau and Portuguese-speaking nations.

11Industrial projects and the promise of tourismAs Macau is a service-focused economy, the MSAR continuously creates investment opportunities in the secondary sector. In this area, as well as the presence of Hovione since 1987, a manufacturer of pharmaceutical products, Sociedade Industrial de Macau (SIM), owned by Portuguese businessman Vasco Pereira Coutinho, has taken advantage of the conditions offered at the Macau-Zhuhai Cross-Border Industrial Zone. The investment of US$25 million led to the creation of a coffee roasting factory. The coffee is exported mainly to China, where coffee consumption is on the increase. The Olá ice cream brand is already in the territory, with promotional activities in several cities. With the aim of entering into the clean and alternative energy market in China, Portuguese electricity company EDP, which has a stake of 22 percent in Companhia de Electricidade de Macau (CEM), set up a partnership with Stanley Ho creating EDP Energy Solutions. In the opposite direction, of industrial developments by Macau businesspeople in Portuguese-speaking countries, Eduardo Ambrósio is concluding the process of creation of a scooter factory in Mozambique. An area that remains largely unexplored in this process is Tourism. With the exception of Stanley Ho’s investments in Portugal - in the gaming and entertainment sector - there is little else. However, there is no lack of projects. Macau businessman David Chow has a project that was announced three years ago in Cape Verde, which implies an investment of around US$100 million. John Lo, of Sociedade Internacional Grupo Excelente, has Guinea Bissau as his priority.The former president of IPIM, Lee Peng Hong, noted that “the Chinese business community has paid increasing attention to the development of the economic and commercial relationship with Portuguese-speaking countries, based on equality and mutual benefit.” “This happy relationship justifies the need and the strategic significance of the creation of said Forum and has been a fitting contribution to the prosperity and progress of the world economy and particularly in Africa and Latin America,” he said.First came the opening of the Portuguese Consulate-General in the MSAR, then in 2007 Angola opened its consulate, as a sign of the importance of the level of cooperation between China, Macau and Angola.

12Civil society has responded with enthusiasm, to this shift. The lusophone festival, held every year, has become a highlight of Macau’s festival calendar and is a showcase for the music, culture and cuisine of each Portuguese-speaking country. After the Forum was set up, associations of citizens and friends of each one of the Portuguese-speaking countries were either set up or re-launched, and have since promoted cultural and recreational events to the Macau population. As it is clear that most large business deals are carried out bilaterally, that is between China and each of the Portuguese-speaking countries, the Forum provides many opportunities to small and medium-sized enterprises from Portuguese-speaking countries, which have found a solid base in Macau, with supporting consulting services and an environment that is propitious to providing support for entry into the Chinese market. Similarly, medium-sized companies from China, especially from the south, can make use of the fact that in Macau there are many intermediaries and human resources with experience in contacting Portuguese-speaking cultures and companies, as well as entities from Portuguese-speaking countries, in order to launch themselves onto the Portuguese-speaking markets.

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14As well as support provided by IPIM and by the Forum’s Permanent Secretariat, private sector agents in Macau have also been involved in promoting economic and, particularly, commercial ties between China, Macau and the Portuguese-speaking Countries. This is the case, for example, with the International Commercial Association for Lusophone Markets (ACIML) which provides information about the Chinese and Portuguese-speaking markets and provides support to business partnerships. The ACIML has been active since 2002 and has over 60 associates that import and export products amongst China, Macau and the Portuguese-speaking countries. The chairman of the ACIML, Eduardo Ambrósio, noted that over the past decade, especially since the launch of the Forum, “there is a greater awareness by companies from China and Portuguese-speaking countries about Macau’s role,” and that is reflected in an increase in requests for information and services. As part of the activities of ACIML associates there has been an increase in the sale of Chinese medicines from China to Cape Verde, Angola and Mozambique. For the Angolan market, the export of clothing and footwear, and more recently mopeds, has been increasingly significant. In the case of Mozambique, the chairman of the ACIML noted the import of wood, cotton and cashew nuts. As for Guinea Bissau there is interest in increasing cashew nuts imports, but transport costs are higher. From Timor-Leste, Macau companies have imported coffee, which is then roasted and packaged in the MSAR, in order to benefit from tax exemption as part of the Closer Economic Partnership Arrangement (CEPA) with Portugal there has been a rise in olive oil, wine and medication imports. In terms of exports to the Portuguese market, the highlight is the sale of mopeds and air conditioning equipment manufactured in Guangdong province.

15The role of platform for the Portuguese-speaking world has been a recurring theme of the visits by the former Chief Executive, Edmund Ho, to the various provinces and regions of China. As well as the ministerial conferences in 2003 and 2006 in Macau, every year there have been business meetings within the scope of the Forum, in Portuguese-speaking countries, with the aim of strengthening ties between institutions, chambers of commerce and private agents on the ground. One of the high points of this process took place in March, when the Chinese deputy trade minister, Jiang Zengwei, invited a delegation from Macau to be part of his mission on visits to Mozambique, Angola and Portugal. In Macau, the Macau International Fair (FIM) has an area exclusively set aside for companies and institutions from Portuguese-speaking countries. In this Macau not only has the role of a services platform, but also serves as a showcase for products from Portuguese-speaking countries, for a universe of over 20 million visitors.As a result of the various initiatives of IPIM and the Secretariat of the Forum, during the activities carried out between 2003 and 2008 trade and investment agreements to the value of US$5 billion were signed. The lion’s share of the agreements is for import and export contracts, but there have also been partnership and cooperation agreements, particularly in the financial sector.

16Spreading of a financial networkThe banking sector has also been aware of the potential for business between China, Macau and the Portuguese-speaking countries. In September 2006, an agreement was signed linking Macau, Portugal and Angola. The Macau branch of the Bank of China, Banco Fomento Angola (BFA) and Banco Português de Investimento (BPI) signed a cooperation protocol to open up a credit line worth US$100 million to provide support for exports from China to Angola. On the same occasion, the BFA and the Bank of China (Macau) signed another agreement to make bank transfers by Chinese immigrants in Angola easier. Portugal’s Banco Espírito Santo also has its eye on the business potential between China and Portuguese-speaking countries. Present in Macau since 1996, via Banco Espírito Santo do Oriente

17(Besor), the BES group aims to boost its position in China, where it also has an office, in Shanghai. In Macau, BESOR’s activities are focused only on investment banking, corporate banking and trade finance. BES now plans to expand its activities to Hong Kong, where it intends to open an investment bank. According to Pedro Homem, the BES director responsible for the banking group’s international activities, taking into consideration the fact that the group has a strong presence in Brazil and in Africa, “the aim is to make use of the links with China to drive interactions between Chinese companies, Africa and Brazil, taking advantage of the international trade between these three hubs.” In this China-Macau-Africa-Brazil network, BES’s activities will focus on the activities of companies, investment banking and project finance, particularly in the energy and agro industrial sectors. Portugal’s Millenium BCP group has an offshore branch in the MSAR and a representative office in Guangzhou. Recently, Mozambican bank, Banco Internacional de Moçambique, of the Millenium BCP group, signed a cooperation agreement with the Bank of China, with the aim of facilitating bank transfers by individuals and companies between China, Hong Kong and Mozambique.Banco Nacional Ultramarino, of state Portuguese group Caixa Geral de Depósitos, has seen strong growth in its revenues throughout the first decade of the MSAR, with its frequent presence in banking syndicates that have funded gaming and tourism projects and with a significant presence in the banking and retail segments, as well as being one of the banks to issue currency in Macau. Banco BPI and Caixa Geral de Depósitos also operate in the MSAR with offshore branches. In this process, the Seng Heng Bank is one of the banks that has most closely followed and most invested in boosting relations between China and the Portuguese-speaking countries. Since 2005, it has had an agreement with Caixa Geral de Depósitos to jointly explore business opportunities in China. At the same time, the Seng Heng opened an office in Lisbon. In 2007, the Seng Heng Bank merged with the Industrial and Commercial Bank of China.

18Companies and institutionsMacauLink Information and News AgencyIn 2005 Macau’s Government Information Bureau set up a free website in Portuguese, English and Simplified Chinese, called MacauHub, put together by Agência de Informação e Notícias MacauLink (MacauLink Information and News Agency). The daily service provides information about economic relations between the Portuguese-speaking Countries and China as well as analyses of the countries. The MacauHub service is available through several international search engines and has over 1 million visitors per year.www.macauhub.com.moAv. Infante D. Henrique,43- 53 AThe Macau Square,8 Floor - LTelephone: (853) 28355315/6 Fax: (853) 28355466Email: macauhub@macauhub.com.moACIML - International Commercial Association for Lusophone MarketsIn practice it works as the Chinese-Portuguese-speaking chamber of commerce in Macau. Made up of over 60 businesspeople in the import-export sector, it provides companies with information and consulting on the Chinese and Portuguese-speaking markets.Alameda Dr. Carlos d’Assumpção No 263, Edif. China Civil Plaza, 20˚ andar, MacauTel: (853) 28728212Email: aciml@aciml.org.moWebsite: http://www.aciml.org.mo/AICEP MacauAICEP provides support and information to Portuguese companies planning to enter the Macau and Chinese markets, particularly in the south of the country. Edifício Rafael, Rua Pedro Nolasco da Silva, 45 – 2ºTel: (853) 28 72 83 00/1Email: aicep.macau@portugalglobal.ptWebsite: http://www.portugalglobal.ptMacau Economic and Commercial Delegations- To the European Union (Head of the delegation: Raimundo Arrais do Rosário)Avenue Louise, 480 Bte 2b, 1050 Bruxelles, Belgium,Tel: (00322) 647 1265 Fax: (00322) 640 1552Email deleg.macao@skynet.be- Lisbon (Head of the delegation: Raimundo Arrais do Rosário)Av. 5 De Outubro 115, 4th floorTel: +351 217 979 33Email: decmacau@decmacau.pt- World Trade Organisation (Head of the delegation: Raimundo Arrais do Rosário)Avenue Louis-Casai, 18, 1209 Geneve, SuisseTel: (41)22-7100788Fax: (41)22-7100780Email: macaoeto@macaoeto.ch - Beijing (Head of the delegation: Hong WaiNo. 8 Wangfujing East Street, 16th/F Macau Center, Dongcheng District, BeijingTel: (0086)10-58138010Fax: (0086)10-58138020

19Forum for Economic and Trade Cooperation between China and the Portuguese-speaking Countries - Permanent SecretariatThis is the permanent structure that supports and coordinates the activities of the Forum, with headquarters in Macau and with delegates designated by the governments of Portuguese-speaking countries and China. Together with the support office, it promotes business meetings, contact meetings and provides support to institutions and companies from China and the Portuguese-speaking countries, which act in the Chinese-Portuguese-speaking economic area. Address: Avenida Governador Jaime Silvério Marques, nº415, Edif. Comercial Tai Fong, 2nd floor, MacauTel: 00853-28723284Email: kangkai@gfce.gov.mo/ manuelamante@gfce.gov.moWebsite: http://www.forumchinaplp.org.mo/zh/main.aspGeocapitalPartnership of investor Ferro Ribeiro and Stanley Ho. It acts in the financial sector and natural resources and energy sectors. Set up in 2005, this partnership has investments in Mozambique, Angola, Cape Verde, Guinea Bissau and Brazil, and there are plans to invest in Sao Tome and Principe and East Timor. Rua Dr. Pedro José Lobo, nº 1-3, Ed. Banco Luso Internacional, Macau.Tel: (853) 28717080rosariofalcao@jfrcapitalholdings.comInternational Institute of MacauRua de Berlim, Edifício Magnificent Court, n.240, 2º, NAPE, Macau, Macau-ChinaTel: (+853) 2875 1727 / 2875 1767 Fax: (+853) 2875 1797 Email: iim@iimacau.org.moLisbon Delegation:Palácio da Independência, Largo de São Domingos, n.11, 1150 - 320, Lisboa Tel: (+351) 21 324 1020Fax: (+351) 21 324 1029 Email: iimlisboa@iim.com.ptWebsite: www.iimacau.org.moIPIM - Institute for Promotion of Trade and InvestmentThis is the Macau government body to support companies that do business in the MSAR and also has a role in opening up doors to the Chinese and Portuguese-speaking markets via activities to promote exports abroad, consulting services and technical assistance to Macau exporters and promotion of Macau to potential investors, publicising investment opportunities.Address: Avenida da Amizade, 918, Edif. World Trade Centre, 4th floor, MacauTel: (853) 2871 0300Website:http://www.ipim.gov.moEmail: ipim@ipim.gov.moSIM - Sociedade Industrial de MacauLarge Portuguese industrial investment after the creation of the MSAR, this coffee roasting factory in the Macau-Zhuhai Cross-border Industrial Park is an initiative of businessman Vasco Pereira Coutinho, who is seeking to access the growing coffee market in China. Parque Industrial Transfronteiriço Zuhai/ Macau, Lote D - Fábrica Torrefação de CaféTel: (853) 28270166Fax: + 853 28270331Email: suki.hor@simcafe.com.moWebsite: http://www.simcafe.com.mo/STDM - Sociedade de Turismo e Diversões de MacauFounded in 1962, STDM was the gaming monopoly concession company in Macau until 2004. As well as gaming it made large investments in sea transport, aviation, infrastructures, tourism and the financial sector. STDM also has investments in gaming and in tourism, real estate and the financial sector in Portugal. Avenida de Lisboa, Hotel Lisboa, Ala Nova, Macau. Tel: (853) 2857 4266/ (853) 2871 0300http://www.sjmholdings.com/http://www.shuntakgroup.com/en/index.asp

20Chinese Premier Wen Jiabao reaffirmed Macau’s role as a platform for the development of economic and trade ties between China and the Portuguese-speaking world during his first visit to the Special Administrative Region last November. During his two-day visit, the popular premier also voiced four hopes for Macau’s future development. Addressing the 3rd Ministerial Conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries at the MacauDome, Wen announced that the Chinese government will launch six measures between 2010 and 2013 to help boost the progression of less-advanced Portuguese-speaking countries. Under the new measures, financial institutions from mainland China and Macau will set up a US$1 billion development fund for cooperation between China and Portuguese-speaking countries, in a bid to push forward financial cooperation between the two sides. China’s PM Wen Jiabao reaffirms Macau’s role as hub between China and Portuguese-speaking world1) Financial institutions from mainland China and Macau “will initiate a US$1 billion cooperation and development fund between China and Portuguese-speaking countries to boost financial cooperation”. 2) Providing 1.6 billion yuan (US$237 million) in concessional loans under bilateral framework arrangements to the Forum’s Asian and African member states. Six measures The Chinese government’s six measures announced by Wen are:3) Providing materials, equipment, technical personnel and other support to one bilateral agricultural cooperation project in each Asian and African member state of the Forum.4) Training 1,500 officials and technical personnel for the Asian and African members of the Forum and supporting the Macau government in establishing a local training centre under the Forum.“The eight brothers of this Forum are at different stages of development,” Wen said, adding that to “help the developing Portuguese-speaking countries achieve faster development and shake off poverty is our common responsibility”. Apart from China, the Forum includes Brazil, Angola, Mozambique, Portugal, East Timor, Guinea-Bissau and Cape Verde. EU-member Portugal is the Forum’s only developed country. 5) Providing 1,000 one-year government scholarships to students from the Asian and African members of the Forum to study in China. 6) Providing medical equipment and devices worth 10 million yuan to each Asian and African member of the Forum.

21The Forum’s African members are Angola, Mozambique, Cape Verde and Guinea-Bissau. The Atlantic island nation of Sao Tome and Principe is not a member of the Forum because it does not yet maintain diplomatic ties with Beijing. East Timor is the only Asian member of the Forum. Wen’s keynote speech was headlined ‘Advance Common Development Through Diversified Cooperation’. The premier also said that the “Forum has served as an important platform and bond for mutually beneficial and friendly cooperation between China and Portuguese-speaking countries,” stressing that the Forum “has given full play to Macao’s unique advantage as a bridge between the two sides and boosted our exchanges and cooperation with a focus on the economy and trade.”

22Wen pointed out that when the Forum was founded in 2003, trade between China and the Portuguese-speaking world stood at just US$10 billion, while two-way trade surged to US$77 billion in 2008 and hit the original target of US$50 billion one year ahead of schedule. According to Wen, trade between the two sides reached US$68.2 billion in the first three quarters of 2010, up 57 per cent year-on-year. Angola is now China’s main African oil supplier. “Today, coffee, cashews, wine and other famous products from the Portuguese-speaking countries are becoming more and more popular in China,” Wen said, adding that “quality yet inexpensive consumer goods from China have enriched the markets of the Portuguese-speaking countries and have been well received by their people.” Wen also pointed out that by the end of 2009, business people from Portuguese-speaking countries had set up over 700 companies in mainland China with a total Booming tradeinvestment of more than US$500 million, while China’s investment in the Forum’s seven counterparts has topped US$1 billion. The premier also stressed that since 2004 China has provided 3.6 billion yuan of assistance to Angola, Cape Verde, Guinea-Bissau, Mozambique and East Timor, and cancelled 230 million yuan of debts associated with interest-free government loans. Underlined by Wen too was the Forum’s commitment to human resources development, pointing out that by November 2010 the Chinese authorities had held over 200 workshops and trained over 2,100 officials and technical personnel from Portuguese-speaking countries.Commerce Minister Chen Deming wound up the Forum by pledging that China and the Portuguese-speaking countries would focus on the development of two-way investment as part of their economic and trade cooperation in the coming three years. Chen also said that China planned to exempt tariffs for some products from Portuguese-speaking countries in Asia and Africa over the next three years. The Forum’s eight participating countries signed an Action Plan at the end of the conference. The plan vows to expand the scale of cooperation, optimise trade structures and give full play to Macau’s unique advantage as a hub and business-service hub and link between China and Portuguese-speaking countries. The plan also calls for the Forum’s member countries to promote free trade within the framework of each of their international commitments and to strengthen customs cooperation. Also highlighted is the cooperation of the two sides in the areas of finance, infrastructure development, natural resources exploitation, tourism, education and human resources development. The next ministerial conference of the Forum is slated to be held in Macau in 2013.

23a) Increasing bilateral trade – “We should open our markets wider to each other, reduce trade barriers, step up policy coordination, jointly oppose trade protectionism and work hard to raise our trade volume to US$100 billion by 2013,” Wen said, adding that China was willing to “phase in zero-tariff treatment for the overwhelming majority of the commodities imported from the Portuguese-speaking countries in Asia and Africa.” b) Promoting two-way investment – Wen called for the removal of investment barriers and stressed that “Chinese enterprises are competitive and experienced in infrastructure construction, while Portuguese-speaking countries have big markets.” c) Exploring new areas of cooperation – Wen singled out the potential of tourism and transport cooperation, and he announced that the Chinese government will promote the tourism resources of the Portuguese-speaking countries. The premier also called for deepened financial cooperation such as “encouraging the establishment of branches of banks in each other’s countries”. Four goals In terms of the Forum’s future activities, Wen raised four goals:d) Bringing into full play Macau’s role as the Forum’s cooperation platform – Wen said that the Chinese government would continue to urge mainland Chinese enterprises to use Macao as a business-service platform for the development of trade and investment ties with their counterparts in the Portuguese-speaking world. The 3rd conference is the triennial Forum’s first to be attended by heads of state and government. The conference originally slated for 2009 was postponed by a year due to scheduling problems by some of the member states. The conference was held under the official motto of ‘Diversified Cooperation, Harmonious Development’. It closed with the adoption of an Action Plan for Economic and Commercial Cooperation. The conference was co-hosted by the Chinese government’s Ministry of Commerce and the Macau government.

24The “big leap” to the Portuguese-speaking worldCHINA

25CHINA Trade between China and the Portuguese-speaking world has not stopped growing over the last decade. Between 2003 and 2006 the flow of goods and services between China and the eight Portuguese-speaking nations rose almost three-fold to a total of US$34 billion.This growth, linked to a boost in trade but also to a rise in the price of raw materials, made it possible to reach the ambitious goal set, a year ahead of schedule: Transactions to the value of US$50 billion in 2009. In 2008 trade rose 66 percent to US$77.022 billion, according to figures from China’s Customs Services. Figures for 2009 showed a drop of 23 percent due to the effects of the international crisis on the price of raw materials, an important component of the basket of goods traded between China and the Portuguese-speaking nations.Capital BeijingOfficial Language Mandarin ChineseCurrency YuanTime Zone MST (UTC+8)Telephone country code +86Internet country code .cnArea 9,596,960 Km2GDP USD 4.9 trillion (2009)Population 1.33 billion (2009)

26According to Brazil’s ambassador in Beijing, Clodoaldo Hugueney, “China is diversifying its investments in the world,” and the current scenario of global recession could even lead to a closer relationship with Brazil. Bilateral ties “could come out stronger after the crisis is over.” “By increasing cooperation, we strengthen both countries, which are two giant economies with very important industrial sectors and two economies that continue to grow,” the diplomat said. The Brazilian Agency for Export and Investment Promotion (Apex Brasil), which has an office in Beijing, says that trade between the two countries will double over the next five years, in which Brazilian raw materials and Chinese consumer goods have significant weighting. As well as the concession of a US$10 billion loan to Petrobrás, the China Development Bank in May 2009 established a deal with Brazil’s Banco Nacional de Desenvolvimento Económico e Social to extend the credit line between the two countries.Brasilia and Beijing have never been so close. Tightening of trade relations over the last ten years has made Brazil China’s biggest business partner in Latin America. Growth in trade has been, on average, 50 percent per year over the last ten years. “We have achieved more in 35 years than others are able to in even 100 years,” said Brazilian President, Luiz Inácio Lula da Silva on a visit to China in May, 2009, which marked 35 years of diplomatic relations.Nowadays, soy, iron ore and oil make up around 80 percent of all of China’s imports. To this is added cellulose pulp and agricultural products (tobacco, cotton and tropical wood), accounting for 90 percent of exports. In terms of products exported to China, the highlight is Embraer aircraft. The Brazilian manufacturer already has 50 aircraft flying for Chinese airlines.The China Development Bank is set to establish itself in Brazil and, by the end of 2009, the Bank of China did the same, with a starting capital of US$60 million. It was the first Chinese-owned financial institution to establish itself in South America. The branch will be retail in nature and focused on investment.

27“A quicker way of cooperating” with AfricaWith bilateral trade totalling US$25.3 billion, in 2008 Angola was China’s most important trading partner in Africa. It vies with Saudi Arabia and Sudan for the “title” of main source of oil imports for the Asian economic powerhouse. Figures from the Chinese Trade Ministry showed that in 2006 oil imports from Angola totalled 22.7 million tonnes, rising the next year to 25 million. Angola, which currently produces 1.7 million barrels of oil per day, has China as its biggest customer.Angola’s ambassador in Beijing, João Bernardo, is unhesitating in saying that “cooperation with China stands at a really good level.” The Chinese presence, he noted, had supported the reconstruction of the country, which in 2002 came out of a devastating civil war, and which had affected the country almost constantly since its independence in 1975. To support reconstruction of the economy the Chinese government in May 2001 pardoned debt of 67.38 million yuan (around US$10 million). The creation of multimillion-dollar credit lines to fund reconstruction has been decisive in the rapid growth of Chinese-Angolan trade. China’s credit line to Angola is estimated at US$5 billion. Li Ruogu, president of the Eximbank, said after a meeting with President José Eduardo dos Santos, in 2008 in Beijing that the credit institution planned to increase the value of the credit line. Contacts continue between the Angolan Finance Ministry and Eximbank China, a financial institution that currently supports over 200 construction projects in Africa.

28Trade between China and Portuguese-speaking countries between January and December, 2009Unit: 10,000 USDCountryFrom January to December 2009 Amount of Trade from January to December, 2008Amount of tradeExports from ChinaImports by ChinaRise (percent)TotalExports from ChinaImports by China1 Angola 1,706,179.07 238,596.00 1,467,583.07 -32.60 -18.90 -34.40 2,531,1442 Brazil 4,239,950.08 1,411,851.83 2,828,098.25 -12.90 -24.90 -5.30 4,857,3053 Cape Verde 3,540.52 3,540.50 0.02 136.80 136.80 0.00 1,326.594Guinea Bissau2,481.08 2,319.36 161.72 235.80 277.30 30.10 737.15 Mozambique 51,668.82 33,913.38 17,755.44 22.50 14.60 41.00 41,4336 Portugal 240,444.61 192,351.62 48,092.99 -11.10 -17.00 24.10 269,1207 Timor-Leste 2,328.30 2,326.02 2.28 144.20 146.80 -78.60 9258Sao Tome and Principe220.22 219.79 0.43 15.60 16.40 -75.00 189.41Total 6,246,812.70 1,885,118.50 4,361,694.20 -18.90 -22.43 -17.27 7,702,180Source: China General Admnistration of Customs

29The first credit line to Angola was launched in 2004 and totalled US$2 billion. In 2006 there was a new rise at the time of the visit by Prime Minister Wen Jiabao to Angola.Some of China’s largest construction companies are in Angola, such as the Sinohydro group, which has 70 projects underway in the country, employing around 3,000 Angolans. Deputy Trade Minister Chen Deming has said that China will continue to encourage Chinese companies to invest in Angola and extend cooperation in sectors such as agriculture, infrastructures, national reconstruction programmes and health. In 2009 direct flights were launched between Luanda and Beijing, via Angolan airline Taag, which now lands in the Chinese capital twice a week. In Portuguese-speaking African countries, the Chinese government’s attitude has been to encourage business carried out by the Chinese, but also to develop support projects in several areas for the development of these countries. The People’s Republic of China seems focused on helping Africa to meet its Millennium Development Goals.Many Mozambican products are exempt from tax on import to China. The number of exempt products stood at 190 and after the 2007 meeting between presidents Hu Jintao and Armando Guebuza this number rose to 442 products.China’s involvement in Mozambique extends to social, economic and defence areas. On Hu Jintao’s visit an agreement was signed for a preferential loan of US$160 million. Cooperation agreements signed in 2007 are valued at around US$240 million. One of the highlights of the meeting two years ago was the pardon of the debt owed by Mozambique to China, which was worth around US$15 million. At the same time a Chinese credit line of US$31 million was opened up by the China Eximbank.The company set up in Mozambique has also carried out other projects, such as construction of the Centre for Investment Promotion, a ten-storey building in the Mozambican capital. Investment by Chinese construction companies has increased and there are contracts ranging from the National Stadium to Maputo International Airport with Chinese companies. Júlio Morais, ambassador to Beijing, launched Cape Verde’s diplomatic presence in China and the two countries have had diplomatic relations since 1976. In terms of infrastructure projects on the archipelago, China has had a significant role, as the diplomat said, “it has a way of cooperating that is faster than that of other countries.”

30Cape Verde could be the site of one of China’s five economic cooperation zones in Africa. The country’s level of development, political stability, strategic geographical position and openness to foreign investment, makes it a strong candidate for future cooperation.Despite imports from the Chinese side still being in their infancy, Chinese exports to Cape Verde have been growing, with an increase of 94.6 percent in 2006. Nowadays Chinese public and private companies are linked to large-scale projects such as that of the archipelago’s first cement factory, on Santiago Island. Nearby, in Guinea Bissau, this year the first stone for construction of a military hospital was laid. The facility is due to be concluded at the end of 2010, with funding from China. In 2006 an agreement was signed for Chinese financing of a dam on the Ceba river, a large hydroelectric project some 200 kilometres from the capital, Bissau. With an estimated cost of US$60 million, it will be the country’s first hydroelectric facility. Other infrastructure projects involving China are construction of the deep water port in Buba, which will be the country’s largest, two main motorways and the bridge over the Farim River. The agreement for the deepwater port (2006) opens up the way for Chinese fishing vessels in the Exclusive Economic Area.

31Oil could also be a gateway for China’s relations with Sao Tome and Principe, the only Portuguese-speaking country that has diplomatic relations with Taiwan. Sinopec is exploring one of the oil blocks in the Nigeria-Sao Tome and Principe Joint Development Zone. And with the recent acquisition of Addax it now controls another block and has become a shareholder in a further two. In 2008 China said that the door was open for the archipelago to be part of the Forum for Economic and Trade Cooperation between China and the Portuguese-speaking countries.Sinopec’s presence can also be felt in East Timor, a country that has benefitted from a significant rise in Chinese cooperation. China was the first country to establish diplomatic relations with East Timor in 2002, immediately after its independence and currently over 2,000 Chinese people work in the country. China is East Timor’s fourth-largest trading partner, after Indonesia, Singapore and Australia.One of the areas in which the Chinese presence has been most apparent is the construction of government buildings. In 2008, the Foreign Affairs Ministry building was concluded, which cost US$7 million. In 2009 the country’s presidential palace was concluded, having been built using US$6 million in aid from China. In health, education and agriculture, the Chinese central government has invested in training Timorese citizens in Chinese education and research centres.In May 2009 a contract for the supply of third generation mobile telephony equipment and services was signed involving ZTE Corporation and Timor Telecom. Trade between the two countries rose from US$1.07 million in 2003 to US$9.51 million in 2008 and US$23,28 million in 2009. China and Portugal have a centuries-old tradition of good trade relations. The last few years have been marked by Chinese entrepreneurs setting up in Portugal. In the opposite direction, Portuguese companies have had some difficulty in setting themselves up in China at the same rate as other European countries such as Germany or France. At the beginning of the new millennium the future of trade relations between Portugal and China was set. To mark the 30th anniversary of diplomatic relations in 2009, the Portuguese Prime Minister said in a letter to Prime Minister Wen Jiabao that he hoped that both governments could create opportunities for “a qualitative and quantitative leap.”In March 2009, the Chinese deputy trade minister, Jiang Zenwei visited Portugal for meetings at the Economy Ministry. Despite the world financial crisis, he said, the common aim continued to be to increase Chinese-Portuguese cooperation, which still had a lot of room for growth. In the last decade, the relationship between the two countries saw significant growth, favoured by the new commercial and legal framework set up since the creation of the Macau Special Administrative Region on 19 December, 1999.

32PortugalZTE de Portugal Lda./ZTE Corporation, Huawei Technologies, China Die and Mould Industry Association, GeocapitalAngolaGeocapital, Sinopec, Huawei Technologies ZTE de Angola Lda./ ZTE Corporation, China International and Trust and Investment Corporation (CITIC), Sinohydro, China Ferrovia Grupo 20, Dongfeng Nissan, China Road and Bridge Corporation (CRBC), Wuhan Iron and Steel, China General Machinery and Equipment Import and Export (CMEC), SinoMach, Jiangsu International , China Railway Construction Company, CNOOCBrazilGree Electric Appliances do Brasil Lda., ZTE do Brasil Ltda / ZTE Corporation, Chinatex Grains and Oil Imp. & Exp. Co. Lda.,Huawei Technologies, China National Machinery & Equipment Import/Export, Chana, Effa Motors, Hafei Motor and Jinbei, China Development Bank, Bank of China, CheryCape VerdeGeocapital, China Building Material Industrial Corporation for Foreign Econo-Tech-nical Cooperation, China Ocean Shipping Companies Group (Cosco), CNFC (China Overseas Fisheries Co.)Guinea Bissau Western Metal Product Company (Wempco),MozambiqueSogecoa (Moçambique) Lda., Huawei Technologies, ZTE, China GEO-Engineering Cooperation, China Internal Trade Engineering Design & Research Institute, China Shandong Foreign Economic & Tecnhical Cooperation Group, China Henan Inter-national Cooperation Group Co.Ltd – CHICO, Anhui Foreign Economic Construction Corporation, Geocapital and China Metallurgical Construction Group (MCC), Con-strução CCMSao Tome and Principe Sinopec, COVECEast Timor: ZTE, China Nuclear Industry 22nd Construction Company, PetroChina, GeocapitalThe biggest Chinese companies in CPLP countries

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34Giants of BusinessBRAZIL Capital BraziliaOfficial language PortugueseCurrency RealTime zone UTC-4 to –2/ Official UTC -3Telephone country code +55Internet country code .brArea 8.514.876 Km2PIB USD 1,73 trillion (2009)Population 192,73 million (2009)

35BRAZIL In April of 2009, China, for the first time, overtook the United States as Brazil’s main trading partner, with total trade of US$3.2 billion. Between 2004 and 2009, trade between Brazil and China rose almost four-fold, rising from around US$9.1 billion to US$36 billion. From January to the second week of June, 2009, Brazilian exports to China rose 34.5 percent to US$8.99 billion, against the same period of 2008. In the opposite direction, Brazilian imports from China fell 23.4 percent to US$6.17 billion, in the same period. The recent rise in bilateral trade is the result of the good performance of commodities such as iron ore, the main product on the list of exports from Brazil to China, as well as soy and oil.The import of Chinese vehicles by Brazil, the world’s sixth-largest vehicle manufacturer, with 3.22 million units produced last year, marks another chapter in the growing trade relationship between the two countries. Chinese car manufacturer Chery launched several models on the Brazilian market last year. The target is to end 2010 with a network of 80 stores and over 15,000 units sold of the Tiggo, Chery Face, compact vehicle QQ and Chery A3 models. If the models are well-accepted by the Brazilian consumer, the company plans to open up a factory in the country, with an investment of US$700 million, with capacity to produce 150,000 vehicles per year. Chery joins four other Chinese car brands already operating in the Brazilian market, namely Chana, Effa Motors, Hafei Motor and Jinbei.In the first quarter of 2009 alone, China acquired 50 million tonnes of iron ore, 70 percent of the total sales of Brazilian company Vale, the world’s biggest iron ore exporter. At the end of 2008, the Chinese suspended the purchase of commodities due to the global crisis. At the beginning of 2009, purchases began again in order to re-establish reserves, resulting in a rise in bilateral trade. Figures from the Brazil-China Council showed that 65 percent of Chinese exports to Brazil are machines, chemical products and electrical and mechanical equipment. In the last two years, the trade surplus favoured China, thus altering the trend of a surplus for Brazil that had been in place since 2003. Brazil is likely to post a surplus this year, but China is likely to post a surplus in 2010, according to specialists.Over the last few months, Brazilian meat producers have been exerting pressure to open up the Chinese domestic market, following a drop in exports from Brazil to other countries, due to the global economic crisis. The issue was one of the main points of the recent visit by president Luiz Inácio Lula da Silva to China, in May of this year, with a delegation of businesspeople. “With the contraction of the global economy, China is a great partner for buying basic products from Brazil,” said the chairman of the Brazil-China Chamber of Economic Development (CBCD), Paul Liu, referring to products such as pork, beef and chicken as well as soy, sugar and ethanol. According to the Chamber’s figures bilateral trade has the potential to total US$100 billion in five years.

36Year AmountExports from China to BrazilImports to China from Brazil2002 4469.44 1466.38 3003.052003 7988.56 2144.76 5843.802004 12358.98 3674.85 8684.132005 14817.29 4827.55 9989.742006 20199.97 7379.95 12920.022007 29705.04 11372.03 18333.012008 48573 18749 298232009 42399 14118 282802010 (Jan-Mar) 10175.62 4375.44 5800.18Source: Chinese Ministry of Commerce (2002-2007)China General Administration of Customs (2008-2010)2002-Mar 2010: Value of China-Brazil Trade (millions of USD)

37The Bank of China office in Sao Paulo has already opened. Initially its operations in Brazil have been focusing on the business segment and commerce, but it is also considering going into retail, in the long term, via Brazilian banks.With the Chinese community in Brazil in mind, the Bank of China plans to implement services for cash transfers between the two countries. The bank’s branch on Avenida Paulista, in the financial centre of Sao Paulo, will essentially provide credit lines for companies interested in bilateral trade. The China Development Bank is preparing to open an office in Rio de Janeiro. “It is a spectacular piece of news because the arrival of the bank’s branch will be the platform for Chinese investments in Brazil,” said the governor of the State of Rio de Janeiro, Sérgio Cabral. The aim is to invest in ports, steel works and energy. The city is home to the headquarters of Petrobras and Vale, the world’s biggest producer of iron ore. In May, the Chinese financial institution negotiated a loan of US$10 billion to Brazilian state company Petrobras. The resources will be used for the exploration of gigantic oil and gas reserves recently discovered off the coast of southeast Brazil. In exchange, Petrobras will guarantee “strategic supply” following the rise in Brazilian oil production. The agreement also includes an export agreement between Petrobras and Unipec Asia, a subsidiary of Sinopec, which projects sales of 150,000 barrels of oil per day for the first year and 200,000 barrels per day in the following nine years. “The Chinese have resources and Petrobras can supply oil for the next 20 years,” said Paul Liu.The China Development Bank has also shown interest in investing in projects related to the Football World Cup in 2014 and has agreed a loan of US$800 million to Banco Nacional de Desenvolvimento Económico e Social (BNDES), the government’s development bank.

38Over the next few years, Chinese manufactured trains will be responsible for the link between the centre and the suburbs of the city of Rio de Janeiro, which is used by 500,000 passengers per day. The consortium led by the China National Machinery Import & Export Corp, set up in the 1950s, won a public tender launched last year by Supervia, the company responsible for urban trains in Brazil’s second-largest city. The contract, which was signed at the end of June, includes 120 electric trains for US$165 million, the local government’s biggest investment in the public transport sector in the last 40 years.The public tender won by CMC, in which companies from France and Korea also took part, is one of the most recent examples of the advance made by Chinese companies in Brazil, with the opening up of business opportunities, namely in the infrastructure sector. In January 2007, the government of President Luiz Inácio Lula da Silva launched an ambitious construction work project in several economic sectors for the next four years. Christened the Programme for Accelerated Growth (PAC), the project includes public and private investments of US$329 billion. “The challenge is now to accelerate the growth of the economy by maintaining the victories achieved over the last few years. It is time to overcome barriers,” said Lula da Silva, on presenting the plan. “We want to grow in a correct way, lowering inequalities and distributing income, placing the country on a rhythm that is more compatible with its capacity and with its strength,” the president noted. Of the total, US$152.3 billion will be public investments, namely from state companies such as Petrobras, which accounts for 40 percent. The remainder will be investment from private companies that will benefit from tax reductions as an incentive.From oil to public works: Brazilian market opportunitiesOne of the main projects in this ambitious plan is the launch of exploration of gigantic oil reserves that were recently discovered along the Brazilian coast. Located in 150 million-year-old sedimentary basins at great depth and over a distance of 800 kilometres, the Brazilian reserves may total 80 billion barrels of oil and gas, according to national oil agency, ANP, the Brazilian oil sector regulator.With these large reserves, Brazilian production could rise from current 2.4 million barrels of oil and gas per day to around 3.6 million barrels in 2013, making Brazil a net exporter of oil. If production potential of 80 billion barrels is confirmed, Brazil will have the world’s sixth-largest reserve, behind Saudi Arabia, Iran, Iraq, Kuwait and the United Arab Emirates.

39The start of exploration of those oil reserves was in May of 2010, with the launch of production at the Tupi field, the world’s biggest oil strike in the last 30 years, by a consortium led by Petrobras, Portugal’s Galp Energia (10 percent) and Britain’s BG (25 percent). Located in the Santos basin, 290 kilometres off the Brazilian coast and discovered in July, 2006, the Tupi field has estimated reserves of 5 to 8 billion barrels of oil and gas. The exploration at Tupi began with test phases with production of 30,000 barrels per day at a depth of 5,300 metres. Production is expected to rise to 100,000 barrels per day, in December 2010, according to projections from Petrobras.Business opportunities opened up by exploration of those reserves have brought the two biggest Brazilian companies closer together. Petrobras and mining company Vale have signed an agreement for joint exploration of natural gas. The agreement includes exploration of three blocks, on the coast of the state of Espírito Santo, at a depth of between 1,000 and 2,000 metres, above the pre-salt layer. The three oil blocks were acquired by Petrobras in a public tender in 2005. Through the agreement Vale will have the right to use all the gas extracted by Petrobras in these three blocks to produce electricity at its industrial facilities in the region. Currently, Vale has stakes in the exploration of 26 oil blocks, 22 of which in partnership with Petrobras, on the Brazilian coast.Amongst the large projects underway in Brazil is also the construction of a railroad to link the south and north of the country. Investment in the construction of the southern section of the “North-South Railroad” will total US$4.06 billion. The project will be 3,100 kilometres long between the cities of Barcarena, in Pará state in the north of Brazil, and Estrela D’Oeste, in Sao Paulo state, in the southeast region.Construction of the railroad is expected to attract more than ten ethanol factories to the central region of Brazil, namely in the state of Goiás, at an estimated investment of US$2.5 billion. Conclusion of the project, in December 2010, could also encourage the use of 8.3 million hectares of land for grain production in the region, more than twice the area that is currently planted. Valec, the state company responsible for the project, is also expected to offer the private sector 25 investment projects in new business opportunities in the area covered by the new railroad.In the energy sector, the Brazilian government recently authorised the construction of two large dams in the Amazon, at an investment of around US$10 billion. The Jirau and Santo Antonio dams, on the Madeira River near the Bolivian border, are expected to produce 4,000 MW of power, or the equivalent of 10 percent of Brazil’s electricity consumption. The two dams are considered to be fundamental to prevent an energy supply crisis in the country, starting in 2012. Authorisation was granted after years of intense debate amongst the authorities, concerned with environmental conservation as well as the risk of a supply crisis.Another large dam will also be built in the Brazilian Amazon region. This is Belo Monte, with capacity to produce around 11,000 MW of power, along the Xingu river. With investments of US$4.87 billion, the project is expected to be handed over to private companies, via a public tender, this year. Construction of Belo Monte is one of the main projects included in the Growth Acceleration Programme.

40Over the last four years, with the rise in international oil prices and the search for renewable energy sources, Brazil has become the target of foreign investors for ethanol production. Multinational companies such as Cargil, Bunge, ADM and trading companies such as Japan’s Sojitz, Mitsui and Itochu, have become ethanol producers. Investments in the sector are expected to rise to US$19 billion, with the construction and expansion of 86 units over the next few years, which will double production of ethanol.In the housing sector, the Brazilian government last year launched a project for construction of over 1 million houses for poor families, at an investment of US$17.2 billion. Known as “My house, my life” the plan aims to reduce the housing deficit of 7.2 million houses by 14 percent and fight the effects of the world crisis, by generating jobs. “In this programme we won’t have a problem with spending and we are going to spend and the sooner the better,” said President Lula da Silva. The houses due to be built will have thermal solar heating, which will also help to reduce the electricity bills of their beneficiaries. The organisation of the 2014 Football World Cup will also open up big opportunities for foreign companies. Investments in infrastructure projects in the 12 Brazilian cities selected by FIFA to host the games are expected to total US$55.8 billion. The projection comes from the Brazilian Infrastructure and Basic Industry Association (Abdib) on considering the construction, reform and expansion of stadiums, motorways, airports and even a high-speed rail link (TGV).One of the biggest investments will be construction of the TGV over 450 kilometres between the cities of Sao Paulo and Rio de Janeiro, the likely locations of the opening and closing of the World Cup. The TGV project, which is still being studied, is expected to cost around US$15 billion and large international groups have already shown an interest in it.Of the 12 cities selected to host the games, Sao Paulo is expected to head up the list of investments in infrastructures, with US$16.2 billion. One of the main aims of the investments will be to order the chaotic traffic of Brazil’s biggest city, by expanding the current public transport system. The investments also include construction of motorways, tunnels and expanding the current Sao Paulo international airport.

41A nation turned towards AfricaOver the last few years, the African continent has become a priority for Brazilian foreign policy. This priority has translated into a rise in trade and investments. Trade between Brazil and the African nations has risen more than five-fold, from US$5 billion in 2003 to around US$26 billion in 2008, with particular focus on Portuguese-speaking African countries, such as Angola and Mozambique. The sharp growth in trade has transformed Africa into Brazil’s fourth-largest trading partner, behind China, the United States and the European Union. Trade with Africa accounted for 7 percent of Brazil’s total foreign trade last year.In the last six years, Brazil also expanded its diplomatic presence in Africa, a region in which it currently has embassies in 34 countries. Since he came into power in Brazil in 2003, Lula da Silva has travelled to the continent on ten occasions to visit 20 African countries. The president’s interest in Africa has fed rumours that Lula da Silva wants to set up an institute to fight famine in Africa, as of 2011, when he is due to leave the Brazilian government. The creation of the institute was discussed by the president and some businesspeople, who are potential investors in the project, at a seminar in New York, the last leg of a visit that Lula da Silva made to the United States, in March of 2009.Brazil’s increasing relations were felt most keenly in Portuguese-speaking African countries (PALOP), nations with which the South American giant has special cultural and historical ties. Bilateral trade rose more than 16-fold, from just over US$260 million in 2003 to US$4.2 billion in 2008. Angola and Mozambique stand out as Brazil’s biggest trading partners.The trade list has also been diversified to include products other than oil. One of the most recent Brazilian exports is the sale of 300 buses by manufacturer Marcopolo. The buses, of the Ideale 770 model will be supplied to the Angolan Transport Ministry to transport passengers between the country’s provinces. This is the biggest ever export consignment of Ideale 770s since the model was launched in 2006.

42In Angola, Petrobras launched its activities in 1979. The company has outlined investments of US$900 million for the 2008-2012 period according to its latest Business Plan. Petrobras has in Angola its biggest campaign of offshore test oil wells and is the Brazilian state company’s fourth-largest single foreign investment. In October of last year, in its most recent announcement, Petrobras said that it had struck oil in the deep waters off the Angolan coast, 350 kilometres from Luanda. The N’Goma-1 well is explored by a consortium that includes Petrobras, via its subsidiary Braspetro, and by other companies, such as Sonangol and ENI Angola.One of the biggest private Brazilian investments in Africa is being carried out by mining company Vale, in Mozambique. In March of this year, the company began mining for coal in the country, an investment of US$1.3 billion. In the carrying out phase of the Moatize mine, in Tete province, started in 2008, a consortium made up of construction companies Odebrecht and Camargo Corrêa was responsible for doing work on the project. In total, more than 20 Brazilian companies have been hired to assist Vale in Mozambique with this project. The Moatize coal mining project will have the capacity to produce 11 million tonnes of coal per year (metallurgic and thermal), with production due to begin in December 2010. Vale, which has been operating in Mozambique since 2004, has the concession on the Moatize mine, one of the world’s biggest coal reserves, in northeast Mozambique, which is the company’s biggest investment in the coal business. Production from Moatize will be transported by trains for around 600 kilometres on the Sena railroad, as far as a new coal terminal under construction by a concession-holder at the port of Beira, in Sofala province. The coal will be exported to the markets of Brazil, Asia, the Middle East and Europe, which are traditional consumers of coal, the Brazilian company said. “The Moatize project will give a new dynamic to the Mozambican economy, creating employment and income. Over 2,000 people are working on the project and the execution of the enterprise, 90 percent of which are from Mozambique,” the company said. At the peak of implementation work, the number of workers will exceed 3,000, of which the majority will be Mozambican. For the operating phase, the company expects to employ 1,500 people. Vale is Brazil’s biggest private company, with business in 30 countries, such as Colombia, Australia, Argentina, Chile, China, the United States, Indonesia and Canada.In Mozambique, Camargo Corrêa, one of the biggest groups in the Brazilian construction sector, is facing a true “acid test” with the construction of one of the biggest dams on the African continent. With production potential of 1,500 MW of power (Cahora Bassa has a capacity of around 2,075 megawatts), the Mphanda Nkua dam will require investment of 2.1 billion dollars, a figure three times higher than the company’s entire international portfolio of contracts.According to the contract signed with the Mozambican government the Brazilian construction company will be responsible for the design, execution of the work and possibly the operation of the dam. It is also Camargo Corrêa’s responsibility to find international investors interested in being involved in the project, which is due to be concluded in 2013.

43Surplus power of around 1,000 MW will be exported to countries in the Southern Africa Development Community (SADC), namely South Africa, which depends on electricity imports from Mozambique. The contract also includes construction of a 1,400 kilometre transmission line linking the dam to the capital of Maputo. The Brazilian construction company is part of a consortium that includes Mozambique’s Electricidade de Moçambique (EDM) and Energia Capital. The Mphanda Nkuwa dam will be built 60 kilometres downstream of the similar Cahora Bassa dam in Tete province, in the centre of the country, and will also use the potential of the Zambezi River for power production.“Brazil has focused on Angola a lot over the last few years and has kept Mozambique in second place, which is a situation we now plan to reverse,” said the director of the Brazil-Mozambique Chamber of Commerce and Industry (CCIABM), Mário Tavernard. At the end of last year, the chamber, which was recently set up, led a mission of dozens of Brazilian companies from various sectors of the economy to Mozambique.The mission took part in meetings with the local authorities and in business meetings promoted by the Confederation of Economic Associations of Mozambique. “The country is a great business opportunity, with 21 million consumers and little domestic competition,” noted the director of CCIABM; for whom the African country offers business opportunities in the food, drinks, cosmetics, machinery, equipment, construction materials and services, medication and agricultural tools sectors.In Angola Camargo Corrêa is working on a luxury residential project, on Costa do Sol, a high class region of the capital Luanda. The project, carried out in partnership with Escom Imobiliária, of Portuguese group Espírito Santo, will have 220 luxury apartments. It is the Brazilian group’s second luxury residential project in Luanda, after the launch of the Acqua Ville condominium. The group also plans to launch other real estate projects in Angola such as the Luanda Sul Business Centre, a group of ten five-storey buildings covering 80,000 square metres, designed for companies that want to open offices in the Angolan capital.Two of the “colossi” of Brazilian business - Odebrecht and Embraer - are already present in Africa at their full strength. Odebrecht, which is involved in some of the most important infrastructures in Angola, such as the Capanda hydroelectric dam, is taking on an important role in the energy sector. In biofuels, in partnership with Angolan oil company Sonangol, but also in oil exploration. Some 315 kilometres off the Angolan coast, the oil division of the Brazilian group recently made its first significant discovery.Embraer is notable for its sales of aircraft to Mozambican airline Linhas Aéreas de Moçambique. Two of four Brazilian aircraft (E190) have been delivered in 2009, as part of the process of renewing the Mozambican flagship airline’s fleet.

44Reconstruction in “Angola Mode”ANGOLA

45ANGOLAChinese relations with many states are ruled by the five principles of peaceful co-existence, which are mutual respect for territorial integrity and sovereignty of each country, non-intervention in internal affairs of each one and equality and mutual benefits and peaceful co-existence between states. That is, China seeks to have a pragmatic and differentiated relationship with its allies. With the fall of the USSR and the end of the cold war in the 1990s, Beijing became more interested in Chinese-African relations, focusing its might on investments, trade and energy. Angola is no exception to this rule.Capital LuandaOfficial language PortugueseCurrency KwanzaTime zone UTC+1Telephone country code +244Internet country code .aoArea 1.246.700 Km2GDP USD 84.9 billion (2008)Population 18,2 million (estimate 2008)

46Chinese relations with many states are ruled by the five principles of peaceful co-existence, which are mutual respect for territorial integrity and sovereignty of each country, non-intervention in internal affairs of each one and equality and mutual benefits and peaceful co-existence between states. That is, China seeks to have a pragmatic and differentiated relationship with its allies. With the fall of the USSR and the end of the cold war in the 1990s, Beijing became more interested in Chinese-African relations, focusing its might on investments, trade and energy. Angola is no exception to this rule.On 2 March, 2004, the Export-Import bank of China (Eximbank) and the Angolan Finance Ministry agreed a credit line of US$2 billion, framed into over 150 projects in the health, education, energy and water, agriculture and public works sectors. The Angola-China financial assistance platform is focused on creating and rebuilding the infrastructures destroyed by the war in Angola. The main focus is public works, energy, health, education, telecommunications, transport and agriculture and gives priority to Chinese companies in construction of these projects. China, in its turn, imports oil, diamonds and other products, at low prices. This process known as “Angola Mode,” outlines bilateral cooperation for mutual benefit. Angola gets infrastructures and China gets resources.According to Angola’s Finance Ministry, new credit agreements were signed on 19 July, 2007 and 28 September, 2007, to the value of US$500 million and US$2 billion, respectively. The projects are being carried out in stages.

47According to the report from the Finance Ministry, of the 50 projects carried out in the first stage of financing (US$1 billion), “44 have been concluded, one of which in the transport sector, six in agriculture, eight in energy and water, 20 in education and nine in health.” Amongst these are new polytechnic institutes in four provinces: Huambo, Bié, Malanje and Luanda.Along with this the China International Fund was set up, which is a private organisation with headquarters in Hong Kong, with access to the Chinese funds and to Angola’s Office of National Reconstruction. It announced the availability of US$6 billion for construction of large projects such as railroads, the Luanda International Airport, the new Luanda satellite city, Kilamba Kiaxi, and a new administrative complex. However China’s heavy involvement in Angola has not been entirely free from tension. The main issue has been greater participation of Angolan companies and workers in the reconstruction projects. Angola’s Centre for Strategic Studies (CEEA) has noted that it “is Luanda’s job to defend its interests.” According to the Centre, the contracts outline 35 percent local workers, but there is no specific body responsible for checking compliance with this clause. Angola’s President during his visit to China, in 2008, said China was “a strategic partner” and the China-Angola partnership was “a good example of cooperation between developing countries.” His Chinese counterpart, Hu Jintao called for increased China-Angola cooperation, calling for the “creation of a body to guide and coordinate economic and bilateral cooperation.” Cooperation, he suggested, should be expanded to “the area of human culture” in the sectors of “education, journalism, magistrature and sports,” as well as development of agriculture and telecommunications. During this visit, in December 2008, four cooperation agreements were signed boosting bilateral and diplomatic cooperation between the states. According to the Angolan Centre for Strategic Studies, the biggest benefit of China’s appearance in Angola is the “change in approach of the West.” “The open attitude of China in relation to us has required others to change their attitude. This partnership has changed the rules of the game.”Kilamba Kiaxi: Houses “made in China” for 200,000 peopleThe China International Trust and Investment Corporation (CITIC) is investing US$3.5 billion in social housing on the outskirts of Luanda. This is the biggest ever housing investment project promoted by a Chinese company abroad. The project includes 700 apartments, schools, shops, energy, water and transport. The project is part of the Luanda government’s aim to reduce the housing deficit in the country – estimated at 1.9 million houses – by building 1 million new houses by 2012.

48“Angola Mode”The China-Angola partnership, or “Angola Mode” of exchanging raw materials for infrastructures, with use of credit, is considered to be a success by both sides. China has privileged access to Angolan resources and Angola takes advantage of conditions to develop several areas of its economy, from agriculture to services such as transport, as well as a powerful partnership on the international scene.The two countries now have strong diplomatic ties and a financial agreement that covers most of the areas of health, education, public works, transport, telecommunications, energy and water and agriculture. Last year, Angola became China’s largest supplier of oil, ahead of Saudi Arabia.A lesser known fact is the role played by Portugal, as well as its companies, in boosting the China-Angola relationship. In 2004, the year the US$2 billion credit line from Eximbank was launched for the reconstruction project in Angola, Beijing “sounded out the Espírito Santo group about its plans for Angola, and then attracted it, via a subsidiary Escom, to have an active role in these plans,” said the Luso-Angolan editor of Africa Monitor, Xavier de Figueiredo.“In March 2004, a delegation headed by the director-general of Sonangol, Manuel Vicente, and which included an economic government advisor, Carlos Rubio, as well as two senior officials from Escom, Hélder Bataglia (Portuguese) and Eugénio Neto (Angolan), travelled to Beijing with a view to concluding the negotiations that had been underway,” he said.From this initiative two measures were born: The creation of China Sonangol International Holding Limited (CSIH), a consortium of the China Petrochemical Corporation and Sonangol, with two companies: One for production and exploration of oil and gas, between the two oil companies, and another focused on investments in the oil industry and in infrastructures, between Sonangol, Escom and Chinese companies. The joint-venture aims to invest in the oil and gas sector, especially in countries other than China and Angola, with mainly Chinese capital and Sonangol’s experience in the field. The company is currently exploring and investing in blocks in Argentina and in ultra-deep blocks in Nigeria.The plans for construction of infrastructures implemented by the consortium are construction of social housing in 17 of Angola’s 18 provinces, construction of the new Luanda International Airport (the largest in Africa), motorways, logistical bases and dams. The China International Trust and Investment Corporation (CITIC) together with China Sonangol International Holding have invested around US3.5 billion at Kilamba Kiaxi, in the company’s biggest project outside of China. This project includes construction of 700 apartment blocks, schools, commercial establishments, with access to electricity, water, gas and sanitation, and transport. It is estimated that Kilamba Kiaxi will house 200,000 people. Similar projects are planned for other provinces, in order to deal with a housing deficit, estimated at almost 2 million houses, which drives the real estate speculation seen in the country, where the purchase or rental of housing in Luanda is close to prices seen in Tokyo, London and New York.

492003-Mar 2010: Value of China-Angola Trade (billions of USD)Year Trade ValueExports from China to AngolaImports to China from Angola2003 2,352 0,146 2,2062004 4,911 0,194 4,7172005 6;955 0,373 6,5822006 11,827 0,894 10,9332007 14,12 1,231 12,8892008 25.31 2.92 22.382009 17.06 2.38 14.6752010 (Jan-Mar) 6.30 .46 5.80Source: China Ministry of Commerce (2003-2007)China General Administration of Customs (2008-2010)According to the Angolan national private investment agency, ANIP, the number of private Chinese companies installed in Angola rose 93 percent from 2006 to 2007, to 31 companies. Some of the Chinese companies that carry out the projects contracted by the government end up settling in the country, due to the return achieved on investments. According to the Centre for Chinese Studies the keyword in this relationship is “potential.” “Angolan economic progress continues to be sustained by a stable policy and effective government management. China has recognised this potential and is investing accordingly. This investment has turned Angola into China’s biggest partner in Africa and its investment will continue to rise,” said Martyn J. Davies, executive director of the Centre for Chinese Studies:

50Nowadays, more than 50 large Chinese companies operate in Angola including Sinopec, China International and Trust and Investment Corporation (CITIC), Sinohydro, China Ferrovia Grupo 20, Dongfeng Nissan, China Road and Bridge Corporation (CRBC), Wuhan Iron and Steel, China General Machinery and Equipment Import and Export (CMEC), SinoMach, Jiangsu International and China Railway Construction Company. These companies carry out large construction projects across Angola’s 18 provinces, in all areas. According to the Angolan Centre for Strategic Studies (CEEA), the need to develop the provinces is also due to a pressing need to decongest Luanda. “Benguela will be the logistics centre and Huambo the agricultural capital of the country.” Thus efforts to develop the entire national territory are visible. Amongst the most important projects is the reconstruction of the Benguela railroad, and later the Luanda/Benguela/Moçâmedes lines, a project estimated to cost US$4 billion. The Benguela railroad links the port city to the country’s interior and may continue on to the Democratic Republic of Congo and Zambia, thus becoming a transcontinental railway. The new project was born Over 2,500 kilometres of railroad are to be rebuilt along what was considered to be the “main artery” of colonial Angola. The Benguela-Luau section covers 1,434 kilometres and has 70 stations; the Luanda section is 473 km long and has 16 stations whilst the section running between Moçâmedes and Namibe covers 800 km with 16 stations, according to China International Fund Limited. Angola’s railroads are part of plan that aims to connect them to Zambia, Namibia, South Africa, Zimbabwe, Mozambique, the Democratic Republic of Congo and Tanzania.The campaign pledge of President José Eduardo dos Santos to build 1 million houses across the country has made construction of housing a priority for the government. There are plans to build some 500,000 houses over the next two years. In all the provinces there are projects in the Education sector, such as polytechnic institutes, the new project for Public Universities, expanding the Agostinho Neto University, the creation of large hospitals, hotels, primary schools and health clinics, across Angola’s provinces. “Made to bear hardships”João Li, one of the first Chinese businesspeople in Angola (since 1996) and Assistant Director of the Chinese Chamber of Commerce in Luanda, says China’s success in the country is down to a culture of hard work. “”It is our national character and is forged by nature and by the climate (...) In Africa people can go naked all year. We are made to bear all kinds of hardships. Look at our rivers (...) they are raging; floods kill hundreds of thousands of Chinese. Here, the rivers seem to be asleep. And what about our climate! We have cyclones, storms, tsunamis, snow. Here things are peaceful,” said Li, who owns an import-export company, in the recent book, “The Chinese Safari.” “You have to invest a lot, but the margins are good. Very good. Most of the Chinese businessmen in Luanda are rich. And when I say rich, I don’t mean one or two million.” The possibility of getting rich makes Africa the new destination for the Chinese diaspora, “the biggest and richest” in the world. According to the Angolan immigration and border services there are now 40,000 Chinese in Angola, but it is estimated that the real total may be around 100,000.in 1988 as a way of transporting wealth from the interior to the port of Benguela.

51The review of the General State Budget, due to a drop in oil revenues, will affect some projects, although not in agriculture, according to the CEEA. The consensus is growing that agriculture is one of the most important areas for development in the country. China announced the concession of US$2 billion to support agriculture in Angola. “The projects in this sector remain practically intact,” the Centre said. The report from the Angolan Finance Ministry on the reconstruction projects funded by Chinese credit lines shows that, in agriculture, the projects being completed include irrigation and land portioning in Waco-Kungo, Luena, Caxito and Ganguelas, carried out by Sinohydro. In fisheries, during 2009, ships, patrol ships, tugs and over 2,000 canoes are due to enter the country. According to José Manuel Cerqueira, an Angolan economist and director of the “Projecto Aldeia Nova” programme for agrarian development in Kwanza Sul province, if Angola is successful in outlining its objectives, China could be a great partner for the country. “The Chinese adapt themselves to the situation, as was the case in America, Australia, and New Zealand so it can be here.” “If China is successful, Africa could be, in 20 years’ time, not only a partner, but also a competitor, in the global development plan,” the economist said.

52In Public Works, work is underway to finish the Palace of Justice, at universities such as the Angolan Methodist University and the university campus in Luanda, the reconstruction of the Kifangondo-Caxito-Uige-Negage road including roads within these cities, as well as the reconstruction of four bridges and construction of three. The construction and equipping of hospitals in Malange, Benguela, Lubango, Huambo and several Health Centres is also underway. For the Education Ministry construction of schools, polytechnic institutes, universities and teacher training institutes is underway in several of the country’s provinces. None of the projects is completely finalised because they depend on complementary activities and the development of support infrastructures, also being carried out in the same cities, such as electricity networks, sanitation and telecommunications and access roads. There are also protocols set up to send teachers and academic specialists, mainly from Portugal and Cuba, to Angola in 2009.The progress of telecommunica-tions is also an important part of the development strategy outlined by the Angolan authorities. An example of this is the recent an-nouncement of construction of An-gola’s first satellite, with the aid of a Russian partnership. Another large project in this sector is the laying of around 7,000 fibre optic cables to Angola’s 18 provinces, launched in order to switch the country’s elec-tronic telephony and telecommuni-cations network to a digital system. In the telecommunications sector, the Eximbank credit line includes laying 3,569 kilometres of fibre optic cables with the use of new generation networks that cover 141 locations in 14 provinces (Bengo, Bié, Kwanza Norte, Kwanza Sul, Luanda, Malange, Moxico, Huambo, Huila, Cunene, Uíge, Zaire, Ben-guela and Cabinda).In the energy sector, projects are underway such as the expansion of the electricity grid in Luanda, reconstruction of the Cazenga-Quifandongo section, expansion of the electricity supply network in the cities of Huambo, Caxito, Catete and Uige, reconstruction of the sewage system, as well as other activities in the area of sanitation. The second phase of execution of projects includes reconstruction and expansion of networks in Lunda Norte and Lunda Sul provinces, Luanda (phase III) and Malange, with eight projects concluded in this area.

53Due to an extension of its credit, the Eximbank is now clearly the foreign financial institution that is most heavily involved in public works in Angola. Alongside this, large foreign companies have also taken on important contracts. Amongst those from Brazil is Odebrecht, which is responsible for the Kapanda hydroelectric facility. Portuguese companies such as Mota-Engil, Somague, Soares da Costa and Teixeira Duarte have big contracts With oil exploration accounting for 80 percent of Angola’s exports and 57 percent of its GDP, this drop means the loss of 50 percent of oil revenues this year. “The Finance Minister announced a 40 percent cut in current revenue,” which means that progress of social projects underway will slow. The current financial climate has led to a new phase in the relationship between the countries. China’s exposure to the costs and risks of investing in Angola has made the Asian giant more cautious in its approach. According to researcher, Lucy Corkin, from the Centre for Chinese Studies, “although Luanda is being inundated with Chinese capital, this is predominantly as a result of loans paid for in oil, rather than investments in new projects.According to the International Energy Agency, in 2008 Angola was the second-biggest supplier of with Angola’s National Roads Institute. The Angolan market seems big and attractive enough to guarantee work for them all.According to the Centre for Chinese Studies, in the current context of economic crisis China will boost its relationship with the country, taking advantage of the price of oil and the stepping away of competitors in the face of financial uncertainty. “In April China imported an extra oil to China, behind Saudi Arabia. Angola exported an average of 598,000 barrels of oil a day, which accounts for 16.7 percent of China’s oil imports and 32 percent of Angola’s oil exports. Large Chinese oil companies are in the frontline for the next round of oil block auctions in Angola, particularly in the case of Sinopec in partnership with Sonangol. The tender is now awaiting a rise in the price of oil per barrel that will make it possible for Luanda to get a greater return. 1.8 million barrels of oil for its strategic reserves, half of which are believed to have come from Angola.” This move by the Chinese government is an endorsement of African markets, which are more vulnerable than those of the Middle East, and usually more conservative in times of crisis in terms of oil prices, which fell from US$147 per barrels to less than half this figure.

54In December 2008, the Angolan president travelled to Beijing for the second time in five months (despite his absence at the China-Africa cooperation summit in December 2006) to secure China’s financial support in times of financial crisis, which reflects the fact that despite Luanda being determined to diversify its economy and its trading partners, in times of financial instability China is considered to be its safety net, particularly because Angola’s access to foreign investment is limited. High demand and low supply makes Angola a fertile area for private investment. Although natural resources continue to be the biggest attraction of the Angolan economy, other areas are beginning to flourish, ranging from agro-livestock to new energies. In order to create a sustainable economy, the Angolan state has sought to diversify its sources of revenue and its economic partners.The refurbishment of infrastructures makes the free circulation of people and goods possible, launching small retail businesses, access to health and education, decongestion of cities, restoration of the industrial sector, tourist development and creation of employment in general. Augusto Albuquerque, former commercial attaché to the Angolan embassy in China, who currently Agriculture, new energies and trade on the investment routehas the same position at the Angolan embassy in Lisbon, notes opportunities in fishing, agriculture and natural resources. His opinion is shared by Carine Kiala, of the Center for Chinese Studies in South Africa, who noted that it was necessary to develop a local workforce and support certain institutions for multilateral growth. Similarly to other African countries such as Zambia and Mozambique it is possible to foresee China’s presence in the agricultural sector.ANIPThe Angolan government charged the National Agency for Private Invest-ment (ANIP) with managing proposals of up to US$5 million (a higher value has to be approved by the Council of Ministers). It is also responsible for explaining the tax incentives promoted by the government in order to restore the country’s industrial sector. Investment can be free from indus-trial tax, for eight to 15 years, based on the choice of certain provinces.15 years - investors are exempt from paying tax on capital application if they invest in the provinces of Huambo, Bié, Moxico, Kuando Kubango, Cunene, Namibe, Malanje and Zaire.12 years – For investments in the provinces of Kwanza-Norte, Kwanza-Sul, Bengo, Uige, Lunda Norte and Lunda Sul, and the interior municipalities and Benguela, Cabinda and Huíla.8 years – For investments in the provinces of Benguela, Cabinda and Huila, as well as the municipality of Lobito. For an investment to be approved, the body responsible for private invest-ment in Angola enquires about the nature of the project, the capital to be invested, the description of the project, description of objectives, including social goals, origin and application of funds, the work force and tax com-pliance, amongst other requirements. According to researcher, Loro Horta, food production as a way of supporting demand from the population is one of China’s main interests in Africa. Thus, the central region of Angola takes on a strategic role. The China Development Bank this year announced a US$2 billion credit line for agricultural development in the country, particularly for production and processing of grain, the staple food of the Asian giant.

55With a population of 16 million people for an area of over 1.24 million square kilometres, Angola “offers great opportunities to China,” said Horta. These include meat production, as well as luxury foodstuffs that are in vogue in China such as coffee, spices and tropical fruit, he noted in a recent report entitled, “Food Safety - Africa, China’s new Rice Bowl.” “Considerable attention has been paid to Chinese interests in oil and other African mining resources, but it is perhaps in agriculture and food processing that China will have a more significant impact on the continent’s future,” the academic said. According to José Manuel Cerqueira, an Angolan economist and director of the “Projecto Aldeia Nova” programme for agrarian development in partnership with Israel in Wacu-Cungo (Kwanza Sul province), “it will certainly be in agriculture that this relationship can have greater projection, in fact not only for China, but for the whole world.” “The price of food is rising, the crisis has only served to disguise this and with the environmental impact that will be seen over the next few years, it will be Africa, with its extensive virgin territory and favourable climate, that will help to balance food production and consumption.” “Angola should make use of its comparative advantages, or rather, the sector that develop the processing of raw materials, development of a chemical industry, of cotton, sisal, talc, in fact an number of possibilities,” said economist José Cerqueira. Development of the industrial sector in Angola is dependent on creation of infrastructures. However, Angolan industry will initially be launched to cover its most basic needs: Construction materials, processing of raw materials and transport. Trade, mainly in the country’s interior is always considered to be a safe investment, in all areas, particularly transport vehicles, ranging from bicycles to trucks, agricultural equipment, restaurants, services and information technology. It is a choice area for small and medium-sized Chinese investors in Angola, and you can find small Chinese retail outlets in many areas of the cities of Luanda, Benguela, Huambo and Lubango. Teaching and related areas, rural and mass tourism and sports promotion are also perfect opportunities for agents of these businesses, as can be seen in the Angolan government’s preparation to host the African Nations Cup in 2010 (ANC10). Currently underway is the construction of stadiums, hotel units, reconstruction of access roads, hospitals, transport, restaurants and retail in all nearby areas. “Everything that is related to large crowds and with them extensive consumption of perishable goods creates jobs and thus development,” explained Peregrino Chindondo, of the Methodist University and Angolan Armed Forces officer.Huambo province is being re-born as “Angola’s green province.” The agricultural sector is becoming key to the development of the central plateau area and, because of this the Agrarian Institute was opened in the city. In this sector, another large project in the area of agricultural education is José Eduardo dos Santos University. Together with the agro-industrial hubs there are plans to create conditions for production, storage and industrial transformation of food goods. One of the agro-industrial hubs that is in operation is Kapanda, in Malange province, consigned to the Pungo Andongo ranch. At least four more projects are outlined for the short term in the provinces of Bié, Bengo, Kwanza Norte and Malange.

561. Bengo Bengo-Kissama bridge "Water for all" project", Caxicane housing project, Cabala-Cumucua bridge, industrial park for 100 factories, development of electricity grid, 200,000 social houses in Ambriz (with schools, health clinics and retail establishments), refurbishment of abandoned ranches, 4.,100 houses in Dande municipality, markets, refurbishment of schools and public roads, restoration of the 230 National Maria Teresa-Saurimo road (1,400 km), Polytechnic Institute, new generation telecommunications network2. Benguela Benguela Stadium (ACN10), restructuring of Lobito market, Benguela-Lobito road, Benguela-Dombe Grande Namibe road, Benguela-Huambo-Sonaref 260 National road, Benguela Hospital, Institute of Administration and Management, new generation telecommunications network3. Bié Kuito-Kukema road "Water for All" programme, four new medical posts, water collection and treatment system (Kuito), equipping of the Andul Agrarian Institute, Bié Polytechnic Institute, new generation telecommunications network4. Cabinda Reconstruction of 70 km of road in Alto Sumbi with 24 bridges, Polytechinc Institute5. Cuando Cubango Cuito Canavale-Menongue road, 2,000 social houses, schools, hospitals, roads, markets, administrative areas, libraries, Cuito Canavale Park and Museum, Institute of Administration and Management6. Kwanza Norte Refurbishment of Hotel Bragança (Ndalatando), Government Palace (Ndalatando), municipal hospital, dam, irrigation systems for agriculture, expansion of Higher Education School, rebuilding of the Luanda-Malanje railroad7. Kwanza Sul Road repairs in Wacu Cungo municipality, replacement of the bridge over the Kwanza river that links the province to Kangandala municipality (Malanje), agricultural irrigation projects, new generation telecommunications networks.8. Cunene Mucavelai receiving 22 social rehabilitation projects - houses, hospitals, schools, market, primary school and hospital in Omandobe, Institute of Adminsitration and Management, new generation telecommunications network.9. Huambo "Alemanha” market - retail complex in Quissala, with 300 stalls, 5 warehouses, abattoir, refrigeration units and ice factory, University of Agronomic Sciences, central hospital, Polytechnic Institute, Institute of Administration and Management, new generation telecommunications networkLarge Chinese-Angolan projects

5710. Huíla Polytechnic Institute, secondary schools, Mocâmedes railroad, Regional Children's Home, Lubango regional hospital, Teacher Training Institute, new generation telecommunications network11. Luanda Reconstruction of Panguila and São Paulo markets, Luanda-Soyo motorway, water supply network (300 km), refurbishment of railroads, repair of six main roads, expansion and rehabilitation of Port of Luanda, restoration of electricity grid, four polytechnic institutes, three new secondary schools, Viana-Calumbo road, 32 new hotel units, university campus, stadium (ACN2010), reconstruction of sanitation networks, finishing of centre for state television production (Camama)12. Lunda Norte Rebuilding of Dundo airport and electricity grids, Polytechnic Institute13. Lunda Sul Reconstruction of markets in Saurimo and roads in the municipality, reconstruction of electricity grids, Polytechnic Institute14. Malanje Reconstruction of Massango-Kinguengue road, including two bridges over Kiquila and Mas-sanga rivers, reconstruction of Quessua Agrarian Institute, two secondary schools, three health centres, reconstruction of electricity grids, agricultural irrigation projects, Malanje Hospital, new generation telecommunications network15. Moxico Laying asphalt in city of Luena, construction of electricity grid (Luena), refurbishment of Higher Polytechnic Institute complex (Luena), Youth House (Luena), new administrative facilities (Cangamba), social project in Bundas, agricultural irrigation, Institute of Administration and Management, new generation telecommunications network16. Namibe Municipal Hospital, city roads in Namibe and Tombwa, two secondary schools, Polytechnic Institute, Institute of Administration and Management17. Uíge Section of Zombo-Negage road as far as Kuimba (Zaire), city roads in Uíge, modernisation of the Damba aerodrome, Polytechnic Institute, Agrarian Institute, secondary school, new generation telecommunications network18. Zaire Construction of port, Technical Nursing School, health centres, low income housing, road to Luanda, Angola LNG liquid natural gas processing factory, Soyo gas-fired power plants, Institute of Administration and Management, new generation telecommunications network

58"China is very welcome!"MOZAMBIQUECapital MaputoOfficial language PortugueseCurrency MeticalTime zone UTC+2Telephone country code +258Internet country code .mzArea 801.590 Km2GDP USD 9.1 billion (2008)Population 22, million (2008)

59MOZAMBIQUEOn both sides China-Mozambique relations are nowadays considered to be "excellent." The Mozambican authorities took part in the first Forum for Economic and Trade Cooperation between China and the Portuguese-speaking Countries in Beijing in 2003 and in its second edition in 2006. The President of the PRC, Hu Jintao visited Mozambique in 2007, when he announced a debt pardon for Mozambique of US$20 million. In the area of cooperation the two countries signed a Trade Agreement and an agreement for Promotion and Mutual Protection of Investments in 2001, establishing a Joint Economic and Trade Commission.Statistics from the Chinese embassy in Maputo show over 30 projects carried out in Mozambique. "The construction sector is the highlight of China's involvement in economic development, with structural effects and without the conditions of some Western development packages," said Mário Machungo, noting that "a lot of equipment, previously imported from European markets or other parts of the world have been replaced by imports from China." It is estimated that by 2008, the around 50 main Chinese companies created around 11,300 jobs in the agricultural, agri-industrial, fisheries, industrial and construction sectors. The growth trend in trade sets up good prospects for the future. Mozambican exports to China have risen significantly. According to the Chinese embassy in Maputo, trade between China and Mozambique in 2006 totalled US$210 million, as compared to US$165 million in 2005 and US$119 million a year before that. By 2007, trade had risen to US$284 million, or eight times the figure for 2001, and in 2008 rose to US$346 million. In 2007 the Chinese set up the Chinese Chamber of Commerce in Maputo, which, according to the ambassador, serves as a link between Chinese and Mozambican businesspeople. The community is generally well-accepted in Mozambique Despite occasional problems, there is no lack of praise: They say that the Chinese work as hard as Mozambican citizens, in all weathers, walk side by side with the population on dirt or paved roads, in cities, in suburbs, in the interior... they are in Mozambique to work. The general public is impressed with the Chinese capacity for work.

60Over the last seven years China has risen from 26th to 6th place by 2007 and in 2008 rose to second place in the list of the biggest international investors in Mozambique. "We only have to look at the balance of payments; it leans more towards China and that doesn't just happen with our country, even in Europe or the United States. (...) what we aim for with China is to make the best of cooperation with them, whether from a product point of view, or fundamentally to try to take best advantage of the experience, which is the greatest focus of this relationship," said Banze.2002-Mar 2010: China-Mozambique trade (millions of USD)Year Amount of TradeExports from China to Mo-zambiqueImports to China from Mo-zambique2002 48.49 25.93 22.562003 71.71 45.03 26.682004 119.44 75.15 44.292005 165.01 91.48 73.532006 207.74 127.97 79.772007 284.11 160.22 123.892008 414.32 288.41 125.902009 516.68 339.13 177.552010(Jan-Mar) 134.59 99.62 34.96Sources: Chinese Ministry of Commerce (2002-2007)China General Administration of Customs (2008-2010) "China is very welcome" said the deputy Foreign Affairs Minister, Henrique A. Banze. Mozambique's interest in exploration of raw materials is guaranteed, he said. "There are no reasons for alarm, in all agreements there are clause that must be respected and our main strategy in these activities is to put the interest of Mozambicans first."

61Amongst the agreements that Mozambique has with China, he added, "there is a list with no limitations, of products that can be sent to China, and to which China is receptive. What the Mozambican government is doing is, without doubt, exports, an important factor of the robustness of any economy, of any country." Mozambique exports to China products such as wood, soy, sesame and other grains. "We still do not have products in the desired quantities to export to China," said Banze. Wood is the most visible product, perhaps because it is the one that raises most questions about the environment, in the press and on the streets. "It is important to note that the first interest in environmental and forest conservation is of the Mozambicans, because this is a resource that belongs to the Mozambicans. The government has made the decision that whatever the natural resource it is owned by the Mozambicans first of all, and secondly, that it must be sustainably explored and, whenever possible value must be added to it." In relation to wood, the decision is to ensure that it is processed, whenever possible, in the country, which brings two advantages: "Giving it added-value, whilst providing greater income and new jobs." Financial protocols are also one of the main pillars of China-Mozambique relations. Amongst the most recent (March, 2009) is the Agreement of Intention between Banco Internacional de Moçambique (Millenium-BIM) and the Bank of China (Macau), as part of a business mission by China to Mozambique. "BIM and the Bank of China (Macau) agreed to cooperate to provide a service to transfer funds between Mozambique and China, in a quick, efficient and secure way, promoting and encouraging exchange and development of trade relations that benefit companies and individual residents in both countries. The agreement is expected to be extended to the investment banking area of BIM, which will be a privileged way of channelling information and creating openness to investments between businesspeople from Mozambique, Macau, Hong Kong and China," said Mário Machungo, chairman of the board of BIM, of Portuguese group Millennium bcp. BIM's main aim in the context of China "is for Chinese businesspeople/businesses that plan to invest in Mozambique to have access to banking operation and services in the bank's network whilst also allowing access to the financial flow of trade and investment between the two countries," he said. Machungo noted the importance of the creation of Forum Macau, not only for bilateral trade, but also for multilateral trade. "The trade target between China and CPLP countries will be achieved. (...) Trade between China and the CPLP countries accounts for just 1.3 percent of China's total trade, which is evidence of enormous potential for growth."

62Mozambique has one of the highest potentials for electricity production in southern Africa, and it is estimated that the country could produce up to 12,000 megawatts of hydroelectric power. Reaching this level of production, explained Mozambique's Energy Minister, Salvador Namburete, "requires huge investments, of over US$10 billion, amounts that the country does not have. This is the reason for the investment campaigns carried out inside and outside the country to attract national and foreign investors." Nowadays, the country has just 12 dams, which is enough for national demand, but inadequate for facing the effects of the droughts and floods to which the country is susceptible. The Zambezi valley is considered to be the country's biggest sources of power production. It has the most significant water reserve in the southern region and the continent's biggest source of hydro energy, located in Cahora Bassa. It is estimated that the valley, with an area of 230,000 square kilometres, has capacity for 20 dams. Geocapital, the Chinese-owned holding in which Macau magnate Stanley Ho is one of the main shareholders along with Portuguese businessman Jorge Ferro Ribeiro, has plans to develop the Zambezi valley, namely in agriculture, biofuel production and electricity. In 2005 Geocapital signed a deal in Macau, with two Mozambican companies: Sociedade de Gestão Integrada de Recursos (Sogir) and Mozacapital, for the creation of Zambcorp, a partnership for development of the Zambezi valley. As well as this, the Macau holding company was also involved in the setting up of Moza Banco, in which it has a 49 percent stake, along with Moçambique Capitais (51 percent), a company made up of over 216 Mozambican investors. The chairman of Moza Banco, Prakash Ratilal, the former chairman of the Bank of Mozambique, noted Moza Banco's interest in investments in the Zambezi valley and confirmed that agri-industry was one of the areas to which the bank will pay most attention. "The valley has dormant potential," said minister Salvador Namburete, noting that one of the benefits of the Chinese presence in the Zambezi valley was that it could "bring more partnerships with Mozambican entities for the actual production of goods that the country needs." China showed its interest in acquiring a stake in the Cahora Bassa dam (HCB), after the transfer to Mozambique in 2007 of the majority stake held by Portugal in the hydroelectric facility. The clear interest of the Chinese in the Zambezi valley increased in 2006 when state bank Export-Import Bank of China (Eximbank) provided the Mozambican government with a loan for construction of the Mphanda Nkuwa dam. The construction design for this mega-project is underway, in the hands of Brazilian construction company Camargo Corrêa and its Mozambican partners, Grupo Insitec.Mozambique seeks Chinese infrastructures and technology

63Construction is due to begin in 2011 and the project is scheduled to be built over four years. The new dam will be located some 60 km downstream of HCB and will have a production capacity of up to 1,350 MW. HCB has a production capacity of around 2,075 MW and projected work on one of its power plants will add a further 1,000 MW. “HCB’s current reserves for Mozambique’s needs is of around 400 MW, which only meets the needs of rural areas, but does not ensure the operation of large industrialising projects in the country,” Salvador Namburete explained. The future facility is expected to sell surplus electricity to other countries in the Southern African Development Community (SADC), which could contribute to reduce the effects of the energy crisis that the region has recently faced. “Mozambique is, in the SADC region, the country that has conditions, via the development of projects such as Mphanda Nkuwa and others (clean energy), to provide national and foreign investors with quality energy at a competitive price.” The Eximbank is also expected to fund construction of the Moamba dam, on the Incomati river 80 km from Maputo, which is expected to cost some US$320 million.A community with deep rootsEven during its time as a Portuguese colony, Mozambique welcomed Chinese immigrants. According to Portuguese anthropologist Eduardo Medeiros, the first 30 Chinese arrived under contract, in 1858. From 1881 this recruitment became systematic and, slowly, the Chinese community and its descendents was formed. In 1922/23 the Chinese Club was set up in Beira. According to the Mozambican researcher from the Institute of Social and Economic Studies in Maputo, Sérgio Chichava, the flow of recruitment only stopped in 1975. It is calculated that this recruitment had led to a resident population of almost 20,000 Chinese. With the exodus that followed decolonisation and Mozambican independence (1975), the size of the community fell.

64Alongside this, China has sought out large areas to establish agricultural and livestock projects, managed by the Chinese, particularly in the Zambezi valley, to the north, and the Limpopo in the south. In 2008, the Chinese government pledged to invest US$800 million in modernizing Mozambican agriculture, with the goal of boosting rice production from 100,000 tonnes to 500,000 tonnes a year over the next five years. Over 100 Chinese agricultural experts are in Mozambique, including teams from the Hunan Hybrid Rice Institute. Construction of irrigation networks and channels, including a large canal linking Lake Malawi to the rivers and dams of Mozambique, is also planned. According to specialist Loro Horta, son of the East Timor president, the memorandum of understanding of June, 2007, outlines that 3,000 Chinese set up in the regions of the Zambezi and Tete to manage agricultural facilities.The Eximbank recently granted the Office for the Zambezi Region Development Plan (Gpz) a loan of US$50 million for agricultural projects in the Zambezi valley. Around US$20 million of the Chinese loan is earmarked for importing agricultural equipment, specifically tractors and trucks that will be sold by Sovale, a company owned by the Gpz and Sogir. The remaining US$30 million will be used for three industrial units located in Tete, Zambézia and Manica, in central Mozambique.The Zambezi valley is the richest agricultural region in Mozambique, with conditions to respond to the nation's needs for vegetables, grain, oil-producing plants, textile fibres, renewable forests and other products. With Geocapital's project, the Zambezi valley will start producing biofuel from jatropha, a plant also known as the physic nut, which is not edible, common in Africa and in America, as of the end of 2009, beginning of 2010. Geocapital plans to invest around US$40 billion over the next ten years in Angola, Mozambique and Guinea Bissau. The production projects follows the philosophy of keep the "entire value chain of the programme," in the countries, which implies "construction of refining industrial units," adapted to the size of the plantations set up.

65Portuguese-speaking countries increasingly presentBanking is one of the areas in which Portugal excels in its link with Mozambique. Recently the two countries signed a memorandum of understanding for a 300 million-euros credit line, "for funding infrastructure investment projects in Mozambique, with the participation of Portuguese companies, in the areas of energy, transport and communications, as well as in the health, education and training sectors." In 2007 a cooperation agreement was signed by the then Foreign affairs ministers, Alcinda Abreu (Mozambique) and João Miranda (Angola) that established the annual consultation mechanisms for their bilateral relations. As well as bilateral cooperation, Angola and Mozambique also cooperate on a regional level via the Southern African Development Community (SADC), with its 14 members. Amongst other areas such as education, health and agri-livestock, Brazil is planning two ambitious projects in Mozambique: Construction of an anti-viral medication factory and a gaming equipment factory, the latter in a Mozambican detention unit, with the aim of developing social projects to complement elementary and secondary education. Brazil is one of the countries with ambitions in the Zambezi valley; construction company Camargo Corrêa is a partner in the project to build the Mphanda hydroelectric facility. The future development of the Zambezi valley and actual expected production, will eventually result in other projects such as construction of ports, roads and other facilities, that can improve transport and export of the raw materials. "Conceptually, there is no doubt that those facilities are indispensable for greater profitability of investments," said Energy minister, Salvador Namburete. "All the initiatives in this direction are welcome, whether they come from Chinese investors or from other places."At the beginning of 2009 the Mozambican capital played host to two seminars for Mainland Chinese and Macau businesspeople, about investments in Mozambique, which was attended by new Chinese businesspeople mainly from Hubei province, seeking new business opportunities in partnership with Mozambicans. Around 20 Chinese companies in February presented 30 proposals for investments in solar energy, air conditioning, wood processing, construction and other areas, some of which have been submitted for consideration by the Mozambican authorities. "Setting up Chinese industries in the country and cooperation in technology transfer is our expectation for the future," noted Mário Machungo. The Mozambican government plans to build an industrial and scientific park, with China's help.Wang Cheng An, a Ministry of Commerce official and responsible for boosting economic cooperation between China and the Portuguese-speaking countries, in 2006 told Macau magazine that one of China’s main projects in Mozambique was the construction of a regional supply and distribution post for Chinese products to the whole of Southern Africa, specifically medication and utensils for traditional Chinese medicine, consumer goods and textiles.

66Amongst its strategies to attract foreign investors, Mozambique has carried out some legal reforms in order to make the process more attractive. The approved reforms include not demanding minimum initial capital for setting up a company. These days it is possible to open a company in just a few hours, under the terms of the new Commercial Code. In 2007 the new Labour law was translated into Chinese. “The aim is to make this legal instrument available to all Chinese citizens that are or that will come to work in Mozambique.” In the construction sector, the modernisation and expansion of the Maputo International Airport is already underway, which is an investment of US$75 million, in the hands of Chinese company Anhui Foreign Economic Construction Corporation (AFEC), which si also involved in work to expand and modernise the Vilanculos airport, estimated to cost US$15 million, in Inhambane province, in the south of the country, and which is an excellent tourist destination.Another important project is the construction of the new National Stadium, with capacity for 42,000 people, in Maputo, which is due to be inaugurated before the end of the year, in time for preparation for the football world cup in neighbouring South Africa, of which Mozambique hopes to take advantage. The most luxurious five-star hotel in the Mozambican capital, Hotel Polana Serena, is being modernised by Sogecoa Moçambique, which has carried out other large construction projects in the country, owned by businessmen Jiang Quingde and Jiang Zhaoya. The modernisation of the hotel, owned by the Aga Khan Foundation for Economic Development, is expected to cost around US$24 million. The construction, said Henrique Banze, "is the biggest essence of China-Mozambique cooperation and has been carried out at a very comfortable cost to Mozambique, some of it at highly subsidised interest rates." "This relationship has made it possible for us to have a number of facilities that otherwise we would not have today; we would have got them, but it would have taken time and likely in other conditions," noted the Mozambican deputy foreign minister, adding that the projects had had both a commercial and cooperative basis. "The area of commerce is increasingly attractive to single companies, in construction of infrastructures and real estate and construction and reconstruction of roads, for businesspeople from China, Mozambique and of other nationalities. They are very welcome; and anyone else who wants to invest and contribute in Mozambique is equally welcome." Chinese company Construção CCM is building a six-storey building in the Mozambican capital for Jossefate Samora Machel, brother of former president Samora Machel. The building is expected to house the Attorney General's Office, the new Palace of Justice and Central Office for Fighting Corruption. Other important investment from China approved by the Investment Promotion Centre (CPI), in Maputo, include the cement factory in Marracuene district (US$90 million), a project for production of decoration materials in the capital (US$72 million), a project in the agricultural/agri-industrial sector in Sofala province (US$12 million) and the textile industry in the city of Matola (US$10 million). In the first four months of 2009, five Chinese projects were approved by the CPI, to a total value of less than US$2.5 million. From 2004 to 2009, the value of approved projects totalled US$213 million.

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68From small retailers to Chinese economic areaCAPE VERDE

69CAPE VERDEInvestments by small Chinese businesses in the archipelago have been essential in driving economic relations between China and Cape Verde. The first Chinese store opened in 1995, in the city of Praia, attracting many others in the years that followed. It is estimated that in 2009 there were 300 Chinese stores in Cape Verde, particularly concentrated in the islands of Santiago and Sao Vicente. The success of the stores brought family members and other small Chinese investors to the archipelago. Restaurants, Chinese medicine and import and export businesses were the basis for the first economic contact.A study from 2005, by investors Heidi Ostbo and Jorgen Carling, analysed the appearance of the retail businesses, of the well-known Chinese stores. “Only with the rise in number of stores at the end of the 90s was there a significant rise in the number of Chinese residents.” Cape Verde’s conditions in the 1990s attracted other small investors. Political stability, safety and high prices. “Purchasing power was relatively high due to remittances that many Cape Verdeans receive from family members that have emigrated,” the study explained. Products from China were sold at a low price, even lower than products from Portugal and the European Union. “Each Chinese store sells clothes, shoes, travel accessories, knick knacks, kitchen utensils and photograph frames.” Increasingly, these stores pushed local retailers to adapt to the new situation of supply and demand, thus having some impact on the Cape Verdean retail community.There are an increasing number of Chinese migrants on the archipelago, most from the Wenzhou region, in the south of Zhejiang province, near the southern coast of Shanghai. The impact on Cape Verde’s society and economy has been progressive, with not only local effects, but also amongst the Chinese migrants themselves. At the moment the high number of stores and the change in supply and demand has saturated the market. Although this is currently clear from the approximate number of Chinese stores in Cape Verde, it is important to note the importance the small Chinese investors had in calling attention to the country’s potential. Capital PraiaOfficial Language PortugueseCurrency EscudoTime Zone UTC -1Telephone country code +86Internet country code .cvArea 4,033 Km2GDP USD 1.5 billion (2008)Population 500 thousand (2008)

70Adapting to Cape Verde’s advantages and exploring methods of cooperation have been the main aims since the signing of an agreement to encourage investment, in April 1998, around two decades after diplomatic relations were established between the two countries. A year later, in May 1999, a commercial and economic cooperation agreement was signed. “The Cape Verdean economy has to make use of its greatest potential in human resources, as it does not have that potential in natural resources. It has to put itself forward as a services economy, as a platform for the economies around it,” said Jorge Duarte, chief executive of Tecnicil Imobiliária, a real estate company and one of the largest private groups in Cape Verde. Summarising the current state of the Cape Verdean economy in this way also provides a summary of China’s approach since the end of the 1990s.China has invested, since then, in construction of state infrastructures. The Government Palace, the National Library and the National Assembly (parliament) are just some of the projects. China also financed and built the Poilão Dam, the first in Cape Verde, on Santiago Island.There are many sectors in which the Chinese government has provided aid to the archipelago. As well as construction of infrastructures, investment has focused on the fishing industry, the port sector, as well as education, tourism, telecommunications, transport and energy. Alongside this, China is involved in Cape Verde’s financial sector and provides concessional loans.Since 1996, China has accepted Cape Verdean students to study in Chinese universities. Between 2005 and 2006 some 10 students were sent, between 2007 and 2008 this number rose to 41. Agreement in the area of cooperation and culture, particularly in higher education, has been one of the partnerships that currently allow for exchange of Chinese and Cape Verdean students.Poilão, Cape Verde’s first damHanded over to the Cape Verdean government in May, 2006, the dam is located in the Ribeira Seca hydrographical basin and has a storage capacity of 1.2 million cubic metres of water to irrigate 65 hectares of land. It is 26 metres high, 15 metres long and the reservoir has a capacity to store 1.7 million cubic metres of water. The construction is part of the Economic and Technical agreements between the two countries, and the project’s value was some 3.5 million euros (380 million Cape Verdean escudos). The project brings together power generation with the possibility of modernising agriculture and combating desertification.

71In the health sector, construction and improvement of facilities has been of particular significance: The Chinese government was responsible for construction of the operating theatre of the infirmary of Agostinho Neto Hospital, where other improvements were made, as well as setting up a residency for Chinese doctors. As it is a more recent focus, construction of facilities is not the only Chinese involvement in the Cape Verdean health sector. In 1983 a protocol was signed to send Chinese medical teams to Cape Verde, with the initiative starting in 1984. At the moment eight medical teams are regularly sent to Praia Hospital. The project for construction of a cement factory in Santa Cruz, on Santiago Island, is a large investment agreed in November, 2006, by the two countries. The factory is likely to be placed in the hands of the China Building Material Industrial Corporation for Foreign Econo-Technical Cooperation (CMBC). The factory will be supplied by limestone quarrying - by a Chinese company - on Maio Island. This facility, which has Eximbank as a potential partner, may make it possible for Cape Verde not only to have a domestic supply as investment in construction grows, but also to export cement. In the first quarter of 2009, cement imports into Cape Verde accounted for 4.3 percent of total exports, according to figures from Cape Verde’s National Statistics Institute (INE).José Maria Neves, the Cape Verdean president, in July 2007 noted the various sectors that were the targets of modernisation processes, “roads, ports, airports, electricity, water, sanitation and telecommunications.” China has invested in almost all these areas. Electronic governance is yet another highlight, with funding from China’s Eximbank, which thus works closely with the Cape Verdean state on its reforms. In the same year, China pardoned a debt of 30 million yuan (3.2 million euros) owed by Cape Verde, applying that amount to investment projects on the archipelago.

72In October 2007, China’s ambassador to Cape Verde announced negotiations between the two governments for the Island of Sao Vicente to be the headquarters of one of China’s Special Economic Areas. Efforts would begin by turning the island into a fishing supply centre, and in order for this to happen it would be necessary to invest in the port sector and fishing industry. In July 2008 negotiations continued on the special economic area. Amongst the projects carried out in this area were restructuring of the Cabnave shipyard to provide support to the Chinese sea fleet. The biggest investments that have made it possible to point to Cape Verde, and particularly to the island of Sao Vicente as a good candidate to become a Special Economic Chinese Special Economic Area in Africa?2002- Mar 2010: China-Cape Verde trade (millions USD)Year Exports from China to Cape VerdeImports to China from Cape VerdeTotal2003 41.1 - 41.12004 5.8 - 5.82005 88.9 - 88.92006 94.6 - 94.62007 45.7 - 45.72008 13.26 - 13.262009 35.4 35.42010 (Jan-Mar) 5.03 5.03Sources: Chinese Ministry of Commerce (2003-2007)China General Administration of Customs (2008-2010)Area, have been made by the Chinese government.The island of Sao Vicente, which has an area of just 227 square kilometres, has been used since the 19th century as a supply point for British ships crossing the Atlantic Ocean. The port of Mindelo is the biggest and best-equipped on the archipelago. Its capacities have been explored and renewed so that it can meet the target of becoming a centre for processing and export of fish, as well as a point of transit, supply and repair for the Chinese fleet, making it possible for Cape Verde to become an international trading platform between China, Africa and, in future, South America.

73Port management company Enapor is working on a partnership with Chinese freight company, Chinese Ocean Shipping Group (Cosco), projecting to increase cargo handled at Cape Verde’s ports six-fold by 2030. A rise in cargo traffic requires greater security and inspection of containers that pass through the ports. In January Enapor announced it was seeking Chinese investors for the project to expand the port of Mindelo on Sao Vicente Island. The call was made for investors, noting the port’s logistical capacity and competitive tariffs, the geographical location and natural conditions of the island, which could turn Sao Vicente into a sea platform for shipping and fishing. “An ideal platform for many types of ship that require logistical support: Supply, fishing freight, change of crews and naval repairs,” according to Enapor. Until the first half of 2008, total goods handled at Cape Verde’s ports rose by 16.6 percent, to 1.089 billion tonnes.Along with this, there has been a drive to privatise the Cabo Verde shipyards (Cabnave) with the support of the CNFC (China Overseas Fisheries Co.) China has a fleet of around 300 vessels in the Atlantic, which in repairs alone would revive the naval industry on Sao Vicente. In terms of the aim of setting up a processing centre for exporting fish, the port already has cold storage capacity, although it hopes to refurbish its refrigeration unit, in a partnership with Spain. Cape Verde is currently in charge of the Sub-Regional Fisheries Commission organisation that includes Guinea Bissau, the Gambia, Guinea Conakry, Mauritania, Senegal and Sierra Leone. Boosting cooperation activities between the countries, promoting common strategies, rational exploration of resources and limiting commercial fishing were objectives outlines by Cape Verdean Prime Minister, José Maria Neves at the meeting of Fisheries Ministers in December, 2008.

74Nowadays, the large project underway between China and Cape Verde are linked to Cape Verdean ports. The modernisation of the port of Mindelo includes installing scanners for containers, as well as the acquisition of better conditions to preserve and store fish. The privatisation and recovery of the naval shipyard, under discussion by Enapor and the China Overseas Fisheries Co., is inevitably associated to the final aim of transforming the port of Mindelo into a logistic platform.In the infrastructure construction sector, highlights are discussion about the new dams, after the Chinese government financed and built the first dam, although the Cape Verdean government has recently welcomed a team of Moroccan engineers charged with studying the feasibility of construction of a dam in the Santa Cruz council area. The National Stadium, the start of construction of which is due this year, and three secondary schools already under construction are just some of the latest projects. As is the expansion of Agostinho Neto Hospital, where an out-patients centre and maternity unit are being built, in order to provide better Cape Verdean health services. The out-patients centre covers an area of 973 square metres and will have 11 specialised services. The maternity building will cover an area of 2,176 square metres, with capacity for 90 beds and its own area for surgery, which will free up the general operating theatre.In the education sector, as well as construction of school, in 2009 20 higher education, post-graduate and doctorate students are due to travel to study in China. There are currently over 70 Cape Verdean students studying in China, and it is already possible for Cape Verdean students to learn Chinese at the Cape Verde Public University (Uni-CV). There are also plans to set up a Chinese school in Cape Verde, although this idea is for a later stage.In the financial sector, a loan agreement of US$12.5 million was recently agreed by the Eximbank to the Cape Verdean government. In this sector Geocapital also acquired 27.4 percent of Caixa Económica de Cabo Verde from Portugal’s Montepio Geral. Geocapital, the holding company of Stanley Ho and Jorge Ferro Ribeiro, thus became the biggest private shareholder of Caixa Económica, with state partner Correios de Cabo Verde postal service and the archipelago’s Social Security Institute.

75Portugal and Angola stand out amongst the partnersSome Portuguese-speaking countries have invested in Cape Verde, notably Portugal and Angola. At the beginning of 2008, Portuguese company Cimpor, which has a majority share in Cimentos de Cabo Verde, announced it wanted to invest 16 million euros in special cement transport ships for Cape Verde. This sector, as well as banking, is an important link between Cape Verde and Portugal and Cimpor has been on the archipelago since 2005 and is responsible for 80 percent of the cement supply, where consumption has been on the rise. Santiago is the island where currently most cement is consumed - 50 percent of the total - followed by the islands of Sal, Sao Vicente and Boavista. In Cape Verde there is also a pozzolanic cement factory owned by an Italian group, but some of its raw materials are imported. In tourism, Portugal is involved in construction of a five-star tourist resort on Sal Island, with a cost of 57 million euros. Portuguese group Oásis Atlântico already has four hotels on the archipelago (two on Sal island, one on Sao Vicente island, and one on Santiago island) and this fifth resort is due to be in operation in 2010. Recently, Portuguese oil company Galp Energia became the biggest shareholder of fuel company Empresa Nacional de Combustíveis (Enacol), in competition with Angola's Sonangol. Galp's stake rose from 33.2 percent to 45.03 percent, whilst Sonangol has a 38.13 percent share of the company. Cape Verde has also been trying to boost cooperation with Brazil. The interests of the two countries converge, particularly because of their strategic locations. The establishment of direct sea links could be an opportunity to boost economic relations.Now present in four African countries (Angola, Guinea Bissau, Mozambique and Cape Verde), Geocapital is also investing in research into biofuel production. The project is based on use of jatropha, which is abundant in Cape Verde, and has an outlined investment of around US$40 billion before 2018, expanding planting to Mozambique and Guinea Bissau.In October 2007 Cape Verde was granted the status of Approved Tourist Destination by China. Thus the road was opened up to serious investment in tourism. As well as its natural conditions, the proximity of Cape Verde to Spain's Canary Islands and the Portuguese islands of Madeira and Porto Santo is a bonus. David Chow is one of the examples of investment proposals in the tourism sector as he announced a US$100 million project on the islet of Santa Maria, near the city of Praia. The complex would include a theme park, a casino, restaurants, bars, hotels and a marina. The Cape Verde Development Corporation in 2008 signed with Cape Verde Investimentos an agreement that included construction of a tourist resort in Praia, to the value of some 150 million euros.

76A projection of foreign direct investment in Cape Verde, from the government in 2007, estimated annual growth of 40 percent in approval rate by 2011. Estimates pointed to investment of US$7.8 billion over five years, with potential to create 31,000 new jobs. Efforts to modernise the archipelago cover infrastructures, particularly programmes underway to build roads, ports, airports, electricity, water, sanitation and telecommunications. According to Jorge Duarte, "the set of infrastructures created is a result of a political will, and should have the ultimate aim of serving the surrounding communities."Humberto Santos Brito, Secretary of State for the Economy, said in 2008 in Macau that he has "great hopes" and "founded ambitions for cooperation with China." "We are determined to convert this excellent geographical position into a true competitive advantage transforming the country into an international services centre," he said. "We are ten islands located in the mid Atlantic, close to sources of strategic raw materials and large markets, and we are determined to convert this excellent geographical position into a true competitive advantage transforming the country into an international services centre. Initially, based on tourism and provision of services related to the sea and fishing and, in the medium term, creation of a transport hub for storage and distribution of cargo and passengers, outsourcing of the business process and financial services, in fact, the development of a creative cultural industry."The government also guarantees the protection of goods and rights related to investment, the transfer of dividends and profits abroad, opening of accounts in foreign currency and the right to have a workforce made up of 10 percent foreign staff.Cape Verde considers itself to be a mediator, offering an attractive environment for foreign investment, with "inviting and clear margins of complementarity." The government also guarantees the protection of goods and rights related to investment, the transfer of dividends and profits abroad, opening of accounts in foreign currency and the right to have a workforce made up of 10 percent foreign staff.The availability and high productivity of labour in Cape Verde are further reasons pointed to by investment promoters. Thus, with two industrial parks with ready and available facilities, good quality international and national airports, competitive communications and information technologies, and the availability of services for water supply, energy, ship repair and processing and storage of fish. Due to its location the country can also be a gateway to the African continent and South America. "Well-founded" cooperation with China

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78After peace, investments?GUINEA–BISSAU

79GUINEA–BISSAUInvestment in the construction of state infrastructures has been the most apparent aspect of Chinese cooperation in Guinea-Bissau. The headquarters of the National Popular Assembly, the country's parliament building, in the centre of Bissau, the 24 de Setembro National Stadium, refurbishment of the Canchungo hospital (near Bissau) and refurbishment of the military facilities and residences for Armed Forces officials are examples of infrastructures financed by China. Other projects have been proposed, following the signing of cooperation agreements between the two countries. These include projects for construction of the new Palace of Justice and the Saltinho dam, on the Geba river (200 kilometres from Bissau). In the last few years, the Chinese government has provided financial aid to several Guinean sectors. In July 2005, China supported the organisation of the 6th summit of the CPLP (Community of Portuguese-speaking Countries), with a donation of 615,000 euros. It also provided funding for the State Budget of US$1.1 million and, via a protocol, granted US$4 million for the payment of state workers. Recently it provided aid of US$200,000 to carry out the presidential elections held in July, 2009.Cooperation has been intense in the agricultural and fisheries sectors. Modernisation of agriculture may be a way of improving Guinean production, becoming an advantage not only for Guinea-Bissau, but also for China, which is a potential consumer. Capital BissauOfficial Language PortugueseCurrency West African CFA FrancTime Zone UTCTelephone code +245Internet code .gwArea 36,544 Km2GDP USD 0.4 billion (2008)Population 1.6 million (2008 estimate)

80It is thus important to create an environment in Bissau that is favourable to future investment. Not only through political stability, but also by investing in creating structural bases that may attract private investment. Firstly it is important to secure a regular supply of water and electricity. Thus China has also invested in the recuperation of electricity facilities, by installing new generators and equipment for transmission and distribution of electricity. Based on a partnership with Chinese company Western Metal Product Company (Wempco), the installation of diesel generators to provide an emergency electricity supply has been announced. The investment was seen as an opportunity for economic growth.A seminal, but interrupted relationshipEven before the independence of Guinea-Bissau, China already supported the PAIGC liberation movement. But the recognition of Taiwan (1990) meant that it took until 2002 for a cooperation agreement between the governments of the two countries to be signed, leading Guinea Bissau to once again recognise the "One China" policy. At the time there were plans to develop Guinea-Bissau in terms of human resources, in tourism, finance and environmental protection, counting on China's support. China's experience in the economic construction of Guinea was an advantage upon which the country has since relied.The telecommunications sector has also been the target of China's intervention. In 2008, the government of Guinea-Bissau announced an investment of US$50 million from China for two projects: Installation of a fibre optic network and development of electronic governance, which provides citizens with access to state services and interlinks public services.In the Education sector training grants have been set up for Guinean staff, in the areas of economics, politics, agriculture, health and education. In tourism, Geocapital was granted a concession to build a tourist complex on Caravela island, in the Bijagós archipelago, designated a Biosphere Reserve by UNESCO.

81Year Chinese exports: Chinese imports Total2002 N.A. N.A.2004 N.A. N.A.2005 N.A. N.A.2006 N.A. N.A.2008 6.12 1.24 7.372009 2.31 .16 2.482010 (Jan-Mar) 3.70 .9 2.79Source: Chinese Ministry of Commerce (2002-2007) China General Administration of Customs (2008-2010)2002- Mar 2010: China-Guinea Bissau trade (millions of USD)Chinese investment in the recuperation and construction of infrastructures is very visible. Álvaro Nóbrega, Portuguese researcher and professor at the Higher Institute of Social and Political Sciences said that China "has invested in highly visible projects," whilst more traditional partners, such as Portugal, "spread themselves over a lot of areas," and are not apparent to the Guinean population.Political instability in Guinea Bissau, along with its weak economic growth and the prevalence of an economy based on agriculture and fishing, may limit Chinese investment. However, although China's role in Guinea-Bissau is still not that of biggest partner, its presence is important. "China cannot suspend its cooperation because that will create a vacuum and somebody will occupy it. And Taiwan is always watchful. This requires a minimum level of investment," said Álvaro Nóbrega. Guinea has resources such as phosphates, bauxite and potential for oil to be discovered. It also has a large fishing area, with agreements established for over 20 years. Agriculture, fishing, tourism, forests and handicrafts are the main areas yet to be fully explored, and which have potential for foreign investment. The government also focuses on the competitive advantages of commercial development, taking advantage of Guinea-Bissau as a member of UEMOA and ECOWAS. In September 2008, in Xiamen, the Guinean minister for Commerce, Industry, Energy and Handicrafts, Luís de Oliveira Sanca, invited investors and commercial companies "to invest in Guinea Bissau and sign partnerships with Guinean companies." He described the advantages of the country, noting the size of the market with its 70 million consumers as part of UEMOA and 265 million as part of ECOWAS, as compared to a total local population of just 1.2 million.

82Large Chinese-Guinean projects underway1. Construction of the Administrative Palace in BissauProject : Three two-storey buildings, to house 13 government departments, in Brá, on the outskirts of Bissau (considered to be the biggest bilateral cooperation project)Objective : To improve the functioning of public institutionsValue : US$22 millionDate : Started in August 2008, projected to be concluded within 20 months2. Military HospitalProject : Military hospital with 200 beds, in a former army base in the Brá neighbourhoodValue : 67 million yuan, 16 months3. Fuel productionProject : Expansion of the Geocapital project that also exists in Cape Verde, based on jatropha.Objective : Planting of jatropha in Guinea Bissau at the end of 2009 or 20104. Tourist complex with casino in BijagósProject : Construction by Geocapital of a tourism complex with a casino on Caravela Island, BijagósObjective : To make use of Guinea's tourism potential5. Refurbishment of electrical facilitiesProject : Chinese company Wempco invests in the recuperation of electrical facilities, such as generatorsECOWAS, as compared to a total local population of just 1.2 million.The Guinea-Bissau government thus outlined some of the projects for which, at the end of 2008, it was seeking partners. One of the projects was the recuperation of the Palace of the Republic, as well as the construction of social housing. Construction of bridges and roads is one of the other investment sectors for which Guinea sought funding. The aim of increasing rice production five-fold was met by Chinese aid in setting up hybrid rice farms. Many Chinese products are available in the country, although there are few retailers set up there. "The Chinese have not yet established themselves in this sector," contrary to what has happened in neighbouring Senegal, said Álvaro Nóbrega. The business community is as yet reduced in Guinea, although, according to Nóbrega, Forum Macau "has an important role in meetings between businesspeople." However, the formal sector is still "very small and is in the hands of Portuguese and Lebanese retailers." Political instability and mutual lack of knowledge of the two cultures could be limitations to greater investment, meaning that there may not be room for a growing investment commitment. Drug trafficking in Guinea-Bissau is a reality and its prevalence could be a risk to investment due to the instability it causes. Chinese interest in Guinea-Bissau is clear. Proof of this is its strong move into the country's financial sector, at the hands of Geocapital. The Macau-based holding company in June, 2009 increased its stake in the Banco da África Ocidental (BAO) bank, from 36 percent to 60 percent. The increased stake was a result of shares acquired by Geocapital from Portuguese bank Montepio Geral.

83Business with partners Construction and management of the port of Buba - a deep water port, which is rare in the region - was handed over to an Angolan company. Bauxite Angola has mining rights on bauxite reserves in Guinea-Bissau. The reserves are estimated to total 113 million tonnes. This investment is part of the Boé bauxite mining project, costing US$321 million.Relations with Portugal continue to play an essential role. In January 2009, Portuguese group Galp Energia approved an investment of 3 million euros for the refurbishment of logistics facilities, expansion of the fuel supply network and an increase to the fleet of fuel distribution trucks.Guinea also has partnerships with the European Union, benefitting from funds for construction of infrastructures - such as bridges - and for funding of development projects, particularly in the agricultural and livestock sectors. In June, 2009, the World Bank donated US$8 million to the country. The European Union and the West African Economic and Monetary Union (UEMOA) also created a fund of 100 billion CFA Francs to support the stabilisation of the Guinea-Bissau economy. The International Monetary Fund is focused on boosting the country's institutional and administrative capacity, with a view to economic recovery. Development of agriculture should be a priority for Chinese investment in the country, according to the previous Guinean president, the late João Bernardo "Nino" Vieira. China opened up its market to 442 Guinean products, benefitting from preferential tariffs. The protocol, which was signed in January 2007, opened up the way for Guinea-Bissau to increase its exports. As well as the incentive to exploration, support from China has been felt in a more direct way through agreements for food donations, mainly rice, in periods of greater productive and economic difficulty in the country. China recently started investing in the creation of hybrid rice plantations. The investment as part of the West African agriculture development policies, as called for by researcher Loro Horta in a recent article, responds to the need for food products in China. The modernisation of agriculture, which is one of the main points of cooperation between the two countries, brings benefits to Guinea Bissau. In the fisheries sector, Guinea-Bissau and China have had agreements and cooperation since 1985. At the time, in exchange for fishing licenses for the Chinese fleet in the waters of Guinea-Bissau's Exclusive Economic Area, the Chinese had to provide equipment, funding and technical staff for creation of a Guinean semi-industrial fishing fleet. The aim was to build small motorised fishing vessels. The expansion of BAO's presence in Guinea-Bissau is reflected in the opening of two more branches, in May 2009, in Bafatá and Canchungo, which are added to three existing branches, two in Bissau and one in Gabu. It is an investment in the country's future potential.The Seed of Development

84Economy ahead of diplomacySAO TOME AND PRINCIPECapital Sao TomeOfficial Language PortugueseCurrency DobraTime Zone UTC+3Telephone country code +239Internet country code .stÁrea 1.001 Km2PIB USD 200 million (2008)Population 200 thousand (est. 2008)

85SAO TOME AND PRINCIPESao Tome and Principe is the only Portuguese-speaking country that currently does not have a bilateral relationship with China, as it has had diplomatic ties with Taiwan since May, 1997. In return for recognition, Taiwan promised the Sao Tome government aid of US$10 million per year, which was accepted by then President Miguel Trovoada, despite being contested for five months by the then government and the National Assembly. At the time, Trovoada justified the measure by pointing to the precarious situation in which his country found itself. In retaliation China brought all cooperation programmes to a halt, leaving behind a bilateral debt of Sao Tome and Principe of US$17 million. Between 1975 and 1997 China was an important donor to Sao Tome and Principe, with estimates that Beijing had donated around US$33 million and provided a loan of US$19 million, interest free. China-Sao Tome and Principe bilateral relations were considered "fruitful" as reported by Sao Tome newspaper, Revolução, which closed in 1989. Relations were also marked by numerous reciprocal visits from high level officials such as, for example, in 1981, the visit by a delegation of officials from China led by then deputy Foreign Affairs Minister, Gong Dafei, or Sao Tome Foreign Minister, Carlos Graça to China, in 1989. In terms of cooperation it is worth noting some projects carried out by China in the country, such as the Palace of Congress, where the national Assembly currently works. This building covers an area of 8,300 square metres and cost US$6.8 million. Amongst other areas of cooperation, China was an important country in the medical sector by providing medical staff, training and supply of equipment and medication. In handicrafts, the Chinese continue to be recalled to this day in Sao Tome due to furniture made from bamboo found in homes and offices - the Chinese introduced this art by building the Centre for Bamboo and Straw Handicrafts Training. In agriculture, rice production was also one of China's projects. In the area of education China provided grants that took many Sao Tome students to its universities. It was also an important market for Sao Tome's cocoa, the country's main export product. The Chinese embassy in Sao Tome, which was opened in 1976 by diplomat Lin Ying-Usen, has been closed since the end of diplomatic relations. "Since June, 1997, but it continues to house an Economic and Trade Bureau Council, and some Chinese former employees," for maintenance of the building. Altogether there are "around 30 Chinese living in Sao Tome," according to public manager Luís dos Prazeres. As well as oil company Sinopec, "there is just one Chinese company, COVEC, in the construction sector, set up in the country for over 30 years. It employs some of these 30 Chinese and together they are involved in the sector, but with little visibility. But there are also the well-known traditional Chinese retail stores." And the Portuguese embassy, which currently represents China and deals with the consular issues of the Chinese in the country.

86It is in the oil sector, via the China Petrochemical and Chemical Corporation (Sinopec), that China's economic interests are focused in Sao Tome and Principe. With an office and nominated representative, the Chinese state company was granted 28.67 percent of exploration rights on Block 2 in the Sao Tome/Nigeria Joint Development Zone (JDZ), in February 2006, when it replaced, together with Switzerland's Addax Petroleum (14 percent) a US company that moved out of the consortium. The JDZ was created by Nigeria and Sao Tome in 2001, and the respective treaty established an area of around 36,000 square kilometres in which the 2002- Mar 2010: China-Sao Tome and Principe trade (millions of USD)Year Amount of Trade Exports from China to S. Tome and PríncipeImports to China from S. Tome and Príncipe2002 0.16 0.16 - 2003 0.23 0.20 0.032004 1.56 0.22 1.342005 0.55 0.55 - 2006 1.22 1.22 - 2007 1.78 1.78 - 2008 1.89 1.87 0.022009 2.22 2.19 .022010 (Jan-Mar) .41 .41 0Sources: China Ministry of Commerce (2002-2007)China General Administration of Customs (2008-2010)Chinese roots As in the case of Mozambique, the history of China in Sao Tome began with Chinese workers. In 1895, around 450 Chinese coolies contracted via Macau, arrived at the then Portuguese colony, with increasing demand for labour from Sao Tome and Principe's plantation owners. However, six years later they left the colony, due to the plantation owners being unhappy with their alleged low production rates. Of the few that stayed, some became retailers, married Sao Tome women and had families, some of which remain in the country to this day: Chong, Ten Jua and Choi.Oil: Driver of economic relationstwo bordering sea areas are overlaid, creating a joint area for exploration of natural resources. The agreement signed outlines that Nigeria receives 60 percent of revenues while 40 percent goes to Sao Tome and Principe. Total reserves are estimated at 12 billion barrels of oil. Initially nine blocks in the JDZ were submitted for public tender in 2003. However, so far only six have been granted. Of these, only four already have production sharing contracts (PSC) signed:, including Block 2.

87"It is becoming possible to configure around 30 blocks in the area. And this relates only to the border that Sao Tome and Principe shares with Nigeria and which has yet to be defined. As well as this, the country has its own Exclusive Economic Area (EEA), which is bigger than the JDZ, noted Sao Tome's Jorge Santos, the current executive director of the Joint Development Authority (JDA) in Abuja, the body that manages the JDZ.Sinopec is due, by the end of 2009, to announce the results of drilling, in August, of the first test wells in Block 2, in which it is the operator, three years after acquiring its stake. In this block, sector estimates point to 275 million barrels of crude oil. At the same time, a subsidiary of Sinopec announced it intended to buy Switzerland's Addax, an oil company with exploration rights in Iraq, Gabon, and Nigeria as well as the JDZ. In this area, Addax has 40 percent of Block 1, 14.33 percent of Block 2, 15 percent of Block 3 and 45.5 percent of Block 4, respectively. "This is a normal step in the oil industry," noted Luís dos Prazeres, executive director of the National Oil Agency (ANP). “This is called a farm out. It would not be correct to say that Sinopec is going to control all of Sao Tome and Principe's oil, as these blocks are part of the JDZ with Nigeria, which means it is a special area of joint Nigerian-Sao Tome jurisdiction. There are also more operators in the other blocks."Could Sinopec's growing involvement in the country turn out to be a catalyst for re-establishing official relations between the two countries? Luís dos Prazeres noted that in the world of diplomacy anything was possible but that, "at the moment no return to bilateral relations is foreseeable in the short term." "Sinopec's investment will have no influence on relations because they are one more foreign investment similar to those that happen in many countries, even when relations are not the best between them."

88The acquisition of Addax by Sinopec could require the Chinese oil company to take on Addax's contractual commitment in relation to local content in Sao Tome and Principe. If this is the case, this may affect the country's bilateral relations with Taiwan.The first well in the JDZ was drilled by Chevron, in Block 1, in 2006, which struck oil, but turned out not to be commercially viable. According to the US company, Luís Prazeres said, it was necessary to drill more wells to determine its commercial potential and more wells were due to be drilled in blocks 2 and 4. The next auction, of four new oil blocks (7, 8, 9 and 10) is scheduled for 2011. These will be generally small blocks, with areas of between 750 and 1,500 square kilometres. It is a still "a little premature" to talk about China's involvement in this auction but, there are prospects of future participation by Sinopec and other Chinese oil companies that want to invest in Sao Tome and Principe's Exclusive Economic Area. "They will be welcome; we are preparing our first public auction of 14 blocks for November 2009, and we are counting on the potential participation of Sinopec, in fact the company has shown interest in the future development of the EEA," said dos Prazeres.

89Sao Tome and Principe was not left out of the Chinese "charm offensive" on Portuguese-speaking countries. Nor has the desired membership of the Forum for Economic and Trade Cooperation between China and the Portuguese-speaking Countries been forgotten.Zhao Chuang, the former secretary general of the Permanent Secretariat of the Forum told Portuguese news agency Lusa, soon after he took on the role, that China had its "door open" to Sao Tome and Principe to join. The participation, three years ago in Macau, of a Sao Tome minister at the ministerial meeting was a "symbol" of the meeting and, as part of the Forum's objectives, China has the "door open to all Portuguese-speaking countries that wish to take part," including the only one that has diplomatic relations with Taiwan.An example of the increasing closeness is the observer status granted to Sao Tome and Principe at the China-Africa summit for Economic Cooperation. Macau recently hosted the conference of governors of the central banks of Portuguese-speaking countries, with the aim of working to create a "financial cooperation and promotion platform for economic and commercial development." Sao Tome and Principe is one of the beneficiaries of cooperation and technical assistance.In Lisbon, the Africa Monitor newsletter reported in 2008 that Angola actively supported China's initiatives to re-launch bilateral relations with the archipelago. The "discrete forcing" of the Chinese authorities also had the support of Sao Tome's largest opposition party, the Movement for Liberation of Sao Tome and Principe – Social-Democratic Party (MLSTP/PSD). This party is now in government, in a coalition with the movement linked to President Fradique de Menezes.In February 2005, the presence of a representation of the Chinese Communist Party at the 4th Congress of the MLSTP then headed by Guilhereme Posser da Costa, was much talked about. "The MLSTP-PSD has a long-standing historical relationship with the Chinese Communist Party," and "will never forget the friends that helped Sao Tome and Principe to achieve its independence," Posser de Carvalho said at the time in response to criticism from the opposition, denying however that he was preparing to break ties with Taiwan. During the congress, a Chinese Communist Party official said his party was available to "promote the normalisation of Chinese-Sao Tome relations as soon as possible."Any decision on that level would be in the hands of the Sao Tome president, who is also an important businessman in the country with interests in Portugal. Fradique de Menezes said that the relationship with Taiwan has been advantageous for Sao Tome but has noted he is a "realist" on this issue.""I don't have an oracle to guess that tomorrow we are going to give up (relations) with one and start with the other. We'll see," the future relationship with China and with Taiwan, he said in an interview with Lusa in 2008. "Door open" to Sao Tome and Principe

90Sea of OpportunitiesTimor Leste (East Timor)

91Timor Leste (East Timor)Although East Timor is not, as yet, one of China's biggest partners, over the last seven years relations between the two countries has intensified. The cooperation potential between the two countries emerged, at an early stage, in the oil and gas sector, agriculture, fisheries and telecommunications. Agreements signed have made it possible for the East Timor government to receive financial aid from China, as well as to see investments in construction of infrastructures.The presidential palace, one of the infrastructures built by China, will be handed over to the East Timor government this year, and in 2008 the Foreign Affairs Ministry was opened, which was also built by China. There are several projects set for the next few years, including a primary school, the Defence Ministry building and the headquarters of the East Timor Defence Forces. Capital DíliOfficial Language Portuguese and TetumCurrency US dollarTime Zone UTC+9Telephone country code +670Internet country code .tl, .tpArea 14,609 Km2GDP USD 500 million (2008 estimate)Population 1.1 million (2008 estimate)

92The support of the Chinese government to East Timor focuses, as told by Chinese ambassador, Sun Man, at the Meeting for Development Partners, infrastructures, rural development and construction of human skills and competences. The final aim, the diplomat said, was to increase the employment rate and eliminate factors that cause instability. The Chinese ambassador has called for investment by business owners from China, Hong Kong and Macau, thus potentially contributing to the country’s economic development process. Aware of the investment potential and advantages that the country can take from foreign support, the attempts to promote investment are clear, particularly via TradeInvest Timor-Leste, an investment promotion agency. The potential areas for investment are oil and gas, agro-industry, forestry, fishing, tourism, light industry and economic infrastructures. Investment in the agricultural sector has lately focused on planting hybrid rice, as part of the project to increase productive capacity in East Timor.Year Amount of Trade Exports from China to East TimorImports to China from East Timor2002 - - -2003 1.07 10.70 -2004 1.71 1.71 -2005 1.27 1.27 0,0012006 16.76 5.79 10.962007 9.51 9.46 0.052008 9.25 9.14 0.102009 23.28 23.26 0.222010 (Jan-Mar) 6.23 6.13 0.09Source: Chinese Ministry of Commerce (2002-2007)China General Administration Customs (2008-2010)Trade between East Timor and China rose over 13-fold last year totalling US$17 million at the end of 2006. East Timor is one of the exporters of coffee to the Chinese market, particularly to Guangdong province, the economic powerhouse of southern China, bordering Macau and Hong Kong.As a way of encouraging the export of Timorese products, the Chinese government in 2008 gave customs tax exemption on exports to China. Although coffee is one of the only products exported to China, the Timorese government hopes to start exporting fish and other foodstuffs, concentrating on agricultural projects focused on export markets."Door open" to Sao Tome and Principe

93At the same time, the president of East Timor announced the acquisition of two coastal patrol ships from China, estimated to cost US$15 million each. The coast of East Timor is 873 kilometres long and the country has an Exclusive Economic Zone (EEZ) that, according to the Timorese government, is the target of illegal fishing that means annual losses for the country. The government thus warned of the need to inspect the coast, and needed to invest in its patrolling capacity. Military cooperation between the two countries has arisen not only based on an attempt to improve Timor’s naval capacity, but also on the construction of facilities to house the national armed forces. Providing basic conditions in the country has also involved Chinese projects for electricity generation, namely an estimated investment of US$370 million to build 10 electricity substations over the next few years. The contract was signed in 2008 with the China Nuclear Industry 22nd Construction Company (CNI22) with a view to expanding the electricity grid with high voltage cable, as well as two large power stations. This is considered to be China’s biggest investment since 2002. After protests from environmental groups, the government ordered an environmental impact analysis.In the telecommunications sector a contract was signed this year between Chinese company ZTE Corporation and Timor Telecom. The agreement was for the supply of equipment and services for the third generation mobile phone network (3G). The project makes it possible for Timor Telecom to provide access to wireless broadband in the country.

94Five years ago the biggest Chinese state oil company, PetroChina, started a seismic survey to locate oil and gas in East Timor. The study required an investment of US$1.7 million and covered around 70 percent of East Timor’s territory. Exploration of oil and gas continues to involve several countries in East Timor. In 2002 PetroChina sent a mission to Timor to survey and carry out studies on land. A bilateral agreement was signed for future oil exploration. Two years later a study was carried out. In 2005 the Timorese government launched a tender for exploration of 11 blocks, in which 36 companies showed initial interest, including Portuguese companies and one from Brazil. The 11 blocks up for auction were located in Timor’s exclusive economic zone and, thus, outside the area disputed with Australia. It is essential for the government to ensure that clear benefits for the economy and development arise from this exploration and future joint agreements. The aim of creating an oil industry requires diversification of East Timor’s partners, whilst also focusing on creating gas processing facilities in the country. Construction of a gas pipeline from Timor’s biggest oil project, Greater Sunrise, has led to controversy over the last few years. The project is located in the Joint Oil Development Area, shared by East Timor and by Australia, an area that is expected to bring Timor revenues of US$14.5 billion over the next 10 to 20 years. Australia proposed to build a gas pipeline from the oil field to the Australian city of Darwin. However, China proposed to build the pipeline to the coast of East Timor. Some studies have tried to analyse which of the two options may be more beneficial to Timor, although they are unlikely to be conclusive. The recent closer relationship of China and Timor has led to greater openness to the possibility of the Chinese government building the pipeline, negotiating with Australia and contributing to the creation of a support facility in Suai, a city in the south of East Timor, not far from the Timor Sea. In order for this to go ahead construction of refineries and the necessary facilities are under discussion. Indian, Malaysian and Italian companies currently operate in Timor, notably exporting natural gas from the Greater Sunrise field to South Korea starting in 2013. Oil revenues account for 95 percent of the government’s total revenues, as does 73 percent of GDP and almost all exports. It is expected that Timor’s dependence on the oil sector will increase, and it is necessary to diversify the country’s sources of revenues.China provides “capital, technology and resource development”

95Alongside this, East Timor’s oil fund has grown and it is hoped that over the next 20 years it will generate US$5 billion. The creation of the Oil Fund is aimed at ensuring total transparency in the management of oil and gas revenues. Although oil and natural gas are the main focus of the economic relations between Timor and its partners, including China, there are other resources of potential interest. Magnesium and blue marble could be two potential resources, and in which China has already shown interest. Diversifying and developing East Timor’s economy are two of the aims of developing the oil industry. This would make it possible to provide a basic sanitation system, a road network, an electricity grid, ports and health facilities. Construction, hotels, restaurants, transport and information technologies would also benefit. Carla Fernandes of the Lisbon University Faculty of Social and Human Sciences has noted the role of international partnerships in the process of diversifying the economy. “One of the big priorities of Timor’s foreign policy is to develop relationships with countries that can support and economically develop the territory. As one of the poorest countries in the world and the poorest in Southeast Asia, one of its biggest priorities is economic growth. This is where Beijing emerges as an attractive partner, as one of the largest Asian economies in constant growth that could provide capital, technology and development of resources so that Timor can totally expand its potential.”And to ensure the development of that potential, East Timor has to give China oil, gas and other resources, such as blue marble and magnesium. China recognises Timor’s potential and a closer relationship brings advantages to it. “It would cost it a lot less in terms of transport and security, and also in terms of exerting its influence. Thus, as there are regional alternatives to energy supply, such as Timor priorities are adjusted,” said Moisés Silva Fernandes, director of the Confucius Institute of the University of Lisbon.

96Analysts of the reality of Timor are almost unanimous in considering that relations between China and East Timor “have great potential to grow.” As well as oil, infrastructures and tourism are expected to play an important role.This year is the expected launch of important infrastructure projects such as construction of the airport, new roads, dams and port facilities and it is expected that Chinese companies will take part, although with “strong competition” from their South Korean, Indonesian and Malaysian counterparts. In 2006, a company specialising in the sale of oil products from East Timor, Ta Fui Oil, opened an office in Macau to sell oil products in the region. Awareness was raised of the territory’s potential in order for sales to reach China. China’s potential as a source of tourists has an effect on the tourism sector, including in East Timor. The country is thus focusing on its beaches, culture and history, seeking to develop the necessary infrastructures to respond to that tourism. Construction of hotels and tourist complexes could be one of the next projects by private Chinese investors. As a member of the World Tourism Organisation since 2005, a focus on tourism could now bring revenues to East Timor. It could also create jobs, develop non-urban areas and provide easier access by the population to infrastructures. Thus East Timor’s deputy development minister, during the 16th general meeting of the World Tourism Organisation in Senegal, said that tourism should be “used by development partners as a modern and innovative tool for international cooperation.”According to the Chinese embassy in Dili, cooperation between China and East Timor will be expanded into areas such as forestry, fishing and construction of infrastructures, as well as oil and gas. In this sector, it said, developments had been few since the survey carried out by Petrochina in 2005, for location of onshore reserves. As they were unable to secure extraction rights, the project did not go ahead.Macau and East Timor cooperate in areas such as tourism, training, sport, justice, electrical industry and culture. Macau provided financial aid to East Timor for construction of the Resistance Archives Museum as well as for Timorese athletes to take part in the Lusophone Games. According to Chinese diplomats, trade between the two countries rose to US$14.6 million in 2006. China started importing liquid natural gas and coffee. Some private investors moved ahead with production of rice and fishing activities, others are studying the possibility of producing tobacco and sugar cane in East Timor. Infrastructures and tourism open up to Chinese companies

97Large Chinese-Timorese projects underway1. Construction of power plantsProject : The China Nuclear Industry 22nd Construction Company (CNI22) is building two power plants and expanding East Timor’s electricity grid.Value : US$360 millionObjective : The contract signed in 2008 outlines construction of two heavy fuel power plants in the north of East Timor with a capacity of 120 megawatts and one in the south of the country with a capacity of 60 megawatts, the expansion of the electricity grid with 750 kilometres of new high voltage cables and construction of 10 electricity sub-stations.Duration : Two years;2. Defence Ministry building and the headquarters of the East Timor Defence Forces.Project : Construction of the buildingObjective : To improve Timor’s military facilitiesStatus : Next few years3. Naval patrolProject : Acquisition of equipment for the naval component of the Defence ForcesObjective : To improve the capacity of coastal patrol, controlling illegal fishing in the East Timor Exclusive Economic Zone4. Planting of hybrid riceProject : Creating hybrid rice plantationsObjective : To improve the country’s productive capacity5. Gas pipeline and gas processing centreProject : Construction of a gas pipeline to East Timor, creating a gas processing centre in the Suai area (near the Timor Sea)Objective : To develop East Timor’s oil exploration capabilities, contributing to the possibility of processing and export (possibility of transport by sea)Status : Under discussion, needs to be negotiated with Australia

98Strategic PartnerPORTUGALCapital LisboaOfficial language PortugueseCurrency EuroTime zone UTC+1Telephone country code +351Internet country code .ptArea 920.391 Km2PIB USD 128,4 billion (2009)Population 10,6 millions (2008)

99PORTUGAL30 years ago, on 7 February 1979, Portugal and China established formal diplomatic relations. Until 1999, when the administration of Macau was handed over to China, there were many attempts to strengthen the economic relations between the two countries.“There was a good opportunity there for Chinese and Portuguese companies to cooperate,” said Fernanda Ilhéu, the former secretary-general of the Luso-Chinese Chamber of Commerce and Industry and professor at Lisbon’s School of Economics and Management ISEG.In Macau changes were underway with public administration being reformed, the renegotiation of the gaming contract, investment in infrastructures and public works. Portuguese construction companies such as Soares da Costa and Teixeira Duarte started showing their presence. The leap that was taken in construction of infrastructures made the 1990s golden years. Fernanda Ilhéu noted the large-scale projects in which Portuguese companies had an important role. There was little competition: As there were no local companies competing for the work, there was a greater openness for Portugal to participate. But the situation changed after the transfer of Macau to China in 1999 and particularly with China opening up when it was approved to join the World Trade Organisation in 2001. Competition became much greater. Competing in public tenders now required adaptation by Portuguese companies. Some moved out early on.It is important to communicate the experiences of companies that have already been involved in the markets to companies considering investing in China or Portugal. “Going through the same cultural difficulties and considering business prospects that China does not want to do is to lose time and money,” Fernanda Ilhéu said. “It’s never been possible to foresee business associations between Portuguese companies in Macau and partners in China. They could get together and carry out construction in China, in Macau and other places, with investment and commitment from both sides,” Fernanda Ilhéu said. These partnerships were considered to be indispensible, both to ease access to tenders and to reduce costs. Portugal has advantages in sectors that are genuinely Portuguese, but China is also searching for partners in new technologies, renewable energy, health and cutting edge sectors. “I have no doubt that many Portuguese products would be extremely successful if they were on sale in China,” said Fernanda Ilhéu.

100So why are they not in the Chinese market? The size and capacity of the competition may be one of the reasons. The initial trend towards undifferentiated products, sold in large warehouses, is no longer unique. Faced with consumers with a different demand, Chinese companies started paying more attention to the brand, with greater focus on the quality of brand marketing, in the store and of the layout of the product itself. In 2005, trade between Portugal and China increased, although the import of Chinese products exceeded Portuguese exports giving Portugal a deficit of 267.9 million euros. After a visit from the Chinese prime minister, Wen Jiabao to Portugal in December 2005, the country was elevated Year Amount of Trade Exports from China to Portu-galImports to China from Portugal2002 383.63 300.93 82.712003 600.98 406.37 194.612004 869.30 588.40 280.902005 1235.86 912.01 323.852006 1713.53 1359.72 353.812007 2210.81 1826.28 384.532008 2691 2303 3872009 2404 1923 4802010 (Jan-Mar) 643.5 494.4 149.14Source: Chinese Ministry of Commerce (2002-2007)China General Administration of Customs (2008-2010)2002-Mar 2010: China-Portugal trade (millions of USD)to the status of strategic partner, with a boost to bilateral relations. Portugal thus joined Great Britain, France, Germany and Spain. At the time, cooperation agreements were signed in the legal area, health, reciprocal protection of investments, and teaching the Chinese and Portuguese languages. Other cooperation agreements were signed by the moulding, communications and technology sectors.An agreement of association was also set up between Portugal’s Sonaecom and Chinese company Huawei Technologies, a manufacturer of telecommunications equipment. Portugal’s Cefamol and the China Die and Mould Industry Association established a partnership to promote investment and industrial cooperation between the sector companies of both countries. As Portugal is one of the world’s biggest manufacturers of precision moulds for the plastics industry, and places around 90 percent of its production in foreign markets, the Chinese market was a good bet.

101The focus on Portuguese investment promotion agencies in China, such as investment and export promotion agency AICEP, has shown increasing interest and motivation. In 2006 and 2007, there were rises in exports of Portuguese wines to China, and the Chinese market’s potential has been considered since then. Portuguese cement company Cimpor also boosted the importance of its activities in China, particularly in Shandong and the areas outside Shanghai. Several conferences analysing the Chinese market, organised by the Portuguese-Chinese Chamber of Commerce and by AICEP, have sought to show the Portuguese business world how best to invest.In 2008 Cimpor acquired Chinese company Liyand DongFand Cement, raising its annual cement production capacity by 6 million tonnes. Another agreement between China UnionPay and Portugal’s Caixa Geral de Depósitos, signed in 2008, made it possible to use Chinese banking cards in Portuguese automatic teller machines (ATMs).

102Direct speech: Márcio Ferreira, ViniPortugal1. How have Portuguese wine exports to China progressed?In China, in 2008, we saw growth of around 35 percent in value (US$2.6 million) against 2007. It will be interesting to see how we will end 2009 and see if this world crisis affects our growth. For now things are still going well, if we reach 3 million in 2009 that would be very positive. Another factor is the position that Portuguese wines have in Macau, where Portugal is the market leader in terms of volume. The ties between Portugal and Macau are vital for the positioning of Portuguese wines in the Chinese market. Another factor for deciding to focus on these markets was the abolition of import taxes in Hong Kong, which around 10 months ago quashed taxes on imported wines, which had been of up to 80 percent. This quickly made the former British colony into the platform for supply of wines to China and led the market to increase three-fold.2. What efforts are being made to improve exports and increase consumption? I think there is still a lot to do in terms of the image of bottles. Some care needs to be taken with what is put on a bottle directed at Asia, especially in terms of colours. I think that companies should focus some attention on local cuisine, the Chinese culture and local consumer habits. On an international level the most important thing is to create Portuguese brands of wine. We still don’t have that credibility, which makes our work difficult in terms of market penetration. Without brands there is no basis on which retail operators can base their purchases. Tourism, Wine, Culture: Investments for the FutureAnalysts agree that doing business with Chinese companies requires time. That time is synonymous with deepening relationships between Chinese and Portuguese businesspeople. The need to design an entry strategy based on in-depth knowledge of the Chinese reality is a requirement for success. The confidence created between the businesspeople allows for commitment, acceptance and entry into a network, starting to outline business deals that will lead to investment. “We have to find an area of negotiation that is advantageous for both sides. And visits of two or three days are not very productive. The biggest progress is seen not at the negotiating table, but on the sidelines, in the breaks.”

103One of the structural bases for economic relations between Portugal and China has to be greater cultural closeness. Investing in higher education, via partnerships between Portuguese and Chinese universities, is one of the measures called for by many specialists and academics. Sonny Lo, a lecturer at the University of Waterloo in Canada, suggests development of research centers by Portugal in Guangzhou, on the Pearl River Delta and in Macau, for Portuguese businesspeople and academics to gain deeper knowledge of Southern China. This, in the long term, would allow for easier cultural access to China, with a focus on the potential of Zhuhai, the future education centre.Greater proximity as part of these cultural projects could also be encouraged by the Macau community, which is considered by Sonny Lo to be “a unique group that not only acts as a bridge between Portugal and China, but is also a cultural advantage to Portugal.” Another great opportunity is in the tourism sector. The projection of 100 million Chinese tourists travelling abroad each year, by 2020, is extremely attractive. The rise in purchasing power of the Chinese middle classes, the opening up of borders and the ease of movement has generated a growing market of potential tourists.According to recent figures, and although it has had Approved Tourist Destination status since 2004, Portugal receives only around 50,000 Chinese tourists every year, who stay an average of three to four days in the country. Zélia Breda, a researcher at the University of Aveiro, considers “the number of Chinese tourists in Portugal derisive, when you take into account the potential.” Weak promotion, a relatively small knowledge of Portugal and a lack of air links are the reasons given.Investing in promotion of tourism to Portugal is a focus for the next few years. “Portugal’s participation in tourism fairs in China is a very important point. Investment is also now being made in translating websites to Chinese.” Focusing on the historical potential of Portugal and its geographical diversity is essential, as is knowing the Chinese tourist better. “Understanding what they are looking for, in order to know how to drive that investment. We know that these tourists leave a lot of money wherever they go.”The wine market in China is growing by 20 percent per year and it is estimated that by 2017 it will become the biggest in the world, thus overtaking the United States. According to the Portuguese National Statistics Institute, Hong Kong, Macau and China accounted for sales of around 7.6 million euros at the end of 2008. In terms of ranking it is the 11th biggest export market for Portuguese table wines. Barca Velha, Quinta do Crasto or Alvarinho: Portugal is recognised as having some of the best wines in the world. This is another area in which companies from both countries could cooperate, given the growing Chinese appetite for red, white or rosé wines.

104What can Portugal do to attract more Chinese investment? First of all it is important to have a pro-active attitude: Knowing what matters to Chinese businesspeople, what they are looking for and what Portugal can offer. Portugal can also select the sectors in China that are of interest to it and find ways of attracting them with specific projects. Once again this requires confidence, stable relationships and time. “Everything is a trade off with China. A world of trade off that has to be a win-win situation, as both sides have to benefit,” said Fernanda Ilhéu. More recently, Portuguese group Mota-Engil was awarded a construction project for a container terminal in Luanda, according to Portuguese newspaper Jornal de Negócios. The project is due to be delivered in June, 2010 and the capacity of the container terminal at the port of Luanda will rise from 150,000 TEU (twenty foot equivalent units) to 204,500 TEU.Trade between Portugal and Angola totalled 720 million euros between January and April 2009, having risen 21.6 percent against the same period of 2008, according to the president of the Portugal-Angola Chamber of Commerce and Industry (CCIPA). The credit line between Portugal and Angola is funding a number of large projects, including construction of bridges and hospitals, state bank Caixa Geral de Depósitos (CGD) has said. This is one of the three credit lines for investment in Angola that Caixa Geral de Depósitos has in operation, with a total value of 1.6 billion euros. Investment by Portuguese companies in Angola has been visible over the last few years and various projects have come to light. In July 2009, Zon Multimedia manifested its interest in investing in Angola’s television service.To Mozambique, Portugal’s exports rose 33 percent in 2008 and in the opposite direction growth was 100 percent. Portugal plans to open a credit line of up to 300 million euros to fund infrastructures that involve Portuguese companies.“Win-win situation”… in Portugal and the entire Portuguese-speaking world

105Large Chinese-Portuguese projects underwayEDP – Energy Solutions ÁsiaProject : EDP – Energias de Portugal (60 percent of the capital) and the Stanley Ho group (40 percent of the capital) create EDP – Energy Solutions ÁsiaObjective : Clean energy market in the People’s Republic of China for consulting services in managing clean energy solutions. EDP is boosting its position in Asia, operating with a 21 percent stake in Companhia de Electricidade de Macau.Headquarters : Beijing (created in Macau)Created : February 2009Portugal Telecom (PT)-Huawei PartnershipProject : Portugal Telecom (PT) chooses Chinese telecommunications equipment group Huawei to develop its Portuguese broadband telecommunications network, in order to take fibre optic connections to a million homes in Portugal by the end of 2009.Created : June 2009Chinese tourism in Portugal and Spain1. Project : Portugal and Spain work together to promote themselves in China: Single Iberian destination; Portugal benefits from air links from China to Madrid Objective : To promote the Iberian market to the Chinese tourist market Created : February 20092. Project : Second visit by tour operators to Portugal Objective : To promote Portuguese tourism Created : September 2009Portuguese wines in ChinaProject : Promotion of Portuguese wines in the Asia-Pacific region, in partnership with distributors from Macau, Hong Kong and Mainland China, exploring growth of the local market and the potential of Portuguese wines.Objective : Growth to 3 million euros in sales in 2009

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