China-Venezuela oil deal at risk

Beijing has lent billions to Caracas in recent decades, and the fate of money it is owed is in question after the ouster of Venezuela’s leader, writes Alexandra Stevenson from Hong Kong

- Alexandra Stevenson

China's President Xi Jinping and Venezuela's President Nicolás Maduro in Beijing in 2023.

(MIRAFORES PALACE/REUTERS)

The bargain was struck when China was thirsty for oil and Venezuela was hungry for cash. Now, with the ouster of Venezuela's leader, Nicolas Maduro, the partnership's future is in question.

In the early 2000s, China's economy was expanding at such a voracious pace that it needed more energy to power its growth. Beijing, which imports most of its oil, sent its companies to scour the world to secure access to resources. They found a willing partner in Venezuela, where its leader at the time, Hugo Chavez, was looking to diversify his country's economic ties away from the United States.

The two countries struck a trade partnership that would yield more than $100 billion in financing promises from China in exchange for Venezuelan oil.

The Chinese money financed railways and power plants and gave Caracas much-needed cash. Venezuela, in exchange, paid the money back with “all the oil that China needs for its growth and consolidation as a power” as Chavez put it in 2010.

The deal continues today under far more challenging circumstances and a lack of clarity over what happens next. Over the years, Venezuela has worked to pay down its debt to Beijing and is estimated to owe around $10 billion, according to AidData, a research institute at the College of William and Mary in Williamsburg, Virginia.