China Development Bank Corp. has deposited $4 billion with a Venezuelan state-run institution as part of the renewal of a bilateral investment fund, President Hugo Chavez said.
Venezuela will add another $2 billion to the fund from its National Development Fund known as Fonden to continue investing in infrastructure projects in the South American country. Venezuela repays the loans to China with oil exports.
“A new tranche of the China-Venezuela fund has been activated with $6 billion which is good news, our financing system for works and projects,” Chavez said today during a nationwide broadcast. “My appreciation goes out to China.”
China has lent Venezuela more than $36 billion since 2007 for investment in infrastructure projects including a railway in the central plains of the oil producing nation and housing projects. Venezuela currently sends about 640,000 barrels of oil a day to China, of which 264,000 barrels is to repay the loans, Oil Minister Rafael Ramirez said in an interview with El Universal on Aug. 15.
Venezuela is increasingly looking to China for credit to fund development projects as interest rates in international markets rise on perceived risk of Chavez’s heterodox economic policies. The extra yield that investors demand to hold Venezuelan debt over U.S. Treasuries is the highest of major emerging market economies after Pakistan and Argentina.
Chinese companies including China National Petroleum Corp., Qingdao Haier Co. and Chery Automobile Co. operate in the country and have benefited from the increased economic activity from the loans.