China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics
China is Venezuela’s largest bilateral lender as well as a source of diplomatic support. Yet for half a decade Beijing has been steadily unwinding its financial ties with the struggling South American nation.
In a new, deeply-researched report, Stephen Kaplan and Michael Penfold demonstrate how China has been ensnarled in a creditor trap in Venezuela. For years, China lent to Venezuela with few policy conditions, securing their lending with loan-for-oil deals and wagering that Venezuela’s oil production capacity was a sufficient guarantee for debt repayment. However, under the shaky leadership of Nicolás Maduro, Venezuela’s economic and political dysfunction has grown at the same time that Chinese confidence in the Bolivarian nation appears to have plummeted.
China’s recent lending has been defensive, providing some temporary debt relief to Venezuela to protect Beijing’s considerable financial commitments in the country. At the same time, the Asian giant has signaled its willingness to work with opposition leaders. What does the future hold for China-Venezuela relations, in both economic and political terms?
About the Authors
Stephen B. Kaplan
Associate Professor of Political Science and International Affairs, George Washington University
Michael A. Penfold
Professor of Political Science, Instituto de Estudios Superiores de Administración (IESA) Business and Public Policy School, Venezuela
Latin American Program
The Wilson Center’s prestigious Latin American Program provides non-partisan expertise to a broad community of decision makers in the United States and Latin America on critical policy issues facing the Hemisphere. The Program provides insightful and actionable research for policymakers, private sector leaders, journalists, and public intellectuals in the United States and Latin America. To bridge the gap between scholarship and policy action, it fosters new inquiry, sponsors high-level public and private meetings among multiple stakeholders, and explores policy options to improve outcomes for citizens throughout the Americas. Drawing on the Wilson Center’s strength as the nation’s key non-partisan policy forum, the Program serves as a trusted source of analysis and a vital point of contact between the worlds of scholarship and action. Read more
Kissinger Institute on China and the United States
The Kissinger Institute works to ensure that China policy serves American long-term interests and is founded in understanding of historical and cultural factors in bilateral relations and in accurate assessment of the aspirations of China’s government and people. Read more