China-Portugal Relations: Opportunities in Trade and Investment

China and Portugal have maintained a strong diplomatic and economic relationship for over four decades, with growing investment and collaboration in sectors like green energy, technology, and infrastructure. The partnership continues to thrive, bolstered by the strategic role of Macao and opportunities in diverse industries such as renewable energy, education, and financial services.

China and Portugal mark over four decades of diplomatic relations, a partnership built on mutual respect, historical ties, and growing economic and cultural exchanges. Unlike many European nations that have faced shifting political dynamics in their engagement with China, Portugal has maintained a stable and cooperative relationship, leveraging its historical connections and strategic position as a bridge between Europe and the Portuguese-speaking world.

As global economic and political pressures mount—from the EU’s evolving stance on China to broader geopolitical shifts—Portugal finds itself at a crossroads. While maintaining its commitments within the European framework, the country continues to recognize the significance of its ties with China, particularly in trade, investment, and cultural diplomacy. The Forum for Economic and Trade Cooperation between China and Portuguese-Speaking Countries (Forum Macao) remains a key platform for economic collaboration, facilitating Portugal’s role as an intermediary in China’s outreach to Lusophone markets.

Beyond trade, the bilateral relationship extends to technological cooperation, education, and sustainable development. Portugal has actively welcomed Chinese investment in key sectors such as renewable energy and infrastructure while also fostering educational partnerships that enhance linguistic and cultural understanding. As both nations navigate the complexities of a shifting global order, their continued engagement offers a model of balanced diplomacy—one that prioritizes pragmatism, economic opportunity, and cultural exchange.

China-Portugal diplomatic relations

Since establishing diplomatic ties in 1979, China and Portugal have developed a steadily growing partnership, marked by the successful handover of Macao in 1999, which showcased their ability to resolve historical issues through dialogue. This cooperation laid the foundation for a comprehensive strategic partnership, fostering long-term collaboration across sectors such as energy, infrastructure, finance, and green energy.

Portugal has become a key gateway for Chinese investment in Europe, while Chinese companies have also found increasing opportunities in Portugal. The two countries further strengthened their economic ties through participation in the Belt and Road Initiative (BRI), enhancing connectivity. Politically, both nations share commitments to multilateralism, working together on global challenges like climate change and economic stability.

Cultural and educational exchanges continue to play a significant role, with Confucius Institutes and academic partnerships promoting Chinese culture in Portugal, while tourism and growing appreciation for Portuguese culture flourish in China. As they celebrate over four decades of diplomatic relations, China and Portugal reaffirm their commitment to deepening cooperation and contributing to global peace and prosperity.

China-Portugal trade relations

In 2024, trade between China and Portugal reached US$9.65 billion. Chinese exports to Portugal grew by 5.57 percent, totaling US$6.75 billion, while Portuguese exports to China increased by 8.9 percent, reaching US$3.17 billion. This marks a positive trend for Portugal, with its exports to China growing despite a broader decline in exports from other Lusophone countries.

China’s export growth to Portugal is part of the wider trend of increasing trade between China and the Lusophone countries, but Portugal remains a significant partner within that group. The relationship benefits from Portugal’s strategic role in the Forum for Economic and Trade Cooperation between China and Portuguese-Speaking Countries (Forum Macao), helping facilitate trade and investment between China and Lusophone markets.

Despite the growth in bilateral trade, China recorded a trade deficit of US$54.2 billion with the Lusophone countries overall in 2024, highlighting the ongoing imbalance in trade with the broader region. However, China’s positive figures with Portugal reflect continued cooperation and opportunities for further expansion.

China-Portugal investment relations

Bilateral investment between China and Portugal has been steadily growing, with China’s FDI in Portugal reaching a historic high of EUR 3.96 billion (US$4.30) in 2024, marking a 9.3 percent increase from the previous year. This growth highlights a trend of consistent upward momentum over the past fourteen years, with Chinese investment in Portugal multiplying by 4.5 times over the last decade.

While much of the attention is given to high-profile, state-owned investments, there are also significant contributions from private sector players. For instance, China Railway Rolling Stock Corp (CRRC) Tangshan, which manufactured new trains for the Metro do Porto, is among the less-publicized but impactful investments in Portugal. Additionally, major Chinese companies are forging partnerships with key Portuguese firms such as Mota-Engil and Teixeira Duarte, demonstrating a broadening of investment across various sectors of the Portuguese economy.

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In the manufacturing and technology sectors, Chinese companies are also making their mark. Firms like Tederic, Ningbo David, Medical Device, and those involved in the electric vehicle industry, including Chery and XEV, are exploring opportunities to build factories in Portugal. These ventures are part of a larger strategy to tap into Portugal’s evolving market. One notable project is CALB’s plan to build a lithium battery factory, a move aligned with Portugal’s transition to a low-carbon economy.

The bilateral investment landscape is further strengthened by projects such as the Parque de Oeiras development, a collaboration between the China State Construction Engineering Corporation and Teixeira Duarte. This project is poised to attract further investment, contributing to the economic growth of Oeiras and providing favorable conditions for future business ventures.

On the other hand, Macao serves as a significant gateway for Portuguese investment in China, accounting for approximately 90 percent of the total Portuguese FDI in the country. In 2023, Macao received nearly EUR 1.1 billion (US$1.19 billion) in Portuguese direct investment, positioning it as the 12th most favored destination for Portuguese FDI globally.

The sectors attracting Portuguese investment in Macao include pharmaceuticals, banking, finance, insurance, and food products. This strategic focus underscores the importance of Macao as a hub for Portuguese businesses aiming to penetrate the broader Chinese market.

Beyond Macao, the interior regions of China received EUR 55 million (US$59.69 million) in Portuguese direct investment in 2023. This figure highlights ongoing efforts to diversify investment beyond the Special Administrative Regions, although it remains a smaller fraction compared to investments channeled through Macao.

Double taxation avoidance treaty

The Double Taxation Avoidance Agreement (DTA) between China and Portugal aims to prevent businesses and individuals from being taxed twice on the same income in both countries. This agreement helps reduce financial barriers and fosters a more favorable investment climate by providing clear guidelines on tax residency, dividend withholding taxes, and capital gains taxation.

The taxes covered by the treaty in Portugal are:

• Personal income tax (Imposto sobre o Rendimento das Pessoas Singulares – IRS);
• Corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas – IRC); and
• Local surtax on corporate income tax (Derrama).

In China, the covered taxes include:

• Individual income tax;
• Income tax for enterprises with foreign investment and foreign enterprises; and
• Local income tax.

This DTA plays a significant role in promoting economic cooperation between China and Portugal, benefiting multinational companies and individuals engaged in cross-border activities in both countries.

Opportunities for Portuguese companies in China

Macao’s economic diversification and services industries

Portugal’s businesses, particularly those in the services sector, have significant opportunities in Macao’s ongoing push for economic diversification. As Macao looks to move beyond its reliance on gaming and tourism, Portuguese companies with expertise in areas such as high-tech services, financial consulting, and education are well-positioned to contribute to this transition. Companies in sectors like renewable energy, infrastructure, and advanced manufacturing can find opportunities in Macao’s development of non-industrial, high-value industries. Additionally, Macao’s close ties to the Greater Bay Area (GBA) open further prospects for Portuguese companies in the broader regional economy.

Technology and innovation

Portugal’s technology and innovation-driven industries can find a promising market in China, which is increasingly investing in digital transformation, AI, and tech-driven solutions. Portuguese companies involved in areas such as IT services, AI applications, and smart city technologies have much to gain as China accelerates its adoption of next-generation technologies. Furthermore, Portugal’s established presence in sectors such as cybersecurity, cloud computing, and advanced digital services aligns with China’s drive for technological self-sufficiency, creating collaborative opportunities for innovation.

Renewable energy and green tech

Portugal’s leadership in renewable energy technologies presents a key area of opportunity in China’s transition to a green economy. With China’s commitment to reaching carbon neutrality by 2060, Portuguese companies specializing in renewable energy solutions—particularly wind and solar energy—can play an integral role in China’s expanding green energy sector. Additionally, Portugal’s experience in energy efficiency, electric vehicles, and sustainable building practices offers further avenues for collaboration in China’s ambitious environmental goals.

Education, research, and talent exchange

Education and research cooperation between Portugal and China is an area with great potential for growth. With an increasing number of Portuguese students seeking academic and research opportunities in China, as well as China’s growing interest in educational exchanges, Portuguese universities and academic institutions can build deeper connections in China. Collaboration in research and development, particularly in innovation-driven sectors such as biotechnology, pharmaceuticals, and renewable energy, can also provide Portuguese companies with access to China’s advanced research infrastructure. Additionally, Portuguese companies with expertise in vocational training and skill development can play an important role in talent exchange programs between both nations.

Portuguese cultural and food exports

China’s evolving consumer market offers strong potential for Portuguese cultural and food exports. With the growing appreciation for fine wine, gourmet food, and premium products, Portuguese companies in sectors like wine, olive oil, and traditional foods have significant growth prospects. Additionally, as consumer preferences shift towards organic and sustainably sourced products, Portuguese food companies that emphasize quality and traceability can build a competitive edge in China’s food market.

Financial and banking services

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China’s increasing investments in Portugal, especially in the financial sector, provide opportunities for Portuguese financial institutions to expand their presence in China. With China’s growing appetite for cross-border financial services, particularly in areas such as fintech, digital payments, and wealth management, Portuguese banks and financial services firms have significant opportunities to explore partnerships with Chinese institutions. In particular, firms with expertise in digital banking solutions and blockchain technologies can benefit from China’s push towards digitalization and technological innovation in financial services.

As China continues to evolve and modernize its industries, Portuguese companies stand to benefit from the growing demand for advanced technologies, high-quality goods, and global collaboration. The deepening economic ties between the two countries will create a wide array of opportunities for Portuguese businesses across multiple sectors.

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