Fidel Castro’s part in shaping China’s economic link with Venezuela revealed by former bank governor

It started with a one-on-one meeting with then Cuban leader Fidel Castro in Havana in November 2004. The meeting went on for four hours, during which time Chen Yuan, then governor of the China Development Bank (CDB), presented a photo album about his father Chen Yun – a senior Chinese Communist Party official – to Castro, who had ruled Cuba since 1976. Castro started recalling his visits to China and meetings with Communist Party chairman Mao Zedong and China’s first premier, Zhou Enlai.

The amicable meeting with Castro came at a time when the CDB, one of China’s policy banks, was looking to expand its overseas business after the burden of bad loans was reduced significantly under the leadership of Chen, who had previously served as deputy governor of the People’s Bank of China (PBOC) for a decade before running the CDB from 1998 to 2013.

At one point, Chen asked Castro where the CDB should start its business in Latin America. Castro mentioned Hugo Chavez, who ruled Venezuela from 1999 until his death in 2013. This opened a new chapter in the relationship and paved the way for China’s decade-long financial support for Venezuela’s economy and growing investment in Latin America.

Since 2005, two Chinese policy banks – the CDB and the China ExIm Bank – have provided at least US$140 billion in loans to Latin American countries, with Venezuela being the largest recipient of more than US$67 billion, followed by Brazil, Ecuador and Argentina, according to the China-Latin America Finance Database compiled by the US think tank Inter-American Dialogue.

But the details of high-level discussions that led to China’s massive loans to Venezuela were little known. And Chen rarely spoke publicly about his role in making deals with Chavez until an interview with Modern Bankers, a Chinese-language financial magazine published by the PBOC. The interview was part of a segment reviewing major events during China’s 40-years of reform and opening up in the financial sector published in print in April and released on social media earlier this week.

“I said [to Castro] ‘Chavez?’ I am confused. I don’t know anything about him. I ask president Castro, ‘what can Chavez do?’ Castro says he is the Napoleon of Latin American. Wow, this is great, I think. [He] can change geopolitics and the landscape of Latin America. I say OK, now I know him,” Chen recalled in the interview.