VENEZUELA: Beijing's support is only political, banks do not follow Xi Jinping

Re-elected Venezuelan President Nicolas Maduro has received the full support of his Chinese counterpart Xi Jinping, but Chinese companies appear less enthusiastic.

Xi was quick to send a congratulatory message Tuesday after Venezuela’s National Electoral Council declared Maduro had won 51 percent of the vote and defeated his challenger Edmundo Gonzalez Urrutia, the candidate of the opposition led by Maria Corina Machado. The Carter Center, invited by the CNE as an observer, said the same day that the election “did not meet international standards of electoral integrity and cannot be considered democratic.”

We were little concerned about Beijing, with Xi flattering the socialist Maduro for guiding “the Venezuelan government and people in pursuing a development path suited to their national conditions,” according to Xinhua“China, as always, will firmly support Venezuela's efforts to safeguard national sovereignty, national dignity and social stability, as well as Venezuela's just cause of opposing any external interference,” he said.

The Chinese government considers Venezuela, which is under U.S. sanctions, to be one of its most important global partners. Their bilateral relationship was elevated to an “ironclad strategic partnership” last September, when Maduro visited Beijing for the first time in five years. During the previous trip, the South American nation formally joined the Belt and Road Initiative, Xi’s pet diplomatic project aimed at building infrastructure.

China has about 100 “partnerships” with other countries. They can be classified into five categories, “all-weather” or “permanent,” according to the China Institute of International Studies at the Ministry of Foreign Affairs in Beijing.

China has backed its rhetoric on Venezuela financially. According to data compiled by the Inter-American Dialogue and the Global Development Policy Center at Boston University, Venezuela is by far the largest Latin American recipient of loans from China's development finance institutions, the China Development Bank and the Export-Import Bank of China.

The latest update last year estimated the amount of loans to the Venezuelan government and state-owned companies at $59.2 billion, almost double the amount given to Brazil, a key partner of Beijing in groupings such as BRICS and the Global South movement.

The state-run China Development Bank has 11 representative offices around the world. Caracas has one, along with Astana, Budapest, Minsk, Moscow and others. However, the closeness of the political partnership between China and Venezuela has not necessarily translated to the business level.

The same Inter-American Dialogue database, which tracks lending to the region by China's five major commercial banks (Industrial and Commercial Bank of China – Icbc, Bank of China – Boc, China Construction Bank – Ccb, Agricultural Bank of China – Abc) and Bank of Communications – BoCom), paints a very different picture on this front.

Unlike state-to-state development financing, Venezuela ranks lowest in trade with Honduras, among nine countries. According to records, only one syndicated loan was made in 2013 with ICBC's participation in an oil and gas project at the Puerto La Cruz refinery in Venezuela.

Argentina tops the ranking with 36 loans, followed by Brazil with nine. Unlike the China Development Bank, no commercial bank from mainland China has opened a permanent office in Venezuela.

China’s direct investment in the Latin American country has also dried up. The latest version of the country-by-country foreign investment guide for Venezuela, jointly developed by China’s Commerce Department and its embassy in Caracas, shows that the annual flow of direct investment turned negative in 2019. Net outflows continued through 2022, when the data ends, with a year-end stock of $468.51 million.

The same government report mentioned that China's overall global non-financial FDI in 2023 increased by 11.4% year-on-year to $130.1 billion.

Construction contracts are a similar story. Chinese companies made $160.91 billion globally in 2023, an increase of 3.8%. For Venezuela, the data provided is more than a year old and the amount was only $377 million.

Lucie Giannini

Segui i nostri aggiornamenti su Spigolature geopolitiche: https://t.me/agc_NW e sul nostro blog Le Spigolature di AGCNEWS: https://spigolatureagcnews.blogspot.com/