Skip to main content

Maduro: China Gives $5 Billion Loan to Venezuela ( Source- The Diplomat /Author- Shannon Tiezzi)

The President Nicolas Maduro
 ( Image source- Wikimedia Commons / Author- Cancilleria Del Ecuador)
Source- The Diplomat

Author- Shannon Tiezzi

Venezuelan President Nicolas Maduro said on Sunday that China has provided a new loan of $5 billion to Venezuela. Maduro said the loan would be used to “finance development,” but did not provide details.

Venezuela, already in a precarious economic situation, has been hit especially hard by the dramatic drop in oil prices that began last year. Data from Venezuela’s oil minister suggests that Venezuelan oil prices have fallen almost 50 percent since last year – from $97 a barrel in April 2014 to $50 a barrel today.

Maduro visited China in January 2015, making no secret of the fact that he hoped to secure a fresh infusion of funding to shore up Venezuela’s struggling economy. Since 2007, China has provided over $50 billion in loans to Venezuela in so-called oil-for-loan deals. That means the loan is repaid in the form of oil and gas shipments from Venezuela to China, ensuring Beijing a steady supply even while Venezuela uses the money to fund necessary projects (or, in this case, perhaps simply to avoid defaulting).

China, however, is moving away from a model of international financing that accepts high-risk projects. Chinese scholars Xue Li and Xu Yanzhou, writing for The Diplomat last month, recommended that “China’s investments in Latin America can be low-profit or even zero-profit, but should not result in big losses.”  When it comes to Venezuela specifically, Xue and Xu argued that China should cut off funding altogether: “China’s investment and loans in that country amount to more than $70 billion. Considering the state’s political and economic situation, it is inappropriate to further increase the amount of investments and loans.”

So why, then, has Beijing done just the opposite and promised an additional $5 billion to Venezuela? It’s likely that China is attempting to avert a major crisis in a country that has given it a geopolitical foothold in Latin America for decades. Chinese media took particular care to highlight the clashes between Maduro and U.S. President Barack Obama in the weeks leading up to the Summit of the Americas, held in Panama City from April 10-11.  A true economic crisis in Venezuela would threaten China’s economic and security interests in Latin America – admittedly, not a crucial region for Chinese foreign policy, but not an area China wants to overlook either. Beijing may be resigned to doing just enough to keep Venezuela’s economy afloat.

About the author- Her main focus is on China, and she writes on China’s foreign relations, domestic politics, and economy. Shannon previously served as a research associate at the U.S.-China Policy Foundation, where she hosted the weekly television show China Forum. She received her A.M. from Harvard University and her B.A. from The College of William and Mary. Shannon has also studied at Tsinghua University in Beijing.

To read the original article, click here

Comments

Popular posts from this blog

Strategic Vanguard blog is moving to a new website, our new home

  Thank you for your continued interest in Strategic Vanguard. This blog strategicvanguard.blogspot.com served as an early platform for sharing curated and syndicated content related to global affairs, strategy, and defense with over 3.18 million readers. However, this space is no longer updated and is maintained only as an archive. We’ve Moved! Strategic Vanguard Now Has a New Home with Original Blogs, Podcasts & More. This move helps us bring you faster, richer, and 100% original content, without the limitations of legacy platforms like Blogger. --- ✅ **Visit Our Official Website for Fresh, Original Content:**  🌐  https://www.strategicvanguard.com 🌐 https://www.strategicvanguard.com/blog 🌐  https://www.strategicvanguard.com/podcast 🎥 **Subscribe to Our YouTube Channel:** ▶️ https://www.youtube.com/@StrategicVanguard 📬 **For Updates, Podcasts, and Articles:** 📰 Visit the blog and podcast sections at the official site. We are also available in t...

Devaluation and Despair: Breaking Down China's Currency Dilemma ( Source- The National Interest / Author- Gordon C. Chang)

Source- Wikimedia Commons / Author- JesseW900 Source- The National Interest Author- Gordon G. Chang On Friday, the People’s Bank of China (PBOC), the Chinese central bank, reversed course and set the renminbi on an upward path. That followed three straight days of devaluation that shook global stock, currency, and commodity markets, sending them downward. Friday’s reversal looks responsible. Nonetheless, the PBOC’s actions last week show policy disarray in the Chinese capital. The net result is that Beijing rattled the world, ruined its reputation for stable management, and did almost nothing to help China’s faltering economy. The daily devaluations follow months of government statements that the central bank would keep the currency stable. Every trading morning, 15 minutes before the 9:30 opening bell, central bank officials announce the day’s reference rate against the U.S. dollar. The renminbi, informally known as the yuan, is then allowed to rise or fall 2...

China releases sick propaganda showing Royal Navy ships being blown up - Daily News