China supports Maduro in Venezuela to protect his investments

Washington

The results of Venezuela's presidential election have sparked fierce protests at home and criticism abroad. While the United States threw its support behind opposition leader Edmundo Gonzalez, China and Russia quickly backed incumbent President Nicolas Maduro, who has been in power for 12 years.

On Monday, Venezuela's electoral council said the president had won 51 percent of the vote, compared to 44 percent for Gonzalez. The results sharply contradict exit polls, which had Gonzalez leading by a wide margin.

The Carter Centerwhich was invited to observe the election, issued a statement saying the vote “did not meet international standards of electoral integrity” and said the result “cannot be considered democratic.”

Most Latin American countries, with the exception of Bolivia, Nicaragua, Honduras and Cuba, have rejected the official election results or expressed concern about them. In contrast, China's reaction has been markedly supportive: President Xi Jinping has fully backed Maduro, saying that Beijing will “firmly support Venezuela's efforts to safeguard national sovereignty, national dignity and social stability.”

“China prefers a stable Venezuela, and what it identifies as [a] “The credible source of stability at the moment is Nicolas Maduro,” Antulio Rosales, an assistant professor of business and society at York University, told VOA.

“So even if Maduro manages to stay in power through undemocratic means, it is clear that China sees him as a more credible possibility for stability,” he noted.

Evan Ellis, a research professor of Latin American studies at the U.S. Army War College, said Beijing's massive investment is also a factor.

“China has had a long-standing trade and political relationship with the leftist regime of Hugo Chavez and now Nicolas Maduro since the early 2000s, including recognizing it as a strategic partner under Hugo Chavez, and upgrading that relationship to a comprehensive strategic partner last year under Nicolas Maduro,” he told VOA.

Maduro and Xi announced last September that their bilateral relationship had been elevated to an “ironclad strategic partnership,” the highest level of cooperation between two nations.

China now holds a substantial loan portfolio in Venezuela, accounting for nearly half of all Chinese loans to Latin America and the Caribbean. It is estimated that China has financed projects worth more than $60 billion in Venezuela.

In return, China obtained key resources from the oil-rich country, including crude oil and minerals, through a loan-for-oil model.

Strategic importance

Maduro also repays China by staunchly supporting the country on the international stage. His administration has given unconditional support to China, including endorsing Beijing’s one-China principle by recognizing Taiwan as an inalienable part of China. In addition, Maduro supports China’s national security law on Hong Kong and backs China’s claims in the disputed South China Sea.

Venezuela is also collaborating with China to expand social control measures. The Maduro government has acquired from China the Homeland Card system, which includes a unique personalized QR code capable of tracking individual votes and social media usage.

“Venezuela is important to China’s overall ambitions in the Americas, including access to resources, markets in strategic sectors, strategic political objectives, and military options if it ever has to wage war with the United States in the Indo-Pacific,” said Ellis of the U.S. Army War College.

Antonio C. Hsiang, a research professor at Chile's National Academy of Political and Strategic Studies, told VOA that Venezuela has become an important battleground in the rivalry between the United States and China.

Hsiang argued that Venezuela's political resistance to the United States and its efforts to undermine American influence within inter-American institutions serve as a strategic distraction for the United States in its own hemisphere, ultimately benefiting China.

Economic responsibility

The Chinese business community, however, is not so happy with the Maduro government.

Venezuela, once the richest country in Latin America due to its global crude oil reserves, has seen its current government's popularity decline significantly. The decline is attributed to an economic crisis fueled by falling oil prices, corruption and failed policies.

In 2013, the sharp drop in oil prices, a key export for Venezuela, triggered a severe economic and political crisis. The country’s GDP contracted by 75% between 2014 and 2021. Annual inflation soared to more than 130,000% in 2018, according to the central bank. These factors led Venezuela to suspend loan repayments in 2020, including those to its main creditor, China.

“China is not particularly concerned about issues of transparency or corruption at the domestic level. [in Venezuela]”, Rosales said. “Beijing is focusing more on Caracas' inability to execute some of the projects it committed to.” He observed that Chinese companies have stopped investing more in the country.

It may take weeks, if not months, to determine whether China's gamble on Maduro will pay off. Rosales, however, suggested that China's concerns about Venezuela are unlikely to change even if the opposition party comes to power.

“China has good relations with countries like Chile, which has long been ruled by pro-market regimes, as well as Brazil, which has been ruled by center-left governments,” he said.

“It is important to recognize that regardless of power, China's main concerns will remain the same: long-term stability, the ability to carry out projects and the ability to repay debt,” Rosales said.