(Yicai) May 11 -- Against the backdrop of profound changes in the global economic landscape and cross-border investment, seeking certainty in external cooperation is a practical need for China to promote high-level opening-up. For Chinese companies actively embracing globalization, the Community of Portuguese Language Countries (CPLP) is showing ever greater strategic value.

The CPLP brings together nine countries, including Portugal, Brazil, Angola, and Mozambique, that are united by a common language. Its territory spans four continents and has a total population of over 300 million people, with an economic output of about USD2.65 trillion. 

This multilateral organization has formed a series of complementary advantages in economic and trade cooperation with China. For instance, Brazil can provide China with a huge market as well as agricultural and mineral resources; Angola and Mozambique have close cooperation with China in minerals and infrastructure; and Portugal serves as a bridge to the European market.

The trade in goods between China and the Portuguese-speaking countries exceeded USD225 billion last year, a new high. 

The economic and trade exchanges between Chinese enterprises and Portuguese-speaking nations has shifted from simple commodity buying and selling to systematic cross-border equity investment, local production capacity deployment, and supply chain management, making the need for transnational financial services more urgent.
Against this backdrop, Shanghai, thanks to its global capabilities in finance, law, and supply chains, should serve the cross-border risk control needs of businesses and become a hub to help the overseas expansion of the real economy.

Financial Services for Going Global

Chinese firms have accumulated a large number of high-quality assets in Portuguese-speaking countries. For example, in Brazil, State Grid Corporation of China has acquired a controlling stake in the Brazilian power company CPFL Energia. China Three Gorges Corporation also operates large-scale power generation facilities in the country, and Chinese carmakers have set up manufacturing bases there. 

In Portugal, Chinese conglomerate Fosun International has bought a controlling stake in insurance giant Fidelidade to support an integrated services ecosystem, and Guotai Haitong Securities has opened its local subsidiary Haitong Bank. In Angola, Chinese companies have participated in a number of big infrastructure projects. 

Unlike the earlier contract engineering models, these more deeply integrated heavy-asset projects require firms to coexist with the complex institutional environment of the target country in the long term. Practical challenges such as regulatory compliance, foreign exchange constraints, and dispute resolution will ultimately translate into liquidity risks on a company’s balance sheet. 

Firstly, funding and credit are the main hurdles. In markets dominated by vast projects such as Angola and Mozambique, the commercial feasibility of infrastructure projects relies heavily on credit support provided by national policy-based insurance institutions. Without systematic credit endorsement and structured project financing, long-term capital circulation is impossible. At the same time, due to the foreign exchange shortages and mandatory settlement policies in some host countries, companies often contend with exchange losses and the barriers to cross-border capital repatriation.

Secondly, local compliance and business costs are another barrier. In Brazil, companies face high taxes, strict labor regulations, and inefficient logistics, putting extremely high demands on their working capital. Portugal is subject to strict European Union regulatory standards, so firms acquiring core assets often face multiple hurdles, including antitrust and foreign investment scrutiny, making them highly dependent on ample and low-cost overseas financing.

Thirdly, the jurisdiction and exit risks of long-term investments cannot be ignored. Complex business environments are often accompanied by macroeconomic cycle fluctuations. Without rigorously defining the applicable laws and international arbitration clauses at the outset of contract talks, asset restructuring and exit strategies can easily become mired in jurisdiction disputes should business circumstances change.

These realities demonstrate that businesses rely heavily on well-developed financial tools for early support to establish a foothold in complex overseas markets. Financial services are no longer merely an ancillary component of foreign trade. They now determine whether large-scale cross-transitional projects can be implemented.

Financial Services for Surmounting Hurdles 

As their investments deepen, the corporate need for comprehensive risk control increases exponentially. Faced with large-scale cross-border fund transfers, complex compliance challenges, and significant risk sharing, regional liaison offices or single-local intermediaries are no longer sufficient to handle these tasks independently. Firms need to rely on an international financial center with global resource allocation capabilities for overall coordination and support.

Shanghai’s comparative advantage lies in acting as the “system integrator” for these complex transnational demands. Last year, total cross-border Chinese yuan receipts and payments in Shanghai totaled CNY30 trillion (USD4.4 trillion). Relying on its ample offshore capital pool, international reinsurance market system, and globally top-ranking port container throughput, Shanghai is well-positioned to transform the complex business pain points faced by firms venturing overseas into standardized financial services.

Shanghai has established regular two-way trade worth hundreds of billions of yuan between China and the nine member countries of the CPLP. To take this huge flow of goods to a higher value-added service level, Shanghai needs to further develop targeted financial tools to provide a strong foundation for enterprises going global.

Firstly, the local currency settlement network needs expanding to mitigate exchange rate risks. Given the high inflation and fluctuating exchange rates in some Portuguese-speaking countries, local currency pricing settlement is an effective way to prevent financial risks. Based on this, the functions of free trade accounts can be fully activated, and products such as yuan pricing, settlement, and trade financing can be designed specifically for the import of commodities and the export of complete equipment. At the same time, licensed overseas branches of Chinese-funded financial institutions can help to open a channel for the two-way transfer of funds. 

Secondly, the international reinsurance system needs enhancing to cover substantial credit exposure. Major overseas infrastructure projects often come with potential sovereign credit default risks. By the end of 2025, the Shanghai International Reinsurance Registration and Trading Center had 151 participating institutions. If the city can deeply integrate with the national policy-based export credit insurance system and global commercial reinsurance institutions, it can take the lead in forming a large-scale asset insurance consortium targeting the Portuguese-speaking market, thereby effectively mitigating sovereign credit risk.

Thirdly, Shanghai needs to deepen offshore financing support and empower cross-border mergers and acquisitions of heavy assets. When acquiring strategic assets overseas, companies rely on flexible syndicated financing and capital restructuring capabilities. Shanghai can expand the scale of direct financing such as offshore bonds in its free trade zone to inject cost-effective offshore capital into enterprises going global, thereby optimizing their global balance sheet structure.

Fourth, it would be a good idea to pre-establish commercial arbitration pathways and determine the jurisdiction of any disputes. Pre-determining the exit pathways for investment and locking the dispute jurisdiction are key steps in risk control. By leveraging Shanghai’s newly revised Measures for the Promotion of Temporary Arbitration in Foreign-Related Commercial and Maritime Affairs and the corresponding Portuguese-language arbitration rules, firms can secure the final arbitration right in Shanghai from the outset of contract signing.

Conclusion

Economic and trade cooperation between China and Portuguese-speaking countries is a microcosm of China’s economy integrating more deeply into the global industrial chain restructuring. As a multilateral network spanning four continents, the CPLP addresses the typical challenges that Chinese businesses often face when going global, including strict regulatory scrutiny in Europe, complex business environments in emerging markets such as Brazil, and the potential risk of sovereign credit defaults.

The ability to effectively serve this complex cross-regional network is a comprehensive test of Shanghai's global resource allocation capabilities. If the city can leverage its strong financial resources and develop a set of effective mechanisms for fund allocation, risk sharing, cross-border M&A support, and commercial dispute resolution specifically tailored for Portuguese-speaking markets, this support system can be applied in Latin America, the Middle East, Africa, and emerging markets worldwide in the future.

(Liu Gongrun is executive deputy director of the CEIBS Lujiazui International Institute of Finance.)

Editors: Dou Shicong, Tom Litting