Venezuela’s Maduro Touts Progress in Financing Talks With China

  • President says negotiations for fresh support ‘going well’
  • Opposition-led parliament has dismissed chances of news loans

Venezuelan President Nicolas Maduro said financing talks with China were “going well” after the opposition-led parliament dismissed the idea of any fresh support from the country’s largest creditor.

“We are now working with China on new, big tranches of financing. It’s going well, very well,” Maduro said on Venezuelan state television Tuesday. “If it weren’t for those accords with China, we would have a harder time.”

Maduro’s remarks came as the National Assembly stepped up efforts for a recall vote to remove him from office in the face of a collapsing economy. The opposition has warned that international financing deals struck by Maduro’s socialist government without legislative approval would be null and void, and that such concerns were discouraging China and other potential financial backers from increasing support.

Venezuela has over the past decade relied on China for financing in return for oil. The Inter-American Dialogue, a Washington-based research group, estimated that China lent about $65 billion to the country between 2007 and 2015. Venezuela is projected to owe China $18.9 billion by year’s end, according to Barclays Capital Inc.

‘Large Grain of Salt’

Matt Ferchen, head of the China and the Developing World Program at the Carnegie–Tsinghua Center for Global Policy in Beijing, said last month that Chinese officials have recently appeared more reluctant to affirm Venezuela’s pronouncements of new loans. China’s willingness to declare public support for the current Venezuelan government “has been severely reduced,” he said.

“Any comments from Venezuelan officials about new or renegotiated loan packages from China should be taken with a large grain of salt,” Ferchen said. “It has long been in the interest of Venezuelan officials to tout the supportive role China has been willing to play through loans and other forms of economic and diplomatic cooperation, even as Venezuela has fallen deeper into crisis.”

In a May interview, then-Vice President for Economic Policy Miguel Perez Abad said China wanted to support Venezuela, and predicted that an existing $5 billion loan would be renewed in about 60 days. Maduro removed Perez Abad from that post in August.

“The refusal of new loans from China and other countries is due to violations of the constitution and for not sending contracts in the national interest to the national assembly for approval,” Congress President Henry Ramos Allup said in a Twitter post Saturday.

China Talks

Venezuelan Oil Minister Eulogio Del Pino, who’s also president of state-owned oil company Petroleos de Venezuela SA, said in an interview broadcast on Telesur Monday that the country had agreed with two Chinese oil-service companies to participate in new projects. Venezuelan Vice President Aristobulo Isturiz traveled to China last week, Del Pino said.

China’s foreign ministry has said the country would explore ways to make financial cooperation with Venezuela “more flexible” in light of the fall in oil prices. The Communist Party’s flagship newspaper, the People’s Daily, published a front-page commentary in its overseas edition on June 11 that argued for continued support for Venezuela. The piece noted that China held the world’s largest foreign reserves, at $3.2 trillion, while Venezuela sat atop the world’s biggest oil reserves. 

The International Monetary Fund predicts that Venezuela’s economy will shrink 8 percent this year, with an inflation rate approaching 500 percent. The country depends on oil for 95 percent of its export revenue. 

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE