Latin America Is Now China’s Backyard

(The Real Agenda) China has strongly positioned itself in Latin America, much like it has done everywhere else.

Whether it’s with military hardware, economic aid, trade agreements or political ties, the Chinese are now securing their future by expanding their power as far and wide as possible.

One of the regions where China exercises the most influence is Latin America, where its military and economic power has bought it multiple allies; many of whom have abandoned the traditional American dependence to side with a growing tide of Chinese influence.

The latest example of such advancement by the Chinese -although not new- is Venezuela. In full border crisis with Colombia, President Nicolas Maduro, traveled this week to China and Vietnam.

Beijing, after the visit on Tuesday, Beijing agreed to disburse a new package of $5 billion dollars, which was agreed to in January. The money will allegedly help to finance the operations of the Venezuelan state oil company PDVSA.

Maduro announced the loan the same day during the broadcast of his weekly program, In Touch with Maduro, which aired via satellite from China. The liquidity crisis in public funds was exacerbated by the fall in oil prices, the main source of foreign exchange for Venezuela. Prior to these agreements, the debt of Caracas with Beijing was of about 50 billion dollars.

Venezuela has seen its foreign exchange earnings erode by 60% in less than a year, but Chinese cooperation involves a paradox: much of the debt of the South American country with the Asian is amortized with oil shipments.

With the decline of oil prices, Venezuela could be forced to deliver increasing volumes of oil, without receiving more money in return, which would in fact open a debt hole that could exacerbate the crisis in the long run.

Maduro signed 14 new agreements Monday after meeting with Chinese president, Xi Jinping. The implementation of a set of a 10 year plan to increase Venezuelan oil production stands as it was agreed previously. Indeed, Venezuela does not have a way out now. It is debt servitude with China or complete and immediate collapse.

There were also agreements for the production of tires in Venezuela, new apartment buildings and the opening of the Confucius Cultural Institute for the teaching of Mandarin in the Bolivarian country.

Currencies and food

Caracas and Beijing awarded a strategic character to their relations since they signed the Framework of Cooperation Agreement in 2001. Although in the heart of the alliance is the source of investment by the Asian giant -especially because oil is at the heart of the agreements- it is not clear how such agreements may or may not help Venezuela during its economic collapse as well as ensure its energy needs if most of the oil is being sent to China in exchange for cash whose benefits are not visible to the average Venezuelan and the economy.

Nicolas Maduro’s government increasingly entrusted their fate to investments and loans from Beijing.

The Venezuelan president’s visit coincides with the celebrations in China of the 70th anniversary of the victory against Japanese invaders during World War II.

The regime of President Xi Jinping has granted unprecedented importance to the event, and the Venezuelan government has not ceased to emphasize that it is the only South American country who was present at the military parade.

“I think we can tell the Chinese people and the Venezuelans that, 70 years after the victory of China, today our peoples are closer than ever,” Maduro said.

In Vietnam, meanwhile, President Maduro went looking for solutions that may solve his country’s dependence with regard to food imports, which has been exposed to chronic shortages experienced in the Venezuelan market.

During his two-day visit, the president signed an agricultural production plan until 2018, and an another agreement to increase bilateral trade to $1 billion annually.

Luis R. Miranda is an award-winning journalist and the founder and editor-in-chief at The Real Agenda. His career spans over 18 years and almost every form of news media. His articles include subjects such as environmentalism, Agenda 21, climate change, geopolitics, globalisation, health, vaccines, food safety, corporate control of governments, immigration and banking cartels, among others. Luis has worked as a news reporter, on-air personality for Live and Live-to-tape news programs. He has also worked as a script writer, producer and co-producer on broadcast news. Read more about Luis.