Caracas Chronicles

It may sound like a cliché, but I think we all have that one shameless “friend” who only shows up when he needs something. It’s now been five years since the last time Maduro visited China in September, 2018, just a few months after his extremely controversial (and illegally convened) reelection. This week, he paid a new visit to Xi Jinping, just a few months away from another presidential election. On both occasions, Maduro rings the bell while on shaky financial footing, even after the fifty to sixty-five billion dollars that Venezuela has borrowed from China since 2007. 

Maduro probably believes that this is an important time to reset relations with Beijing after a few years of cold-shoulder distance and now that the local oil sector has had a… change in leadership. Being that shameless friend, Maduro wrapped up a seven-day visit to China with the execution of many agreements but not a lot of solid investment numbers to throw around. This last bit is important both for propaganda efforts as well as for securing votes in the upcoming presidential campaign. How badly does Maduro need the cash, and would China even give it to him?

Venezuela’s recent history is one of piling crises, and this year has been quite a tough one. For the second-consecutive year, the government has failed to raise the minimum wage, even amid almost daily protests from all over the labor market and different political camps. Hyperinflation looms again, as the government looks to spend as much as it can get away with for the campaign, with economic growth projections for 2023 looking a lot worse than last year’s. Maduro’s need for more cash is pretty clear, so he’s turned to China in an attempt to secure the financing for the good vibes propaganda campaign he needs in order to motivate voters once more, let’s not forget that PSUV’s results in the 2021 regional elections were pretty miserable in terms of voter turnout. 

Smiling smugly next to Xi in Beijing as the latter announces a new “all weather strategic partnership” status could favor Maduro in the ongoing negotiations between Caracas, the United States, and the local political opposition.

That said, now’s not the best time to ask Beijing for help. Economic growth in China has seriously slowed down in the past few years. The situation is so dire that, for the first time ever, communist party elders scolded Xi Jinping during the annual party retreat at Beidaihe over the state of the nation. Nevertheless, Maduro went over with an extended palm—which can give us some insight into how bad the government’s finances are.

While it’s clear what Maduro wants from China, what can Venezuela offer in return? Why would China pump even more money into a country that’s clearly incapable of paying back? 

It’s easy to point at the amounts of cash that China put into Venezuela, compare them to the value of oil that’s been shipped over, and conclude that they’ve gotten a bad deal. But, as Brian Ellsworth wrote on Twitter, things are a bit more complicated than that. For starters, beyond securing future oil shipments that China doesn’t desperately need right now, the country has found another market for its manufacturing output. More than the usual in any Western country, if you walk into any Venezuelan supermarket you’ll find dozens of Chinese goods, sometimes all together in the same aisle. Toys, Christmas decorations, puzzles, bed sheets, soap dispensers, cutlery, even cars, all from China. If you drive through Caracas you’ll see billboards advertising door-to-door couriers bringing you all the best stuff from AliExpress and other Chinese domestic market mass retailers.

So, Maduro’s hope is that China’s too tied up in Venezuela to simply walk away and is probably betting on that fact to get his hands on vital resources he needs. On top of that, smiling smugly next to Xi in Beijing as the latter announces a new “all weather strategic partnership” status could favor Maduro in the ongoing negotiations between Caracas, the United States, and the local political opposition. It’s very useful to show your counterparts at the negotiating table that you have other options, even if the partnership may not be as strong as Maduro wants to make it seem.

The two governments have, reportedly, signed some 502 new commitments. It’s highly possible that not much will actually come from any of those promises but the reality is that the PSUV government has traded away much of Venezuela’s economic value and financial promise in order to remain in power, and they may well be doing that again here in shady deals where obfuscation is a built-in feature. While new financing hasn’t been secured yet, the two countries have agreed to hold joint celebrations on the 50^th anniversary of bilateral relations. That’s on June 18^th, 2024, meaning the celebrations could well happen just before the presidential elections. I’ve a feeling that Venezuela will be far more enthusiastic about hosting these events than China, an attempt at securing a narrative victory even if they don’t get everything they want… or need.