Venezuela And China

It is starting to look like Venezuela is losing their last friend in the world. China seems to be done with them. This is not too surprising as Venezuela is such a disaster that they rate below Syria for safety. The bigger issue is of course money. Venezuela is fast running out of hard cash, and has almost none coming in. More than any other OPEC country, the Oil crash is hurting them the hardest. The drop in income is affecting their infrastructure and ability to keep producing oil. Production rates have steeply declined, and that is affecting their relationship with China.

The leader of Venezuela Nicolás Maduro is an idiot. One who desperately clings onto his belief in socialism. And when oil prices were high he could. Because he was flush with oil money, he could institute price caps for basic goods. This made the poor happy, but made it so that it was not profitable for anything to be produces domestically, be it goods or food. This was OK. He just took that pile of oil money and threw it at neighboring countries for food, and traded oil to China for cheap manufactured goods. Some 600K barrels per day. China loved this. They needed oil, and could get it for the price of some cheap electronics. They started throwing money at Venezuela, some sixty billion dollars worth of loans. They gained what they needed an ally with oil. A socialist friend. And a toe hold in Latin America where they could keep the US in check. Now with Venezuela struggling to produce any oil, they don’t have anywhere near the capacity required to trade oil for goods. They need to sell every drop they can just to keep creditors at bay. And of course China is the biggest creditor. They are owed some $40 billion dollars still, and it doesn’t look like they will be getting it any time soon. Maduro has been pleading with them for more loans so he can keep his country afloat. But it looks like China has finally had enough. No more money appears to be incoming. And there are rumblings that China is speaking to Maduro’s opposition about how they plan on addressing China’s loans when they finally take power. If that is they case, then there is absolutely no hope left for the current regime. They country is in a death spiral. And if China is now on the sidelines waiting for it to play out, then there is no hope of recovery until the government is overthrown. Maduro has no more friends, and no more lifelines.