Venezuela’s most recent election jeopardizes an estimated $60 billion China dumped into the country, according to experts.
“China is undoubtedly concerned about the results of the recent elections in Venezuela, especially to the extent that a stronger role for the opposition leads to political infighting rather than much-needed economic reform,” states Margaret Myers, program director for China and Latin America at the nonpartisan think tank The Inter-American Dialogue.
The once 100 percent socialist government must now split power as of Sunday’s elections in which the center-right party gained the majority in the National Assembly for the first time in 17 years. Any political capital China built is now in flux.
In the wake of Venezuela’s political power shift, a representative for the Chinese Ministry of Foreign Affairs states, “We hope that [the Venezuelan government] can maintain stability and national [economic] development.”
According to the spokeswoman Hua Chunying, the “calm” manner in which many Venezuelans celebrated their election results is something Beijing’s politicians noticed. It is unsurprising that senior Chinese Communist Party leaders are keeping a close eye on Venezuela since the country has invested more than $60 billion into the oil-rich country since 2005.
“It is unlikely that Venezuela will reverse existing deals with China, but new financing proposals will probably encounter greater scrutiny,” according to Myers.
China consumes 14.4 percent of the world’s oil. Venezuela, as a member of the global oil cartel OPEC, possesses 24.9 percent of the world’s proven oil reserves as of the end of 2014. As oil prices dipped, the Venezulean economy suffered greatly since according to OPEC, “Venezuela’s oil revenues account for about 95 per cent of export earnings. The oil and gas sector is around 25 per cent of gross domestic product.”
In terms of how opposition gains in Venezuela will affect economic relations with China, Myers states, “China will remain a key economic partner for any Venezuelan government in the coming years, just as it is been for many other countries in the region.”
As for Venezuela’s reliance on Chinese money, Myers states that, “We estimate that Venezuela has received over $50 billion in Chinese policy bank loans since 2005, some of which has been paid off at this point. Loans to Venezuela account for about half of China’s total finance to the region. China promised a total of $10 billion to Venezuela this year. Our online database hasn’t yet been updated with 2015 loans.”
In Sunday’s legislative elections, the center-right opposition defeated the ruling socialist government for control of Venezuela’s National Assembly. This is the first time in the 17 years since the socialists took power that the executive and legislative branches of government have been politically divided.
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