UPDATE 3-China offers to help Portugal but silent on debt

* Hu promises help, but no mention of debt

* Portugal hoped for promise to buy bonds like in Greece

* China, Portugal will seek to double trade by 2015

(Adds Hu departure, trade levels, banking and telecom deals)

By Shrikesh Laxmidas and Kevin Yao

LISBON, Nov 7 (BestGrowthStock) – China will back Portugal’s efforts
to deal with fallout from the world financial crisis, President
Hu Jintao said on Sunday, but he stopped short of promising to
buy Portuguese bonds as the debt-ridden country had hoped.

“We are willing to take concrete measures to help Portugal
cope with the global financial crisis,” he said after meeting
Prime Minister Jose Socrates, without elaborating.

The meeting was the last stop of Hu’s four-day to France and
Portugal before returning to Beijing later on Sunday.

Last month, Premier Wen Jiabao promised to buy Greek
government bonds when Athens returns to markets, in a show of
support for the country whose debt burden pushed the euro zone
into crisis and required an international bailout.

Portugal, which unlike Greece still sells bonds on financial
markets although at high cost, had hoped for a similar promise
as it is trying to soothe investors’ concerns about its ability
to cut a high budget deficit and rein in ballooning debt.

Deputy Foreign Minister Fu Ying, who is part of the Chinese
delegation visiting Europe, told Reuters on Saturday that
Beijing remained committed to investing in European bonds and
was willing to lend Portugal a helping hand.

The Chinese government faces criticism at home over losses
which state entities incurred during the global crisis. But
Beijing may calculate that using part of its huge foreign
currency reserves to support troubled European countries would
help to deflect international criticism of its trade policies
and its refusal to let its yuan currency appreciate sharply.

Portugal and China also signed several cooperation treaties
in areas such as financial services, logistics, renewable energy
and tourism, and agreed to work to double their bilateral trade
by 2015.

Hu said he would encourage Chinese companies to invest in
Portugal, while China also wanted Portuguese firms to sell more
goods in the world’s most populous country.


A stern-looking Socrates thanked Hu for a “personal effort”
to achieve not only the doubling of trade and more mutual
investment, but also “a more balanced relationship so that both
our peoples can benefit from this ambition”.

Portuguese imports from China in the January-August period
jumped 47 percent to 1.03 billion euros ($1.45 billion) from
last year, while exports to the world’s second largest economy
in the first eight months of the year totalled just 149 million

Investors’ concerns that Portugal may fail to rein in its
budget deficit and debt have caused its debt premiums to soar
this year, raising the risk of a Greek-style bailout.

But the minority Socialist government maintains it will meet
the budget deficit target of 7.3 percent of GDP this year and
4.6 percent in 2011 year. It is betting on higher exports to
avoid a new recession next year, when tough austerity measures
such as higher taxes and wage cuts will start. [Id:nLDE69C26Q]

In an example of possible investment, Portugal’s largest
company and utility EDP said China Power Holding International
(CPI), with which it signed an agreement for a potential
partnership, expressed interest in buying a stake in the
Portuguese company.

“Given the strategic significance the cooperation
partnership may have, CPI has manifested its interest in a
potential entry into EDP’s capital,” EDP said in a statement.

Other agreements included a joint effort to identify
business opportunities by Industrial & Commercial Bank of China
(0349.HK: )(601398.SS: ), the world’s biggest lender by market
value, and Portugal’s largest listed bank Millennium bcp
(BCP.LS: ).

China’s Huawei Technologies, the world’s second-largest
telecommunications equipment maker, and Portugal Telecom
(PTC.LS: ) signed a deal to work together to develop new
generation services.
(Writing by Andrei Khalip; editing by Myra MacDonald)

UPDATE 3-China offers to help Portugal but silent on debt