- China is the largest buyer of Venezuela’s crude oil, its second-largest trade partner, and poured in tens of billions through oil-backed loans
- China and Venezuela have nearly 600 cooperation agreements, but Beijing shifted investment toward other Latin American partners over the past decade
ISTANBUL
China’s long-standing economic and political partnership with Venezuela has entered a new period of uncertainty after a US military operation led to the capture of President Nicolas Maduro, raising questions about Beijing’s future trade, investment and strategic interests in the country.
China is Venezuela’s largest buyer of crude oil and its second-largest trading partner after the US. According to shipping data from Kpler, China received more than half of Venezuela’s oil exports last year.
Bilateral trade between China and Venezuela stood at roughly $7 billion by the end of 2024, according to the International Monetary Fund, but experts say the relationship has changed significantly over the past decade, shifting from aggressive lending and large-scale investment to a far more cautious and risk-averse approach.
From strategic partner to cautious creditor
China-Venezuela relations deepened sharply after the late President Hugo Chavez took power in 1999, who saw China as an example of “socialism for the 21st century,” Francisco Urdinez, a Chile-based academic who studies China-Latin America relations, told Anadolu.
“The anti-US rhetoric” made Venezuela, as well as Cuba, “quite dependent on China's finance and investment,” he added.
That relationship was cemented through nearly 600 cooperation agreements covering infrastructure, energy, telecommunications, transport, defense, space technology and food production.
During Chavez’s presidency and the early years of Maduro’s rule, China emerged as Venezuela’s most important external financial backer.
Although the relationship ebbed with Venezuela’s economic situation, the bilateral relationship was elevated to an “all-weather strategic partnership” – one of the highest tiers in Beijing’s diplomatic framework – during Maduro’s state trip to China in 2023.
Between 2000 and 2023, China committed an estimated $106 billion in loans to Venezuela, making it the world’s fourth-largest recipient of Chinese lending. Of that total, about $63 billion was disbursed, largely through oil-backed loans that allowed Caracas to repay debt with crude shipments.
Venezuela has repaid more than $50 billion, leaving around $12 billion outstanding, according to the think tank Beyond The Horizon.
But the lending spree slowed sharply after 2015, when falling oil prices, US sanctions, infrastructure decay and corruption crippled Venezuela’s ability to meet repayment obligations.
Loan defaults highlight risk
Urdinez said that most of the Venezuelan joint projects financed by China failed to deliver meaningful results.
Some of the financial agreements that Caracas signed with China Development Bank and other lenders, Urdinez said “were designed to improve Venezuela's oil production and oil exploration through the creation of joint ventures between large Chinese state-owned enterprises and Venezuela's main oil company.”
“But only a handful of these projects really work as expected,” said Urdinez, blaming “local corruption in Venezuela,” rather than problems on the Chinese side.
Political analyst Paul Dobson, who has lived in Venezuela for more than two decades, said China’s role in the country has diminished significantly under Maduro.
When oil prices dropped, he said there was a “change in policy from Caracas as well as a big increase in corruption. And when we put this all together, they started to default on debt payments to China.”
Venezuela defaulted on parts of its Chinese debt in 2015, prompting Beijing to halt new large-scale investments. Since then, Chinese financial institutions have reduced exposure to the country.
“The Venezuelan market is extremely (attractive) because of the oil, but the sanctions and the inefficiency within the national oil corporation and the exodus of Venezuelan engineers, who went to live abroad, plus corruption and the opacity of the corporation itself, have made the oil industry very uncompetitive,” Urdinez explained.
Following the US raid and Maduro’s capture, Bloomberg reported that Chinese officials instructed lenders to intensify risk monitoring of all Venezuela-related credit.
The Chinese Foreign Ministry, however, said bilateral agreements remain legally binding under international law.
Despite the slowdown, China remains embedded in Venezuela’s energy sector. The country holds the world’s largest proven oil reserves – about 303 billion barrels – though production has fallen by roughly 70% since 2013 due to underinvestment and sanctions.
China has also become a key arms supplier to Venezuela, which historically relied on Russia.
Between 2010 and 2020, Caracas imported nearly $500 million worth of Chinese defense equipment, including K-8 trainer aircraft, armored vehicles and anti-ship missiles, according to the Center for Strategic and International Studies.
Still, analysts say China’s overall footprint in Venezuela has shrunk considerably.
“The Chinese realized, slowly but definitely, that Venezuela was simply too risky and too corrupt to do business with,” Urdinez said.
Shift toward more stable partners
As Chinese investment in Venezuela declined, Beijing redirected capital to other Latin American countries with stronger institutions and more predictable returns.
“When Caracas stopped paying its debts, the Chinese started to look to Peru, Ecuador, Chile,” Dobson told Anadolu.
China’s total trade with Latin America and the Caribbean reached a record $519 billion last year, with Brazil now its largest regional partner.
On Beijing’s response to Maduro’s capture, Dobson pointed out that its statements had “not been strong” nor “concrete.”
“These are the sort of statements you would see opposing US intervention pretty much anywhere,” he said.
Beijing expressed “shock” and “strong condemnation” of the US raid, calling it a violation of international law, the UN Charter and Venezuelan sovereignty, demanding the immediate release of Maduro and his wife.
Meanwhile, it appears that Caracas may now be obliged to work more closely with the US amid threats from the Trump administration. Earlier this week, Trump said Venezuela would be “turning over” up to 50 million barrels of oil to the US.
What comes next?
Experts say what happened in Venezuela could affect China’s presence in the larger region.
“The way the US is exerting pressure over countries, there’s a sensation of hard politics being back to normal – a Cold War rationale of friends versus enemies, us versus them,” said Urdinez.
The Trump administration’s latest national security strategy document explicitly says that one of Washington’s goals is to limit rivals’ influence in the Western Hemisphere.
“These countries need to navigate these new waters of direct confrontation between China and the US,” Urdinez added, saying it posed a dilemma for other nations because many Latin American countries depend heavily on China.
“Times have changed,” Urdinez said about China’s current role in the region. “It’s very hard to unfold and revert that situation.”
