Venezuela’s Nicolas Maduro doubles down on Chinese money to rescue a crashing economy
Venezuela’s president hails ‘new economic era’ after securing US$5 billion in fresh investment from China, that he says will help to almost double oil exports there
Venezuelan President Nicolas Maduro said Tuesday that new investments from China will help his country dramatically boost its oil production, doubling down on financing from the mainland to turn around its crashing economy.
Already a major economic partner, China has agreed to invest US$5 billion more in Venezuela, Maduro said following a recent trip to Beijing, adding that the money would help it nearly double its oil exports to China.
“We are taking the first steps into a new economic era,” he said. “We are on track to have a new economy, and the agreements with China will strengthen it.”
Maduro heads to China as he tries to salvage Venezuelan economy
Venezuela’s inflation this year could top 1 million per cent, economists predict.
After two decades of socialist rule and mismanagement, Venezuela’s oil production of 1.2 million barrels a day is a third of what it was two decades ago before the late President Hugo Chavez launched the socialist revolution.
Maduro says under the deal, Venezuela will increase production and the daily export of oil to China to 1 million barrels a day.
As Venezuelans starve, Maduro feasts on steak at Salt Bae restaurant after China trip
However, China is taking a strong role in its new agreements. Over the last decade China has given Venezuela US$65 billion in loans, cash and investment. Venezuela owes more than US$20 billion.
“The Chinese are reluctant to throw good money after bad,” Dallen said. “They do want to get paid back. The only way they can get paid back is to get Venezuela’s production back up.”
Venezuela also agreed to sell 9.9 per cent of shares of the joint venture Sinovensa, giving a Chinese oil company a 49 per cent stake. The sale will expand exploitation of gas in Venezuela, the president said.
Maduro also recently launched sweeping economic reforms aimed at rescuing the economy that include a creating new currency, boosting the minimum wage more than 3,000 per cent and raising taxes.
Economist Asdrubal Oliveros of Caracas-based firm Econalitica said he doubts that Venezuela can reach the aggressive goal to boost oil exports to China to one million barrels a day given problems faced by the state corporation PDVSA.
“Increased production I see as quite limited,” Oliveros said. “The Chinese companies alone have neither the muscle nor the size to prop up production.”
