Top officials from Venezuela are in China this week, strengthening diplomatic ties and seeking investments in energy, infrastructure, and telecoms. This comes amid the visit of Venezuelan President Nicolás Maduro to China from September 8th to the 14th. Huang Fei reports.
China and Venezuela have maintained diplomatic ties for nearly half a century.
Nine years since relations were officially upgraded to a "comprehensive strategic partnership", Beijing and Caracas are set to strike new deals in key industries.
Venezuela has the largest crude reserves in the world, but international sanctions have hurt export revenues.
China offers crucial funding and investment, while promising no interference in the country's sovereign affairs.
HE XI Deputy Director of Center for Latin America Studies, Jinan University "For a long time, Venezuela's economy has been highly dependent on oil. With domestic politics normalizing, the oil sector needs urgent capital injection, which will help revive their entire national economy. For China, the Venezuelan energy sector offers huge investment opportunities, and Chinese firms already have a lot of experience in this area."
HUANG FEI Guangzhou "China's growing ties with Venezuela come at a challenging time for Latin America. Rising debt stress, inflation and the global impacts of the ongoing conflict in Ukraine are hampering economic recovery. China has played a key role in developing energy and infrastructure projects in Venezuela. More investment is on the horizon with Beijing signing several new free trade agreements with Latin American countries this year."
The World Economic Forum reports that trade between China and Latin America grew more than 20 times in the last two decades, and is expected to exceed 700-billion US dollars by 2035.
But Venezuela remains a risky investment for Chinese firms.
HE XI Deputy Director of Center for Latin America Studies, Jinan University "Sometimes, normal investments from China can be over-interpreted as a political move in Venezuela, and that can be a risk factor. Secondly, Venezuela's credit rating has been downgraded to the lowest by Moody's Investors Service. Chinese companies will have difficulty financing in the country. They need to look at diversifying investments and mitigate credit risks."
Despite these challenges, China's economic footprint in Latin America is expected to grow.
The World Bank has advised policymakers to attract more investment by maintaining economic stability, improving customs regulations and trade promotion agencies.
Huang Fei, CGTN, Guangzhou.
（CGTN Huang Fei）（2023-09-10）