The US has increased pressure on the long-troubled government of Nicolás Maduro in Venezuela. While it continues to work with regional and global allies to recognize Juan Guaidó as interim president, the government of US President Donald Trump has unilaterally imposed sanctions on senior members of the Maduro regime, as well as the country’s most valuable asset, PDVSA.
The response from Latin America’s trading partners has been mixed. China has hewed to its support for Maduro, with the Foreign Ministry saying today that:
The Chinese side hopes that Venezuela will maintain peace and stability, calls for the observance of international law and basic norms governing international relations, and opposes intervention by external forces in the internal affairs of Venezuela.
Japan has taken a more cautious approach. In the wake of Juan Guiadó assuming the interim presidency, the government took a “vague,” noncommittal stance. However last week they shifted — after Maduro rejected calls for new elections — saying their support for Guaidó was “clear:”
"We express our clear support for interim President Guaido," Foreign Minister Taro Kono told a press conference. "Japan hopes a free and fair election will be held swiftly,"
China's perfunctory response has allowed India step in as a key player. With many partners stopping trade with PDVSA, in effect to be able to continue their US operations, India’s Reliance Industries and Nayara Energy (formerly known as Essar Oil) have significantly increased their purchases of Venezuela crude. With India still recognizing the Maduro government, that means the proceeds go to Maduro, and not to a US Treasury escrow account. Venezuelan Oil Minister and PDVSA head Manuel Quevedo flew to India two weeks ago to shore up that lifeline.
Our good friends at IPD Latin America tell us that between them the two companies loaded 5 cargos of Venezuelan crude (or the equivalent of 387,000 barrels per day) in the first 20 days of February. By comparison, the two firms were averaging a monthly load of 60,000 b/d prior to the PDVSA sanctions. With another 156 b/d loaded in February with no destination that IPD was able to confirm, that means that most of the 4-500,000 b/d that used to go from Venezuela to the US Gulf Coast is now headed to the Indian Ocean. Now as a big purchaser, you can bet they’re getting a good deal.
So how long can they keep this going? Already the Indian government is advising one buyer of Venezuela crude “to move away from the U.S. banking and institutional mechanism.” And certainly Naraya — 49% owned by Rosneft — has to be well aware that Russia’s Gazprombank froze PDVSA’s accounts to avoid US sanction. IPD expects India and Venezuela to settle deals in rupees, RMB, or even rubles (what no Petro?).
India was one of the countries able gain an exemption last year from the US’ reimposed sanctions on Iran, by saying those sanctions would impact the port of Chabahar, a vital chokepoint for supporting the US in Afghanistan. As the only one of those countries with a refinery that can process Venezuelan heavy crude, will this be the lifeline Maduro needs?
According to Argentina's Sub-secretary for International Financial Relations Félix Martín Soto is talking with the China Development Bank about financing two railway projects, China Exim on expanding the Cauchari II solar plant, as well as funding transmission power lines and gas pipeline projects. He says they’re hoping to bring in Silk Road Fund financing, as well.
China, Barbados will sign cooperation documents on jointly building the Belt and Road— Belt and Road Portal
Barbados, China agree to deepen cooperation— Barbados Today
México sí se puede subir a la nueva Ruta de la Seda— Manufactura
Barbados and China have announced the former is joining the Belt and Road Initiative (BRI). Mexico is trying to figure out if it can be next under the terms of NAFTA 2.0’s Article 32.10.
Huawei y Alibaba se suman a Amazon y analizan instalar sus data centers regionales en Chile— La Tercera
Subtel inicia roadshow para acelerar fibra óptica a Asia en medio de interés por data centers en Chile— La Tercera
Huawei y Alibaba ponen los ojos en Chile para un posible data center: competirían codo a codo con Amazon— Fayer Wayer
The head of Chilean Sub-secretariat of Telecommunications (Subtel), Pamela Gidi, is headed to China, Korea, and Japan to promote the development of data centers related to the proposed fiber optic cable to connect Chile with Asia. Despite concerns raised by the “Five Eyes” intelligence agencies, Huawei is on Gidi’s agenda.
Huawei instalará fibra óptica submarina en BC— El Sol de México
In other Huawei news, the company has been awarded contract for a $14m fiber optic line between Topolobampo, Sinaloa and La Paz, capital of Baja California Sur. Unclear the impact this will have on strategic Casamigos reserves.
Sube la fiebre del litio en Argentina. Minera china se suma con inversion de US$ 180 millones— Diario Financiero
Auge del litio en Argentina: una minera china invertirá u$s180 millones en un salar salteño— iProfesional
Weeks after one company from an Autonomous Region of China invested in Bolivian lithium, another — Tibet Summit Resources — has announced investment of $180m in the Diablillos lithium flats in Argentina.
Mourão diz que coordenará relações bilaterais com China, Rússia e Nigéria — Poder 360
Com Bolsonaro submisso a Trump, Mourão assume relação com Rússia e China— Brasil 24/7
Bolsonaro subordina o Brasil aos interesses do Governo Trump, por Dilma Rousseff— GGN
Brazilian Vice President Hamilton Mourão says that President Jair Bolsonaro has made him the point person on relations with China. As Mourão has been more conciliatory, this should bode well for the bilateral relationship.
Cautious Capital: Chinese Development Finance in LAC, 2018— The Dialogue
Exclusive: China to Combine Africa, Latin America Investment Funds— Caixin
A note of caution on Chinese financing from the Inter-American Dialogue, whose annual report on its China-Latam Finance Database says official sector lending from China "was among the lowest on record” and “relatively low rates of Chinese lending to LAC governments are possible in the near-term.” Relatedly, in a cost-cutting measure China has announced that operations of the China-LAC Industrial Cooperation Fund will be merged with those of the China-Africa Fund for Industrial Cooperation.
Nuevo gobierno decidirá si es viable un TLC con China— El Salvador.com
El Salvador: productores a capacitación para vender café a China— El Economista
Gobierno de Bukele deberá analizar TLC con China: Minec— Forbes México
The new government of El Salvador under President Nayib Bukele is going to look into the viability of a Free Trade Agreement (FTA) with China.
Japan’s Softbank is looking away from Tesla and evaluating an investment in Brazilian bank start-up C6.
Preços da soja no Brasil ainda dependem das relações comerciais China x EUA para definir direção— Notícias Agrícolas
Guerra comercial: China perjudicada; Argentina, ¿favorecida?— Ámbito
Guerra comercial dos EUA à China se aproxima do fim— Folha
China y EEUU, guerra de titanes por Latinoamérica— El Tiempo Latino
China sinaliza US$ 30 bi em compras dos EUA e ameaça exportações do Brasil— Globo
México: Nuevas reglas del T-MEC afectaría a China como principal proveedor de partes automotrices— América Economía
T-MEC, China y comercio retoman reflectores— El Mañana
Ahead of President Trump’s planned extension of the tariff deadline next month, the trade war continues.
Pese a incertidumbre automotriz, Toyota seguirá en México— 24 Horas
Posible arancel de EU derivaría en autos más caros: Toyota— El Economista
Descarta Toyota México nerviosismo— Zócalo
Toyota recommits to manufacturing in Mexico, despite nerves about US protectionism.
China’s Latin American ambitions on display in Chile— FT
Our own Mike Derham talked with the FT’s Benedict Mander about how Chile is a focus of China's investment in Latin America:
“As China’s investing and trading relationships have matured and become more commercialised, Chile and China are a natural match,” said Mike Derham
China — LAC
Cooperación entre Atlántico y Jiangsu— El Heraldo
China allows corn, barley imports from Uruguay— Business Recorder
Exportações para a China devem crescer menos neste ano— Agência Brasil
Política comercial china en América Latina: ¿Y Colombia?— La República
Korea — LAC
Japan — LAC
Bolo de frutas típicas brasileiras faz sucesso no Japão— Gazeta do Povo
Mexican avocados seek expansion onto Japanese market— Fresh Plaza
Japón contraataca— El Heraldo de México
India — LAC
Argentina compartirá información geológica de litio con la India — Minería en línea
‘India, Argentina complement each other’— The Hindu
ASEAN & Oceania — LAC
Perú ratifica su acuerdo comercial con Australia— El Economista