Venezuela And China’s Foreign Policy

 

Introduction

The Bolivarian Republic of Venezuela located in the North of South America and the People’s Republic of China (PRC) have both established diplomatic relations that have continued to progress since 2008. Diplomatic relations usually constitutes of establishing a communication link between sovereign countries thus facilitating the environment to have each other’s representatives in another country. In the ever-growing concept of globalization, diplomatic relations have become very advantageous to both countries involved. The gains are extensive ranging from political to economic although the latter dominates more. In recent years, different heads of states have realized the significance of such relations, and they keep growing. Developing countries can now grow more economically as the countries with big economies continue to invest in their money. China as an emerging superpower has not been left behind in building diplomatic ties, and they do this governed by their foreign policies that are based on principles of international peaceful coexistence, development, safeguarding world peace,  firmly upheld state sovereignty, and national security1. In recent times, it has become a competition between the East and the West, China and the United States as they both compete for influence in international relations. China seems to be winning especially in developing countries due to their principles in foreign policy. While China’s focus is purely in economic interests whereby they avoid meddling in other states’ political affairs, the same cannot be said about the US whose foreign policies are largely governed by politics.

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  1. Domínguez, Jorge. “China’s relations with Latin America: shared gains, asymmetric hopes.”(Inter-American Dialogue 2006), 1-59.

This difference in approach is what has led to the continued growth of diplomatic ties with China in countries such as Venezuela and much more in the world. This paper seeks to look into the diplomatic relations between China and Venezuela.

Venezuela and China Diplomatic relations

Diplomatic relations between China and Venezuela became well established during the presidency of Hugo Chavez (1954-2013) of Venezuela and Hu Jintao of China. This is quite evident with the embassy of China in Caracas. It is important to note that Hugo was the president from 1999-2013. Before that, investments between the two states were minimal, but by 2010, the Latin American country had become China’s largest investment in that region. Also by the same year, there were over 80 projects and 300 bilateral agreements as an achievement of these relations. Bilateral agreements and projects between the two states have continued to increase with China’s focus on Venezuela taking three aspects. These include expansion of sales of the Chinese products in the Latin country; acquire access to primary production and finally to create a conducive economic and political environment in the Latin American region where they can further their operations2. It is a part of Chinese bigger global goals that seem quite evident. The need for diplomatic relations as stated earlier stem from the need for economic or political interests and the Sino-Venezuela relations are no different.

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  1. Ratliff, William. “Pragmatism over ideology: China’s relations with Venezuela.” (China Brief 6, no. 6 2006): 3-5.

 

China has invested billions in Venezuela as the latter continues to increase its oil exports to China. This is contributed to by the fact that the oil reserves in Venezuela are the largest in the world. China has pumped billions into the Latin country in investment commitments that are mainly concentrated in the extraction of oil among other infrastructure developments. Significant deals were signed in the year 2008 starting with energy cooperation deals that saw hundreds of thousands of oil barrels being exported to China. The vast debts, however, limited the amount of these exports as the loans had to be repaid gradually. The Orinoco river basin carries more than a trillion barrels of oil surpassing even the Persian Gulf countries, and this quantity is one that China cannot resist due to its ever-expanding demand for oil imports3. Although it is indeed true that China may also have interests in metals such as iron and other minerals, oil still takes center stage. But one may ask why doesn’t Venezuela extract the oil by itself and avoid the massive debts that are brought about by the involvement of the Chinese government? The answer to this is quite simple, due to the expensive nature of extraction as well as the specialized nature of the refineries; the Latin country lacks the funds to do it by itself hence the need for Sino Intervention. The policies of the Chavez Government were unfavorable to the country’s manufacturing sector thus favoring the export of Chinese goods into the country. The fact that Venezuela had suspended imports from Colombia only made it better for the Chinese. Chavez encouraged the goods from China into the country whereby they old be sold in the stores as well as be exported into the neighboring countries in exchange for an attractive currency.

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  1. Clem, Ralph S., and Anthony P. Maingot. Venezuela’s petro-diplomacy: Hugo Chávez’s foreign policy. (University Press of Florida, 2011)

Chinese companies also opened up production facilities in the Latin country with the same aim of promoting their high value-added goods4. Telecommunications firms such as Huawei and ZTE opened up facilities and even went ahead to produce a new phone model in the country. This, as reported by the government, was to reduce importation of cellphones into the country. The military sector is important to any government as the focus shifts to national security. Military goods also continue to form part of the trade between the two countries with China being the supplier of aircrafts, air defense radars, and arms as well as facilitating the training of soldiers in their country. Venezuela has also traded with the Chinese in the service industry with the construction of over a thousand km of railway and the establishment of a fiber optics network to cater for the cell phones industry.

The bad relations between the US and Venezuela only serve to favor Chinese interests in the country. It is for this reason that PRC would not be interested in any policies that would mend the disputes between the two countries. However Chinese foreign policies do not support political confrontation thus PRC would not take any actions directed towards this bad blood between the two. The anti-US attitude was started during the Chavez regime in which he was seeking to undermine the US or rather to challenge the dominance of the North American superpower, a matter that did not settle well with the US government.

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  1. Corrales, Javier. “Using social power to balance soft power: Venezuela’s foreign policy.” (The Washington Quarterly 32, no. 4 2009), 97-114.

 

To date, under the administration of Nicolas Maduro and President Donald Trump for the US, tensions between the two countries only seem to increase. Only recently the US government imposed financial sanctions on the country in efforts to show disapproval with the country’s governance. Meanwhile the Chinese continue to benefit as the major trading partners. However, it puts Venezuela in a bad situation as they turn to China for loans. These are then awarded amidst very harsh conditions that could see the country being exploited further. The former President, Chavez with whom the bilateral relations with China started was very instrumental in forming a bond in which the relationship between the two countries thrived upon. Now with him having passed away, the relations between the two countries have weakened quite a great deal. Being on the verge of defaulting, China is not taking any chances5. The recent financial sanctions by the US have only worsened the situation. The diplomatic relations between China and Venezuela are also negatively impacted by the fact that China, in its best interest, would not want to go against the USA. This is because the largest market for Chinese goods that have propelled it to become an emerging superpower is in the US. Therefore China must always seem to take a stand with the USA. A good example of this situation is found in the relations between China and North Korea. The two countries have enjoyed diplomatic relations for many years being neighbors. However, with the recent demands that China cuts off such diplomatic ties, PRC had no otherwise than to oblige. This is a clear sign that the PRC stands to lose so much more by losing the US market. It is no different in Venezuela.

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  1. Cheng, Joseph YS, and Huangao Shi. “Sino-Venezuelan relations: beyond oil.”(Issues & Studies 44, no. 3 2008), 99-147.

China continues to try and play a neutral role in the conflict between the two states, but a closer look reveals that the diplomatic ties between China and Venezuela are growing weaker. However, Venezuela is crucial to China as it is among the few countries in South America that do not recognize the sovereignty of Taiwan as China continues to maintain that Taiwan is part of PRC. Having an ally in that region, therefore, is of great importance. The Venezuelan Republic also has interests in China. These include the benefits that the Latin country gains including that Venezuela can continue extracting its products, China provides funds during times of need, there is increased and the diversified export market for its goods, and there are increased projects for domestic consumption6. When it comes to extraction of products, The Chinese have played a major role in oil extraction that has gone on to become the country’s largest source of GDP. Due to the high specialization and technical knowledge of Chinese companies, they have been contracted by the government to exploit oil which in turn increases the country’s export market. Ever since 2007, PRC has continued to provide funds to Venezuela. Sources show that by the close of 2015, Venezuelan debt to China stood at $53 billion. This has not stopped, and in the following year, they shot up by $2.2 billion. However, as the country’s economy continues to deteriorate faced with decreasing oil prices, China has continued to become more careful with handing out funds.

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  1. Clem, Ralph, Anthony. Venezuela’s petro-diploma. 2011

Although Venezuela has been paying its debts with oil barrels, such agreements were made at a time when the price of oil was high, hence affected by the low prices7. China also provided a ready market for the oil exports which would mean a reduction in dependency upon the US for market and refinery. Chinese productions companies have also been established in the country that has made the rate of imports go down such as Huawei and ZTE. Other than that, China continues to be a supplier of military gear and products which they sell at reasonable prices. Reports show that between the years 2011-2015, there was $373 million worth of Chinese weaponry bought by Venezuela. It is also the leading buyer of Chinese weaponry in the Latin America.

Conclusion

Venezuela and China’s diplomatic relations are mainly based on the former’s huge oil reserves as China tries to satisfy its expanding need for oil. Although PRC retains diplomatic ties with other Latin-American countries, Venezuela takes center stage for various reasons. The bitter rival relationship with the United States forces the country to turn to China who unlike their counterparts has more friendly foreign policies that are fostered on economic development and political peace. China continues to be a great ally to this country supplying it with funds, helping it extract oil, metals and other minerals as well as providing a ready market for its goods. On the other hand, China benefits by getting the supply for its heavy oil demands, achieving a ready market for its high value-added goods, and establishing a great and conducive economic environment.

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  1. Jenkins, Rhys, Enrique Dussel Peters, and Mauricio Mesquita Moreira. “The impact of China on Latin America and the Caribbean.” (World Development 36, no. 2 2008), 235-253.

However, with the continued drop in oil prices, this relationship seems to be affected with China getting worried about the returns in its investments8. The bad relations between the US and Venezuela are also threatening Sino-Venezuelan diplomatic ties. This bad diplomacy stems from the fact that the US is not pleased with the government of Venezuela under the leadership of Nicolas Maduro. Only time will tell how it all goes although, with the heavy investments in Venezuela by China, it is clear that these diplomatic relations will continue for the foreseeable future.

 

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  1. Romero, Carlos A., and Janet Kelly. United States and Venezuela: Rethinking a Relationship. (Routledge, 2013)

 

 

Bibliography

Corrales, Javier. “Using social power to balance soft power: Venezuela’s foreign policy.” The           Washington Quarterly 32, no. 4 (2009): 97-114.

Cheng, Joseph YS, and Huangao Shi. “Sino-Venezuelan relations: beyond oil.” Issues & Studies 44, no. 3 (2008): 99-147.

Domínguez, Jorge. “China’s relations with Latin America: shared gains, asymmetric hopes.” Inter-American Dialogue (2006): 1-59.

Ratliff, William. “Pragmatism over ideology: China’s relations with Venezuela.” China Brief 6, no. 6 (2006): 3-5.

Jenkins, Rhys, Enrique Dussel Peters, and Mauricio Mesquita Moreira. “The impact of China on Latin America and the Caribbean.” World Development 36, no. 2 (2008): 235-253.

Clem, Ralph S., and Anthony P. Maingot. Venezuela’s petro-diplomacy: Hugo Chávez’s foreign policy. University Press of Florida, 2011.

Romero, Carlos A., and Janet Kelly. United States and Venezuela: Rethinking a Relationship.                                                                                                 Routledge, 2013.

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