Tuesday, April 3, 2018

When Investment Hurts: Chinese Influence in Venezuela, by Moises Rendon and Sarah Baumunk

As the United States continues to shape its policy toward Latin America, China is rising as an economic and geopolitical force in the region. China’s influence in Latin America is neither transparent nor market oriented, and no country has felt the consequences more than Venezuela. Through loans and outbound direct investments, China has poured funding into Venezuela at the cost of Venezuela’s citizens and long-term success.
China’s involvement in Venezuela stems from President Xi Jinping’s plan to extend Chinese influence internationally. In the wake of China’s global ambitions, it has taken advantage of a collapsed, cash-strapped Venezuela to sign one-sided financial agreements. Inspired by state-dominated economic systems, both Hugo Chavez and Nicolas Maduro welcomed China’s financial support to fuel their “socialism of the 21st Century.”
There are four main issues that should concern the United States regarding China’s role in the Maduro-ruled Venezuela: (1) China is propping up Maduro’s undemocratic and repressive narco-regime; (2) China’s investments fail to bring long-term benefits to Venezuela; (3) Chinese loans and agreements are not transparent and in some cases are illegitimate; and (4) China’s agreements create energy and security concerns.

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