Few countries can rival the creditor-lender relationship between China and Venezuela on pure volume.  China has loaned more money to Venezuela — some $60 billion — than to any other country in the world and is Venezuela’s largest lender by far. But as Venezuela descends further into uncertainty amid a host of economic, political and social crises, Beijing has remained mostly silent regarding the domestic political struggles of one its largest trading partners in Latin America.

People wait in line as Red Cross workers distributed water containers and potable water purification tablets in Caracas, Venezuela, April 16, 2019. (Meridith Kohut/The New York Times)
People wait in line as Red Cross workers distributed water containers and potable water purification tablets in Caracas, Venezuela, April 16, 2019. (Meridith Kohut/The New York Times)

“China has more or less had its head in the sand, neither overtly criticizing Venezuela, nor offering as much support as other countries like Russia,” said Matthew Ferchen, a research fellow at Leiden University in the Netherlands, who authored a USIP Special Report on China-Venezuela relations.

Still, some see this historically strong bilateral relationship as an untapped source of momentum for resolving Venezuela’s crises. Speaking at a USIP-hosted event, Ambassador Thomas Shannon, Jr., a former undersecretary for political affairs at the U.S. State Department, said, “There are a variety of ways in which China can be engaged and a variety of ways in which it can be moved to play a more helpful role in addressing what's happening inside Venezuela.”

Whether China remains on the sidelines in Venezuela or becomes an active partner in the search for peace will be determined, in part, by whether the international community can find areas of shared interest with Beijing and create new opportunities for Chinese engagement.

Relationship Boom — And Bust

The modern relationship between China and Venezuela dates back to roughly 2003, when China began expanding its lending in Latin America. With a massive domestic demand for oil, Beijing and the China Development Bank (CDB) quickly keyed in on Venezuela’s rich oil industry — issuing loans backed by Venezuelan oil sales that created an economic boom for both countries. “The China-Venezuela relationship was really billed as the poster child for China's win-win rhetoric,” said Ferchen.

In tandem with the economic boom, the bilateral relationship enjoyed a blossoming diplomatic exchange. “[China’s] presence and influence in the region has expanded and diversified so fast, starting with trade and investment, but really moving into all other sectors and aspects of life,” said Adriana Erthal Abdenur, the executive director of Plataforma CIPÓ in Brazil.

However, this mutually beneficial relationship was centered on China’s dealings with one person in particular: then-Venezuelan President Hugo Chavez. After Chavez’s death in 2013, and after the subsequent oil market crash of 2014, the relationship between China and Venezuela hit a number of roadblocks as the oil-driven Venezuelan economy began to sputter and then rapidly declined. Increasingly concerned that the current Venezuelan economic model would never be able to produce consistent growth and reimburse lenders, Chinese officials cut off lending to Venezuela entirely in 2016.

Still, Venezuela remains China’s fourth largest oil importer. Beijing also continues to diplomatically support Chavez’s successor, President Nicolás Maduro. “The importance of Venezuela to China is quite large, no matter what kind of political situation there is,” said Mengqi Yuan, a researcher on China-Latin America issues at Tsinghua University.

In fact, Yuan argued that the relationship between China and Venezuela is still on good footing, despite the turbulence of recent years. She pointed to the medical assistance China sent to help Venezuela weather the COVID-19 pandemic and Maduro’s public support for — and commitment to participate in — China’s Belt and Road Initiative as evidence that the relationship has not soured completely.

Silent on Political and Humanitarian Issues

Yuan and others attributed China’s reluctance to engage with Venezuela to Beijing’s stated position of non-interference when it comes to the domestic political matters of foreign partners. This position, combined with China’s new dual circulation development strategy that places an emphasis on its own domestic development, creates an environment where “China is not putting that much effort” into growing its foreign influence beyond current initiatives such as the Belt and Road, said Mengqi.

But China is under increased pressure to alter course, given its outsized influence in Latin America. “There is a growing expectation of positive constructive engagements by external actors,” said Abdenur. “And of course, that includes China.”

With millions of Venezuelan refugees fleeing to other countries in the region, Abdenur says China’s lack of action on migrant issues is particularly notable: “Historically, when China engages with issues of refugees, it tends to either be very standoffish or focus on the issue of whether China itself should accept refugees.”

Protecting Chinese Interests

Participants agreed that any positive outcome to engagement with China on Venezuela must include the protection of China’s economic and larger political interests. “It's important to understand that China will not be driven out of Venezuela,” said Shannon. “And it will not be talked out of Venezuela either, unless there is an accommodation that protects Chinese interests.” This has traditionally been seen as an impediment to progress but could also produce opportunities if the way forward could produce stability in a future economic relationship. 

“China's pragmatists make it necessary to take into account its interests,” said Marialbert Barrios, deputy of Primero Justicia in Venezuela’s National Assembly. “Their interest has to do with [Venezuela’s] ability to pay the debt that exists with China, but also with the possibilities that China can continue to invest in the country in the future [without] uncertainty.”

The inclination to preserve its interests has been a hallmark of China’s foreign policy over the last two decades. Joe Tucker, a senior expert at USIP, witnessed just how much effort China devoted to ensuring its political and economic interests were protected during the 2005 Sudan peace process.

Chinese officials stepped into an “interesting but quiet” role in negotiating South Sudanese access to Sudanese ports to export oil — a move that was meant to “not only preserve economic interests, but create a more conducive situation for peace,” according to Tucker.

At the same time, Chinese officials were also hesitant to engage on complicated issues unrelated to Chinese investments. However, this hesitance wasn’t seen as a negative, as the United States and others knew that China’s narrow engagement on areas of interest lent a helping hand to the process overall. “I don't think the Chinese would have felt comfortable engaging on security arrangements on disputed border areas, and that was fine,” said Tucker.

For Abdenur, moments like those are “very important precedents to point out if we're trying to think of constructive engagement, even beyond the political level.”

Converging Interests

One key to getting China to engage in Venezuela, therefore, is to find issue areas where Beijing’s interests and those of the broader international community and Venezuela intersect.

In the 2005 Sudan peace process, that issue was South Sudan. “When it became clear that that peace really hinged on the timely conduct of a referendum on South Sudan's independence, the Sudan policies of China and the U.S. actually converged,” said Tucker.

In moments like that, Tucker stressed the need for flexibility and “to engage on the widest possible range of issues so that issues of interest can be aligned, even if one party is focusing on an economic issue or a political issue.”

It also means allowing China to work more through international groups such as the United Nations and the Inter-American Development Bank — organizations that the United States and others have recently blocked China from engaging in. “The extent to which we have attempted to block and prevent China from playing a significant role in regional institutions has actually limited what those institutions can do for Venezuela,” said Shannon. “This has not been helpful for U.S. policy.”

On the issue of refugees, Abdenur pointed out that while China has traditionally been reticent to accept refugees or engage in the UNHCR, it has started to play more of a role in humanitarian and refugee crises. Examples include assistance for refugees from South Sudan, Afghanistan and the Palestinian Territories, which could be a model for Chinese support to Venezuelan refugees in Latin America.

Meanwhile, Tucker said the involvement of the African Union in the 2005 Sudan negotiations was paramount for lending legitimacy and stability to proceedings: “If another stakeholder, maybe [a] non-African regional bloc or entity tried to do this, I wonder if China … would have taken as proactive and helpful a role.”

China has maintained good relationships with similar regional blocs, such as the Organization of American States and the Community of Latin American and Caribbean States, which could allow for opportunities to engage with the region as a whole.

However, this path is not without challenges. “Unfortunately, we're living through a moment here in South America in which regional arrangements and cooperation initiatives are either paralyzed due to political infighting … or lack of commitment,” said Abdenur.

Still, increased Chinese engagement in Venezuela will depend as much upon converging interests as it does on opening doors for cooperation that have traditionally been shut.

“I think in many ways, the big challenge that we're going to face in the 21st century is not how the United States and China compete,” said Shannon. “I think the big challenge is going to be how we cooperate and how we collaborate, and how we find a way to keep the peace and ensure that together we can address significant problems.”

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