Will China Save Venezuela?. Maduro asking more from Bei Jing.
China has already extended
over $50 billion in loans to Venezuela since 2007 in return for guarantees of oil deliveries in the future. With Venezuela in desperate need of financing, Maduro is hoping Beijing will once again open its coffers. However, China has proven reluctant so far to extend more cash to Venezuela beyond the
$4 billion cash-for-oil deal President Xi Jinping signed with Maduro during a July visit to Venezuela.
Venezuela’s
Nuevo Herald,
citing Inter American Trends, said that Maduro was on the cusp of winning at $16 billion loan from China, if Caracas is willing to agree to the “very harsh conditions” set forth by Beijing. According to Inter American Trends, China is once again seeking guarantees of future oil deliveries in exchange for the loan, which could require Venezuela to up its shipments to China by more than 100,000 barrels per day. Venezuela currently exports over
500,000 barrels of oil per day to China, more than half of which already go toward repaying previous loans.
This is not a done deal. Beijing remains reluctant to commit more resources to Venezuela, in part because of the precarious economic situation. As Eurasia Group analyst Risa Grais-Targow
told the Wall Street Journal, China “learned a lesson from the initial no-strings-attached loans” made to Venezuela and is unlikely to go down that path again. The death of former President Hugo Chavez, who provided a personal bond between Venezuela and China, has also impacted the bilateral relationship. Still, China has an interest in preventing a Venezuelan default. Even if Beijing does not shell out billions in new loans, it could
give Caracas permission to restructure repayment of previous loans, allowing Venezuela to sell more oil instead of shipping it to China according to the original loan terms.
When asked if China would “show support to the Venezuelan government,” Foreign Ministry spokesperson
Hong Lei replied that Beijing “understands that the fall of international oil price has exerted an impact on the economy of some countries, including that of Venezuela.” He added, “The two sides enjoy full-fledged and effective cooperation mechanisms in the field of financing. Relevant cooperation between the two countries is running smoothly.”
Maduro will also stop in unspecified OPEC countries, where he will try again to convince fellow OPEC members to agree to cut production in order to shore up prices. A similar attempt last November was unsuccessful. If Maduro’s pleas once again fall on deaf ears, Venezuela’s fate will be largely in Beijing’s hands.