Venezuela is a panorama of misery. Each month tens of thousands flee across borders from spiraling inflation, grinding poverty, rising crime and rapidly spreading disease. The deeper Venezuela sinks into turmoil, the more leverage China acquires over the government of President Nicolás Maduro. But rather than nudge Caracas toward an exit from political and economic crisis, Beijing has opted to watch and wait.
China’s position is not so surprising given its overriding concern to ensure long-term access to Venezuelan oil and other raw materials. With Maduro as an ally, Beijing has moved to expand its stake in Venezuela’s extractive industries. It loaned Caracas approximately $60 billion between 2007 and 2017, cash infusions that have alleviated growing financial pressure on the Maduro government.
Yet Beijing’s support is not without limits. Last year China baulked at making new financial commitments due to an outstanding bilateral debt reportedly in excess of $19bn. Frustration is also growing with the Venezuelan authorities, whose incompetence and corruption have led to a dramatic drop in oil production. Combined with lower oil prices, this decline has placed the country on the verge of full-scale default. While Beijing has shown some flexibility in restructuring debt repayments, it is reluctant to throw good money after bad.