For the past year, Chinese media has been awash with criticism of Beijing’s high-risk loans to unstable regimes, and Venezuela is always the chief example: Venezuelan economy is on the verge of collapse! China’s 50 Billion loan squandered, Venezuela defaults on Chinese loans: no money, no oil, China and Venezuelan opposition hold talks: ensuring massive loan repayment, just to mention a few.

Well, Western media caught up with Beijing’s headlines. The WSJ’s Kejal Vyas recently wrote an extensive piece on China’s frustration with Venezuela:

“The consensus was that no new money was going to be invested,” said one of the officials. “There was a clear message from up top: Let them fall,” said the official. 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.

China is mainly concerned about debt repayment (approximately $20 billion in loans outstanding), the well-being of more than one hundred thousand of it’s citizens residing in Venezuela, and about who knows what other bi-lateral agreements Venezuela has failed to honor… But they brought this charlie foxtrot onto themselves.

Whatever they saw in our late Comandante and crispy shores, be it access to oil and minerals or a gateway to counter US influence in the region, they miscalculated and and aren’t quite getting enough bang for their buck and the headache. If Beijing is tending bridges to the opposition, it’s because it sees the potential for a government transition on the horizon and wants to secure their interests by being at the negotiating table early.  

It can’t be a good thing when a major financial news outlet like Sohu Business feels emboldened to publish a translated Financial Times article that concludes:

Is political change possible? I have always thought so. Venezuela is an open society with great skills and strengths, even if many of the people now with the greatest skills are expatriates. Even if oil volumes are downgraded, the country has a strong untapped base of natural resources and easy access to the markets of North America. Chavez and his successors have damaged Venezuela but they have not completely destroyed the potential of a country that should be one of the most successful in Latin America.

If ever a nation needs and deserves a revolution it is Venezuela.

International skepticism of Maduro’s regime is growing. Tic. Toc. Tic. Toc.

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  1. “If there has been a country in history in need of a revolution that country is Venezuela.”

    Nothing like being heavily in debt to a communist. Brilliant find.

  2. What would Venezuela be like if we were ruled by people like those that currently run China ??, would we be a ruined country , full of half starved people, with a 700% inflation, terrorized by crime , the best of our young rushing to leave the country ?? Not likely !! what would be the Chances of a Maduro reaching the highest job in the land ?? also not very likely !! on the other hand would the press be as controlled as it is here and any dissenters persecuted , shut in prisons or exiled !! for certain …!!

    • If the Chinese had to actually run the country instead of throwing money at someone else to do it? They would have thrown their hands up in despair long ago. If only they had done that 15 years ago…

      A good Chinese friend of mine always jokes that gringos are predictably unpredictable. However his experiences in latin culture he describes as “hundun” which is, amongst several non-translatable phrases, equivocal roughly to chaos embodied.

      They would love the bureaucracy, corruption and centralization but would be made suicidal by the constant state of accelerating entropy and the contradiciton posed by the apparent desire to live and function in continual disorganization.

  3. As they say, the handwriting has been on the wall for at least the last 3 or 4 years, hence my decision to sell everything and leave Venezuela. Apparently the Chinese are not astute enough for serious due diligence regarding corruption, economic stability, etc. before parting with their money. As long as anyone is stupid enough to invest in Venezuela, the people in control will continue to steal as much as they can. Does anyone really think these crooks care about repayment?

  4. The chinese want their money back, but turns out the boliburgeses stole that too. So here is the plan: they help us hunt chavistas and we split whatever we find in their bank accounts half and half.
    I think last time I checked there were 14 billion under the name of a Chavez’s bodyguard in Switzerland,
    so how about we start there?

  5. Venezuela is the result of mislead popular governments and leaders. Through charisma, feats against USA and sharing crumbles to the people, they got the time to grow strong and poison the system all the way to the roots. Now the greed of the Maduro regime may bring a revolution that will take them and their poison out of the system. I say it may, because sadly, latins we need a lot of pain and suffering before we actually take action like this. If only we could use the stamina we have for party and dancing to revolt and change… history would be totally different.
    Great article champs!

  6. China is finally waking up to the fact that these dumb loans in South America and Africa are never going to be repaid. While jockeying for political influence and a steady supply of oil, the Chinese have blundered into quicksand. They will probably demand to build military bases next so they can protect their shaky investments. Ecuador has already let them into the rainforest. Talk about imperialism!

  7. I am not sure that the 20B figure stated in the WSJ article is accurate. I think the Chinese are still owed at least 30 to 35B. Does anyone here have the current estimated numbers?

  8. Thanks for this informative post. I am very worried about how Russia is still involved in Venezuela. A couple of days back I wrote about the trial in Russia of a Russian businessman and former politician involved in the construction of the Kalashnikov factory in Venezuela. It seems, as usual, his is a story of widespread corruption and inefficiency. The Russian government is trying to cover up somehow for the Venezuelan part.
    But at the same time I read now ex KGB Sechin is still pushing for further investment in Venezuela’s oil sector. (in Russian)

    I translate a part:
    “The cooperation of Rosneft and Venezuela has always had a political aspect which is now particularly important for Caracas in the context of a sharp worsening of the economic situation in the country due to the fall in oil price.
    As President Nicolas Maduro’s position is seriously weakened, the opposition demands his resignation. According to Eulogio Del Pino, the agreement with Rosneft will help raise $ 20 billion “in a difficult situation,” Rosneft is reaching out to the regime, built by Hugo Chavez, both politically and economically,” said Vitaly Kryukov of the publication Small Letters . According to him, “Rosneft” Venezuela offers new ways to optimize business, and that in return – for new projects.

  9. Imagine what cartoonish manner of “accounting” must have occurred when the Chinese deposited actual cash money into a national bank run by a General with no experience in capital markets. I imagine the money was in part supposed to go into maintaining the oil machinery so Venezuela could make good on the oil for money deal, but somewhere along the line….

    I think the common retort about stealing is overstated. But any kind of disciplined spending/investing almost certainly never transpired. But 30 B is quite a lot to fritter away. Once the Chavistas simply dry up and blow away – as they are about to do – the Chinese loans will be what, exactly. Everyone knows certain Chinese were also gaming that money like crazy. That dinero is gone, man. But it would be interesting to see a balance sheet on the whole mess.

  10. we can agree a ton of that money went to Wall street right to pay for their bonds? welll its probably like, ill still 100 million for every billion that i pay wallstreet the bond repayments right? right? damn this government has got to go, when food costs more in black market rate than the US, things are going down the sh!tter.

  11. Whomever does business with Venezuela is crazy, dumb, or corrupt.

    China wanted oil, so ok, they got some oil, but they overpaid and got fooled. They’ll never get their money back, just a bit of heavy oil. Russia and others just made some shady deals with corrupt Venezuelans, they probably also got bribed, on the side…

    You see, people sometimes think that Venezuela is the only corrupt country. But the Chinese, or Russians, or other Latin American countries that trade with Venezuela are no saints. They’ll do a deal, get a cut for themselves, and then let others assume the unpaid debt.

  12. Los chinos se cansaron de fusilar corruptos que andaban botando los yuanes para que el régimen le comprara drogas a las farc-pedos y para engordarle las cuentas a las hijas del podrido.

  13. One of China’s motivation for the loans needs to be emphasized: they were building markets for their products. That is why parking lots outside military facilities are full of Chinese cars. Why they made available household appliances for the Chavistas to hand out ahead of the presidential election (reduces scope for Korean and other manufacturers to maintain dealerships and logistics infrastructure). If the Chavistas had not been so incompetent that the general economy was wrecked, the Chinese might have been on to a big winner, with a large captive market in an “oil-rich” economy. (Ironically, Venezuela would have become a neocolonialist economy, with China the “colonial” power.)

    Nevertheless, I remain surprised that the Chinese continued to make such big deals when the constitutional legality of them became increasingly suspect, because of secret clauses held back from the legislature and the Venezuelan public. They must know that any non-Chavista government would have grounds to repudiate some of the deals as clearly illegitimate. Don’t they remember their own propaganda against “unequal treaties”?

    • “hey must know that any non-Chavista government would have grounds to repudiate some of the deals as clearly illegitimate. Don’t they remember their own propaganda against “unequal treaties”?”

      They probably figured that any new regime would be so desperate for money it would be in little position to repudiate most of those deals without jeopardizing access to loans.


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