Photo: retrieved

It’s safe to say that China’s actions in Venezuela, as well as the rest of the developing world, point out a very clear policy with specific goals. China’s involvement in the country, although substantial, isn’t unique and Venezuela isn’t the only place where it’s been controversial. Critics claim that China is exercising a “Debtbook Diplomacy”, loaning exorbitant amounts to emerging markets in order to keep them dependent for decades to come.

But isn’t the Debtbook Diplomacy just a new form of predatory, exploitative colonialism? One that comes from a superpower with a well-known history of censorship and human rights abuse?

Last week Reuters reported the deep involvement between the Chinese telecommunications company ZTE in developing the carnet de la patria as a tool for social control of the Venezuelan population. ZTE’s head in Venezuela said that they “don’t support the government” but they simply were “developing [their] market”.

Critics claim that China is exercising a “Debtbook Diplomacy”, loaning exorbitant amounts to emerging markets in order to keep them dependent for decades to come.

However, one doesn’t necessarily exclude the other.

According to official sources, in 1999 trade between Venezuela and China amounted to $500 million. In 2009, it was over $7 billion. Right now, the world’s largest oil importer has heavily invested in their closest ally in the region, lending over $70 billion, for infrastructure, communications, agriculture, industry—particularly on extraction of natural resources—and trade.

All this works through the Chinese-Venezuelan Fund and the Chinese Development Bank via the Social and Economic Development Bank of Venezuela (Bandes) and with assistance of the National Development Fund (Fonden), both of which drew attention early on for their lack of transparency, even for chavista standards. So, you can imagine.

As our Daniel Urdaneta points out, this money mainly ends up bringing in Chinese goods and services, developing projects in Venezuela, and a special allocation to the executive branch. So far, the Chinese embassy said in 2014 that it had financed over 220 projects in Venezuela. By 2018, the Ministry of Economy and Finances reported the number had increased to… 220!

Regardless of the real number and current state of these projects, they include the Simón Bolívar satellite, Gran Misión Vivienda Venezuela, Venezolana de Industria Tecnológica, the Oderbrecht-built Piar power dam, and a nationwide railroad system set to be finished by 2030 that so far has created El Tren de Aragua only.

The corruption has been so large, that even the government had to make some arrests to keep up appearances.

Needless to say, the corruption has been so large, that even the government had to make some arrests to keep up appearances.

These loans are payable in an oil-for-loan scheme that worked well when the oil prices were well above $100 per barrel, but became increasingly difficult to cover as both prices and production took a fall. By January last year, PDVSA was ten months behind, owing 3,2 billion oil barrels to the State-run China State Petroleum Corporation.

Right now it’s reported that 80% of oil production is used to pay off debts with China and Russia.

Yet, the Chinese government continues to support the Bolivarian Revolution, despite continuous failures to fulfill their obligations. Or maybe they don’t see it as a failure, but simply a bet in which they win either way.

Take for example the Belt and Road Initiative, China’s ambitious and far-reaching series of trillion-dollar construction projects connecting terrestrial and maritime routes in 70 countries, mainly Southeast Asia with Africa, the Middle East, Eastern Europe.

Fun fact: it’s been promoted with catchy music videos!

But these large-scale projects are anything but a gift. The gregarious example is Sri Lanka, that ended up granting a 99-year lease on a major port to Chinese-controlled firms after China financed its construction in 2007 and soon became a money pit that required more loans.

In Latin America, between 2006 and 2016 trade with China rose 200%. It has built a highway in Colombia, two nuclear plants in Argentina and a container port in Brazil, where it has invested billions in energy companies. President Bolsonaro said that they “were buying Brazil” only to quickly have his deputy do some damage control.

Meanwhile in Mexico, López Obrador’s incoming Minister of Foreign Affairs already declared that China is one of the “key countries” in the new president’s economic plans. However, the most talked infrastructure project, developing a transoceanic canal through Nicaragua by a Chinese billionaire with deep ties to Zelaya’s government, seems to have stalled since it was proposed a few years back.

One could make the case that China’s involvement with Latin America and the rest of the developing world is hardly special, particularly if you compare it with the outreach of the United States and Western Europe. After all, the U.S. has a more than spotty record on meddling in Latin American countries for their own interests. You can rightfully criticize the U.S. and Europe for a lot of things, but that doesn’t mean any other player gets a free pass.

Not trading with China isn’t an option, not in an interconnected world and particularly not in the Global South. It’s one of the world’s largest economies and the biggest exporter. As much as leaders like Bolsonaro claim they can block their influence, they are trying to cover the sun with a finger.

China will eventually be measured with the same yardstick than the rest of the developed world.

When ZTE claims it’s simply developing their market, it’s saying the truth. After all, as Belt and Road has proven, they have no issue in developing their markets in Belarus, Iran, Turkey, Turkmenistan and Saudi Arabia. Government surveillance is simply another business for them, one that enables abuse from their business partners against their respective populations.

Sadly there isn’t much Venezuelans or the majority of the world population can do about it. Just hope that, as superpowers continue playing their games, China will eventually be measured with the same yardstick than the rest of the developed world.

But it seems easier to simply have everyone else lower their standards instead.

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16 COMMENTS

  1. China has a lot invested in Chavismo. As a matter of fact, I think that a case can be made that if/when the Chavist house of card collapses, China fears that the likelihood of getting repaid their Venezuelan debts approaches ZERO.

    A rock and a hard place. Throw more money into the cesspool of corrupt Chavismo and hope for the best, or hope that the next leaders of Venezuela will acknowledge the Chinese debt and work to repay them.

    I would make it very clear that any money loaned to Venezuela since the banishment of the AN are null. I would also make it clear that things are turning to shit in Venezuela and the day is fast approaching when even Chavismo will stop exporting crude to China, and China is best served by making friends with a less corrupt regime.

    China wants to be a pain in Uncle Sams ass, but they are done throwing money into the shitter.

  2. At some time, obviously, the Chavista house of cards has to crash, and when it does, the old days of tin horned crooks bolting the country with bags full of loot are over. While they might work out some amnesty thing in country, the biggest Veny crooks will be facing international charges that cannot be swept aside with a little guiso and a backroom deal. The Us, apparently, has been painstaking in building air-tight criminal cases against the most profligate Chavista bandits – or at least some of them.

    https://www.miamiherald.com/news/local/article222226225.html

    Andrade and the others are singing like parrots to avoid long jail terms. Wonder how this will all play out and who is going down. The US is being pretty tight-lipped on what they have against who.

  3. and a nationwide railroad system set to be finished by 2030 that so far has created El Tren de Aragua only.
    Rather witty, that. I clicked on the link expecting to find information about railroad construction- or the lack thereof- and instead find about a criminal gang named El Tren de Aragua. 🙂

    Jumping from the arms of the bloodsucking xYanquis de mierda into the arms of the Chinese, in the expectation that the Chinese would be more fair and generous to Venezuela was not one of Chavismo’s better moves.

  4. Nice report on the Chinese Monster. With 1.4 Billion people, China has more than 4 times the population than the USA. From an isolated, communist, agricultural society, spiritual, poor, they are quickly transforming into an industrialized production machine. No way to stop that train. Their global influence will continue to grow as the enormous Capitalistic appetite of 1400 Million people grows exponentially in a fast, technological era.

    Which is ok, as long as there are certain rules and and the trade game is fair. If they produce all kinds of products cheap, with good quality, and you want to import them, fine. Both parties benefit. Say you need a vacuum cleaner, you go to the local store, 5 models available. You’ve done your homework, technically and price wise. If 3 models are Chinese, cheaper and better than the others, well, thank the damn Chinese. They’ve helped you out, or you would have had to buy a more expensive, worse product from somewhere else. That’s why half of the gadgets and stuff we have at home is “made in China”.

    You’d think, ok fair game, it promotes global competition and keeps prices in check. But that where the sneaky Chinese start to piss me off. They don’t play a fair game. Not just with Tariffs, as Trump says, I dunno if that’s true or not. But for starters, they treat their enormous work force like shit. Their factory workers are paid nothing to work endless hours in sub-human conditions. So the cost of labor is even cheaper than in India or Mexico. The USA and Europe lose their edge from the start. They copy any new product invented elsewhere, copy the technology, except their materials are also cheaper to acquire, because they have zero environmental laws. Much like the Japanese who exploit the seas with industrial fishing and sell their cheap fish everywhere, the Chinese get their building materials much cheaper, because they don’t mind destroying the planet, polluting like hell in the process.

    Also, at the Marketing level, Internationally they simply bully and bribe desperate, corrupt countries like Venezuela. Lending them money to make them slaves, striking obscure production deals for decades to come where they always win, mortgaging poor countries for their benefit. They don’t care in people in failed countries like Venezuela starve; they care about net profits and personal wealth. Forget ‘communism’ or ‘socialism’ or Chinese “Zen’.. they are money-hungry Capitalists. And they are sneaky, they work in the shadows, making deals under the table, deals no one really knows the details of. They constantly bribe and extort, forcing the smaller countries to give away their resources and give everything they got. They’re even ‘buying Brazil’, as their President says. Venezuela was sold for nothing long ago, totally mortgaged for decades to come, unless a future right-wing dictatorship refuses to repay them and kick them out one day.

    That’s nothing short of modern Colonization. You don’t see ship armadas, helicopters or troops on the ground. It’s done noways through economic strangulation, which leads to national submission. Damn the wicked Chinese invaders. Most of the planet will belong to them very soon, Africa is next.

    • “They don’t care if people in failed countries like Venezuela starve; they care about net profits and personal wealth. Forget ‘communism’ or ‘socialism’ or Chinese “Zen’.. they are money-hungry Capitalists. And they are sneaky, they work in the shadows, making deals under the table, deals no one really knows the details of. They constantly bribe and extort, forcing the smaller countries to give away their resources and give everything they got.”

      Mao says “communism for the slaves; capitalism for the masters.”

    • They needed every centavo of oil profit to pay Crystalex to protect Citgo. They can’t afford to send the Russians or Chinese anything close to what they owe.

      And just want until they have to come up with another $1.5 billion within the next 9 months (3 payments) for ConocoPhillips, not to mention bond payments. And exponentially decreasing oil production!

      I don’t see how the hell they can hold on to Citgo.

  5. Jose G. V.: Great job disclosing information that the rest of the world had best start paying attention to. China has, for the last several decades, been turning their international profile into that of slumlord. Shortly after Jimmy (“the blood of Christ”) Carter gave away the Panama Canal, China began buying the land on both ends. In the mid 70’s China began numerous covert operations in Brazil, Venezuela and Trinidad. It is a safe bet that China’s under the table dealings have grown exponentially. US threat assessments have stated, in the 80’s, that US’s greatest threat would come from our southern border and would NOT speak Spanish. President Trump understands very well the risks, ergo his moves to kick China in the economic scrotum.

  6. There is no ideological motive to Chinas involvement with Venezuela , just the pursuit of once promising business opportunities now gone sour , they are not happy with how things have turned out , they have little sympathy for the regime incompetence and heavy handed corruption and lies , but they are already owed a lot of money that they can only hope to get paid one day if they keep giving it the barest of supports with existing investments ……., they went for what looked like a great deal and now wake up to the fact that its really a big lemon……!! what ive heard from private comments by Chinese bosses is that they are deeply dissapointed with the regime and would rather switch to the exploration of business opportunities in other countries. They dont go public with their dissapointment but the feeling is thick and real in the inside of their corridors of power . They have their own big challenges to face in a world economy thats changing big time …….., people doent realize it but they are as careful in making sure that their business are formally lawful than the most traditional western capitalist investor………!!

  7. Interesting news story today about how China’s economic professionals, and people, are pissed with the government over their VZ policies.

    I would take a moment to link it, but why bother if I run a 50% chance of this post getting deleted anyway?

    • I would take a moment to link it, but why bother if I run a 50% chance of this post getting deleted anyway?
      Yesterday I would have considered you paranoid for stating that. I posted a link, and guess what happened? My comment got deleted.
      I will post the link again. China’s Venezuela Policy Is Losing Popularity – in China
      I will also post a link regarding CC’s stated policy on deleting comments. Read the Comments.

      Think of our comments section as our Living Room — if you wouldn’t say it over beers in a friend’s living room, don’t write it here. If your comment doesn’t meet the minimum standard of civility reasonable people would respect in that kind of setting, we’re going to delete it. It’s not a punishment, it’s a defense mechanism for the discussion.

      We want to turn our comments forum into an attractive place for smart, engaged people to dive into quality debate about Venezuela.

      There’s no ideological filter here, but there is a civility filter. Disagree vehemently if you need to, but keep it civil.

      According to the powers that be at CC, posting a link regarding Chinese policy towards Venezuela is not civil. Orwell time.

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