Venezuela’s increasingly dependent on China’s financing and direct investments to the tune of US$80 billion. In exchange, China is playing a greater part on Venezuela’s strategic decision making regarding especially the oil-producing Orinoco area.
Clearly by now Venezuela (which by now can’t even pay its oil drillers) won’t pay the billions of dollars back:
These days, confronted with a pile of unpaid bills and increasing security headaches for its citizens and companies in Venezuela, China appears to be recalculating its alliance with the nation where it has made about $60 billion in loans.
As a result, Venezuela may not get meaningful fresh loans or investment from China, raising the possibility of deeper cutbacks and shortages in the oil-rich nation or a default on more than $110 billion in government and state-oil-company bonds.
There are also security concerns, as more Chinese Venezuelans and expats are being kidnapped and extorted by local gangs (likely including the government-armed colectivos).
It’s not clear how many expats are living in Venezuela at the moment. Eight years ago, Daniel Duquenal reported on the large number of Chinese passengers traveling on his flight from Paris who were rushed through customs upon arrival in Caracas.
21st Century Socialist Bolivarian Revolutions need money, and China is aware that the Venezuela regime can not survive without it (emphasis added),
Since February, at least three Venezuelan opposition lawmakers as well as economists and oil-industry consultants have gone to Beijing at the invitation of China’s Communist Party to discuss a transitional government and recovery plan to turn around the world’s worst-performing economy, according to several Chinese and Venezuelan people familiar with the talks.
While the WSJ article reports that the Chinese may be agreeable to negotiating with the opposition,China’s foreign ministry denied it in writing.
If China gets serious on this, it will not only have repercussions for Venezuela, but also for the hemisphere. As it is, China is “reassessing political and nonpayment risk” on its businesses in Latin America and Africa.