Who’s involved: Chinese President Xi Jinping and Venezuelan President Nicolas Maduro
On 13/09/2023 Chinese President Xi Jinping and his Venezuelan counterpart Nicolas Maduro Moros signed bilateral cooperation agreements in the joint efforts on the Belt Road Initiatives (BRI), economy, trade, energy, tourism, and technology.
The bilateral agreements provide for cooperation in civil aviation, with increased flight connections between the countries, and aerospace. In July 2023, Venezuela expressed interest in cooperating with Russia and China in the International Lunar Research Station (ILRS). Venezuela was the first country to openly support the Sino-Russian spatial initiative, a response to the 2020 US-led Artemis Accords.
The two announced that President Maduro's seven-day visit to China, the first in five years that also coincides with the 50th anniversary of diplomatic relations between the countries, launched a new era of diplomatic ties between China and Venezuela, unveiling an "all-weather" partnership.
During the meeting, Xi Jinping emphasized that China and Venezuela are “good friends who trust each other” as long-term strategic partners for joint and mutual development. In the meanwhile, Maduro praised this partnership as an outstanding example of international cooperation in the Global South and expressed gratitude to the Chinese leader for the support provided to Venezuela to overcome the difficulties imposed by unilateral sanctions and the COVID-19 pandemic.
The meeting also stressed Venezuela's willingness to cooperate with China and join the BRICS and related economic and financial cooperation initiatives such as the New Development Bank, the Global Development Initiative, and the Global Security Initiative. In a statement, Caracas expressed confidence that as the world's largest oil supplier and fourth largest natural gas reserve, Venezuela will greatly contribute to the BRICS.
By signing new bilateral cooperation agreements with Venezuela, China is sending a message internationally, especially to the United States. The strengthening of the bilateral relationship with Venezuela comes just days after the sealing of a strategic partnership between Washington and Vietnam.
Being the largest world importer of crude oil, China is a key player in the Venezuelan oil and gas sector. Since 2007, under the Chavez administration, the development of the oil industry in Venezuela has been financed by Chinese banks under loan-for-oil deals. China is currently Venezuela’s main creditor; it is estimated that Venezuela currently owes over $10 billion to China. Despite the economic crisis that has hit Venezuela since 2014, sanctions imposed by the United States in 2019, and difficulties related to COVID-19, in 2020 China has granted Venezuela a grace period for loan repayment.
Despite U.S. sanctions, China is estimated to have imported about 430 thousand barrels per day (bdp) of Venezuelan crude from January to August 2023, although officially, it has not been supplied with Venezuelan oil since 2019. China has bypassed U.S. sanctions by receiving crude from Venezuela through third-party traders counterfeiting its origin.
The Biden administration is reportedly negotiating with Venezuela for sanctions relief in exchange for free and fair elections. Such a softened stance could come as a reaction to Venezuela's strengthening alignment with China and Russia.
China is continuing to expand its sphere of influence globally, especially in the countries of the Global South, challenging the hegemony and unilateralism promoted by the United States. In a joint statement, Maduro and Xi Jinping expressed their desire to "consolidate a multi-center, multi-polar world and work together to build a community with a shared future."
Through its “South-South” cooperation agreements, China has become a major investor and trade partner for the majority of countries in Latin America. The major areas of bilateral cooperation are energy development, technology, and infrastructure. Besides Venezuela, Beijing has also strengthened space cooperation with other Latin American countries such as Brazil, Argentina, Bolivia, and Chile.
China also established military ties and cooperation with Latin America on issues such as defense and security. In the region, Venezuela is the top purchaser of military equipment from China. Between 2006 and 2022, Beijing exported roughly $630 million worth of weapons to Latin America. China is also a supplier of military aircraft, vehicles, and air defense radars.
China could make use of the renewed relationship with Venezuela to expand intelligence cooperation and espionage activities. This could concern the United States, already alarmed by intelligence cooperation established between China and Cuba. According to the U.S., although Cuban authorities deny the allegations, China since 2019 established espionage facilities on the island.
The elevated China-Venezuela partnership suggests Beijing's growing interest in expanding its economic and political influence in the Latin American region. Twenty-one Latin American and Caribbean countries have already joined the BRI. Chinese engagement in the region is evolving. Under Xi Jinping, China's interests in the area have shifted from the need to access South America's natural resources into a broad international cooperation agenda that includes Infrastructure, security, technology, and even spaceflight initiatives. China overtook the U.S. role as South America's major trading partner and investor. Moreover, beyond economic and financial relations, Beijing demonstrated geopolitical and strategic interests in Latin America by strengthening its influence and diplomatic and military presence throughout the region. Also, China supported Latin America during the COVID-19 emergency, providing loans, medical equipment, and hundreds of millions of vaccine doses. The signing of bilateral agreements between Xi Jinping and Maduro could be a further step in China's strategy to extend its influence and keep eroding U.S. leverage in Latin America.