China and Portugal have signed a Memorandum of Understanding (MoU) on co-operation within the Belt & Road initiative, in spite of pressure from the European Union (EU) for individual member states not to get too closely tied to China.

The MoU was signed just as a joint venture between China Three Gorges and Energias de Portugual (EDP) which acquired an 80% stake in a group of run-of-river (ROR) hydro plants in Colombia.

Chinese President Xi Jinping met with both Portuguese President Marcelo Rebelo de Sousa and Prime Minister Antonio Costa in Lisbon on 5 December, and during his visit a number of protocols were signed, including plans for Chinese investment in the port of Sines.

During the trip, Xi said that, since Prime Minister Costa's official visit to China two years ago, the consensus reached between the two sides has been translated into concrete results in terms of cooperation. China is willing to work with the Portuguese side to elevate their comprehensive strategic partnership to a higher level, Xi added.

President de Sousa will attend the second Belt and Road Forum for International Cooperation to be held in April 2019 in Beijing, and pay a state visit to China at the invitation of President Xi, a joint statement said.

After the meeting between Xi and Costa, the two leaders witnessed the signing of a MoU between the governments of the two countries on jointly advancing the construction of the Belt and Road.

The signing of an MoU will be viewed with irritation in Brussels, but comes at a time when many EU member states feel distanced from the policies being pushed by heavyweight members France and Germany, and are inclined to accept infrastructure investment from China. In August, Greece signed a Belt & Road MoU.

Xi paid lip service to these concerns during a speech in Lisbon. Noting that China and the EU are comprehensive strategic partners, Xi said that China firmly supports the integration process in Europe, and hoped that Portugal continues to play an active role within the EU to ensure the development of China-EU ties to be in the correct direction.

However, analysts note that China often prefers to bypass the institutions in Brussels, and conduct bilateral relationships with individual countries.

The Three Gorges EDP investment in Colombia had been under discussion for some time, but its signing illustrates how Portugal could be of help to China in promoting Belt & Road in Latin America, as well as providing maritime links between the Panama Canal and Europe.

Panama was also on the list of countries visited by Xi between 27 November and 5 December, along with Spain and Argentina - the latter hosting the G20 summit. While in Buenos Aires Xi also met with US President Donald Trump on the sidelines of the summit.

The investment in Colombia was made by Hydro Global, which is a 50:50 joint venture between China Three Gorges Corporation and EDP (Energias de Portugal). China Three Gorges itself holds a 21% stake in EDP.

The stakes in the Talasa Projectco and Talasa Conexión companies were acquired from Macquarie Development Corporation.

The target companies will jointly undertake the Talasa Project, which foresees the construction of three ROR hydroelectric plants with a combined capacity of 170.9 MW in Rio Atrato in the Department of Choco. Talasa is classified as a project of strategic national importance, and so is a significant investment from China. It is the first investment made by Hydro Global Investment Limited in Colombia.

Talasa has the licenses in place, which were granted by the government, to build and run the hydro concession. The intention is to start construction of the dam within a year. Total project cost is estimated at US$356 million.

Already in 2017 Hydro Global entered the Peruvian market, and on 1 September began construction of a dam with a capacity of 209 MW in the Andes. The total project cost is estimated at US$450 million, and is scheduled to be completed in 2022.

In a July report, Macquarie said that Latin America is preparing for a new wave of infrastructure and energy activity, fueled by new public private partnership frameworks, rising political and economic stability, and a workforce increasingly equipped to manage large and complex projects.

These favourable conditions have produced an inflow of foreign investment, with a reported 226 infrastructure-related transactions worth US$61.8 billion in 2017, as the region attracts a larger availability of capital seeking yield in riskier markets.

Latin America's infrastructure needs are extensive, requiring around 6% of the region's GDP annually between the 2012-2020 period, equaling around US$320 billion, according to the Economic Commission for Latin America and the Caribbean. Current infrastructure investment in the region sits at only 2.8% of GDP, according to a 2017 World Bank report, which ranks as the second lowest for any region in the world, with only Sub-Saharan Africa coming in lower.