Caracas Chronicles

It’s been over a week since Nicolás Maduro returned from his state visit to the People’s Republic of China (PRC), his fifth time since succeeding Hugo Chávez in 2013 and his first since 2018. So far, there’s been a lot of noise around the trip. On the one hand, state media from both countries have had a field day with the visit, with non-stop coverage from multiple official outlets elevating the event with nationalistic braggadocio. On the other hand, and rightfully so, international media has largely framed the visit around a cash-stripped Venezuela in search for investment and financing. From a foreign policy standpoint nonetheless, there’s a lot to unpack.

Let’s begin with the current state of Sino-Venezuelan relations. Despite what Xi Jinping and Maduro want the international community to think, with all the lavish talk about “forging an iron-clad friendship” and elevating diplomatic ties to an “all-weather strategic partnership” (a label assigned by the PRC to a select few diplomatic partners), the truth of the matter is that the relationship between Caracas and Beijing is but a shadow of its former self. Venezuela has been disappointing China for over 15 years, and it has taken a toll. Primarily, it has been the lack of results after 65-billion dollars in loans, China’s largest loan portfolio in the world. 

In the eyes of the PRC government, Venezuela was supposed to become the beacon of China-Latin America cooperation, driving other countries to jump on the China-led development train. It’s safe to say their hopes did not pan out. Over the years, Beijing has reprimanded Caracas on multiple occasions, albeit behind closed doors. The best indicator that the golden days of Sino-Venezuelan relations are long gone is that Maduro came back home with nothing more than some selfies, a bunch of hollow memorandums of understanding (MoUs), and a promise to take a couple of Venezuelans to the moon.   

This doesn’t mean that Venezuela does not retain importance for China. It only means that Beijing came to the logical conclusion that corruption and inefficiency at Maduro Inc. know no boundaries, hence the need for a new approach. While large loans and investments are off the table, that still leaves plenty of room for other activities, especially in the political realm. For example, Xi Jinping shunned the G20 forum and sought to receive Maduro instead. As much as Maduro would like to think it was all about him, this was Xi Jinping’s way of saying to the G20, especially to the United States: “I have better things to do.” Meeting with Maduro, given Venezuela’s strained relations with most of the developed countries of the G20, served to add insult to injury.

Additionally, the Venezuelan state apparatus, despite its inability to govern, is still a powerful propaganda machine with regional reach, something that is quite useful to China. Throughout Maduro’s trip and the week that followed, Venezuelan state media went on a frenzy touting China’s model of economic development and leadership in promoting a multipolar world order. Chinese state media, on the other hand, produced a string of content based on publications from these Venezuelan outlets. It’s been a propaganda feeding loop between the two sides. 

From China’s perspective, this serves two objectives. First, at a domestic level, it promotes Chinese Communist Party (CCP) leadership by showcasing how foreign dignitaries seek to learn from China’s great accomplishments under CCP rule. And second, at an international level, it serves to amplify Chinese talking points that align with its national interests, a role Maduro Inc. is happy to play.

During his intervention at the high-level meeting, for example, “Maduro said that under the leadership of President Xi Jinping, China has become a great country committed to peace, development, and welfare of all mankind, and an important engine promoting a new multi-polar world.” Xi Jinping couldn’t have said it better himself. “I would like to express my heartfelt congratulations to the Communist Party of China for its great achievements”, Maduro rambled on.

There are also some clues as to where China stands on Venezuela in Xi Jinping’s comments when he met with Maduro. Something that stands out is Xi’s emphasis on special economic zones (SEZ) –areas in which laws and rules are freer than in the rest of the country to promote business and development– which were recently approved in Venezuela: in La Guaira, La Tortuga, Paraguaná and Aragua. This was unusual. He wouldn’t have brought them up unless they were part of an important agenda for China. For comparison, just a few days after Maduro left, Xi met with Zambian president Hakainde Hichilema. This time around, Xi talked at length about China-style development and modernization models without any mention of SEZs. The same is true for other states visits of the same nature.

For China, setting itself in a Venezuelan SEZ makes sense for several reasons. First, for some time now, China’s been seeking to develop a SEZ in the Caribbean where Chinese companies can be granted special treatment for the assembling of goods and providing services across the region. This would reduce costs and facilitate the regional expansion of Chinese companies. The PRC explored the possibility with the Dominican Republic back in 2017, right after Santo Domingo switched recognition from Taipei to Beijing, but negotiations fell through apparently because strong Dominican business interests pushed against it. Venezuela fits the bill from a geographic point of view. A SEZ on the shores of La Guaira or Paraguaná could be a perfect hub between the Caribbean and South America.

Second, establishing a SEZ does not require a sizable investment from China, minimizing economic risk. Moreover, Chinese companies established in a SEZ in La Guaira would operate independent from a Venezuelan counterpart: unlike joint ventures with PDVSA. In the (almost certain) scenario that the implementation of a SEZ by the Venezuelan government is done in a haphazardly corrupt way, without any tangible economic benefit for the country, this would not affect the operations of the Chinese companies. Electricity shortages can be addressed by power plants and labor and manufacturing materials can be brought from China.

China will not come to the rescue of Venezuela. China has apparently learned from its mistakes and will no longer underestimate the capacity for destruction of the Maduro regime. If anything does come out of Maduro’s trip, strong safeguards will surely be implemented to secure the participation of Chinese companies in the country and limit their exposure to the Venezuelan shitshow.