Oil baron J Paul Getty is reputed to have said: “if you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem.” In lending more than $60b over the past two decades, China may have its own problem: Venezuela.
The chronic catastrophe in Venezuela has most likely transitioned to its acute stage. Over the past week Western governments moved to recognize Juan Guaidó, leader of the Venezuelan National Assembly, as interim president. The US, Organization of American States, Brazil, and the majority of Latin American countries have now been followed by members of the European Union. The US has further stepped up pressure, imposing sanctions on Venezuelan oil company PDVSA.
China, Russia — as well as Bolivia and Cuba — still recognize Nicolás Maduro as president of Venezuela. Our friend at the Wilson Center Benjamin Gedan notes that China is the only one of those in a position to give material support to the Maduro government, and has effectively brought that to a halt.
Guaidó recognizes the key role that China will play in the future of Venezuela, and that the current Maduro government is hurting their investments. In an interview with South China Morning Post, he says:
China is a fundamental global player with whom we would like to relaunch our relationship based on mutual respect and cooperation. China has witnessed at first hand the plundering of our state resources by Maduro’s government. Its development projects in Venezuela have been equally affected and falling due to governmental corruption and debt default. We are ready to begin a constructive relationship and dialogue with China as soon as possible.
But note that he wants to “relaunch" the relationship. Somethings will have to be included in that relaunching, including debt:
All agreements that have been signed with China following the law will be respected. If previous agreements were signed by adhering to the due process of approval by the National Assembly, my government will accept and honour them.
That reiterates the implicit threat that the opposition National Assembly and its supporters have hinted at before, that debt incurred by the Maduro government *without* National Assembly approval is “odious” and will be repudiated.
...the Chinese side has been in close communication with all parties in various ways on the situation in Venezuela. We stand ready to work with all parties...
But with protecting its interests — loans, investments, and energy agreements — as the priority:
China-Venezuela relations are normal state-to-state relations... It complies with laws and regulations and should be above any harm no matter how the situation may evolve.
The Chinese government is openly acknowledging discussions with the opposition, and a newspaper seen as wanting to keep Beijing happy is giving Guaidó a prominent perch. Are these signs that the “win win” with Venezuela is based as much on economics as politics?
Happy New Year!
The Novam Portam team wishes you and your family a happy family, all the best, happy Year of the Pig!
China Should Join the New Trans-Pacific Partnership— Peterson Institute
Our friend Michael Plumer from SAIS argues that China should join the just-launched Trans-Pacific Partnership, with benefit to all sides. One catch: "But to join the CPTPP, China would have to undertake unprecedented reforms and manage complex political challenges.”
SoftBank Is Said to Prep Latam Fund Run by COO Claure— Bloomberg
SoftBank to launch new Latin American investment program— Contxto
Is SoftBank next? The Japan-based conglomerate is rumored to be setting up an investment fund for Latin America run by Bolivian-American COO Marcelo Claure.
En el nuevo "Gran Juego" del litio, Alemania adelanta a China en Bolivia— La Tercera
Autos eléctricos: la Argentina quiere ser el segundo productor mundial de litio, el futuro "petróleo blanco”— Todo Noticias
The “great game” for “white oil” has Germany taking a bigger stake in Bolivia’s lithium reserves than China, and Argentina looking to be #1.
México abrió el mercado chino para el aguacate y Pekín compra hoy 30,000 toneladas de este fruto— El Economista
China buys 30,000 tons of avocados from Mexico.
Volumen de comercio China-América Latina supera 300.000 millones de dólares en 2018— Xinhua
China’s General Administration of Customs says trade with Latin America was up 19% last year, to $307m dollars. They point to the growth of high-value products such as frozen meats, fruits, flowers, alcohol, and tobacco as driving the increase.
"Megvii has its eyes on South America, following plans to this year “empower various industries” in Brazil with AI."
“China has to resume purchases of U.S. soybeans,” Oil World said in its latest newsletter. “The South American supply shortage will make it necessary for China, in our opinion, to import 15 million tonnes of U.S. soybeans in October 2018/March 2019, even if the current trade war is not resolved.”
Brasil vai retomar conversas de alto nível com China, pode ajudar agronegócio— Extra Online
Brasil e China decidem reativar comissão bilateral— Globo
Brazil and China are relaunching the Sino-Brazilian High Level Commission (“Cosban” in Portuguese) for the end of this year.
China — LAC
Blue Pop: arándanos chilenos se venden como snack en los cines de China— Diario Estrategia
Chilean blueberries used as a cinema snack in China— Fresh Plaza
Más carne argentina hacia China y Rusia— El Observador
América Latina principal comprador de acero Chino en 2018— Logistica y Transporte
China a longo prazo— Globo
Peru: Arequipa exported 6,400 tons of grapes abroad— Fresh Plaza
Chinese-Jamaica partnership on sports bears fruits— Jamaica Observer
More Panamanian pineapples for the Chinese market — Fresh Plaza
Chancay fits China investment strategy— Port Strategy
Caribbean Urged To Tap Chinese Tourism Market— The Gleaner
Korea — LAC
La negociación de un TLC está sobre la mesa— El Economista
Designan embajadores argentinos en Ucrania y Corea— El Intransigente
KOTRA withdraws Venezuela office amid turmoil— The Korea Herald
Peru: Grape shipments increased by 40%— Fresh Plaza
Japan — LAC
India — LAC
Quinua peruana ingresaría a Colombia, China e India— Mercados y Regiones
India keen to triple exports to Argentina, eyes additional $1.5 bn trade— The Economic Times
India Keeps Oil Trade With Venezuela— Financial Tribune
ASEAN & Oceania — LAC
Why Australian mining should expand to Peru— Best in AU
GCC — LAC
Brazil's fragrance brand eyes Saudi market— Khaleej Times