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Venezuela: growing closer to China
Friday, March 11, 2011 00:00 0 Comments Editor
Caracas .- President Hugo Chavez has said that the relationship between Venezuela and China have "the strength of the Great Wall." But what benefits does this partnership has brought the country?. Analysts warn of risks by type of relationship that carried forward.

The link is becoming narrower. Proof of this is not just the six trips to the Asian mainland Venezuelan president, but also bilateral agreements, over 300 - and carrying out joint projects, more than 100.

The alliance has generated U.S. $ 28,000 million in loans and U.S. $ 16,000 million in investment commitments.

With Chávez in power, trade increased from U.S. $ 200 million in 1998 to U.S. $ 10,000 million in 2009.

Oil thirst

China's thirst for oil is at the head of Beijing's interest in Venezuela. And is not new. Already in 1998 the National Petroleum Corporation China purchased two oil fields in the Latin American country.

Venezuela now exports to China some 460,000 barrels of oil a day, when six years ago the figure reached 40,000.

All in order to break the dependence of Caracas to the oil it sells to the U.S.. Oil sales to that country last year reached its lowest level in two decades, although there are double what is placed in China.

Oil Venezuela has served also to receive Chinese loans in exchange for future oil deliveries.

For example, the loan agreement a year ago for U.S. $ 20,000 million will be repaid in 10 years with oil shipments.

"Win-win

But beyond the numbers, Evan Ellis, an expert of the Center for Hemispheric Defense Studies (CHDS, for its acronym in English) based in Washington, the relationship is complementary, but different. In the case of Venezuela serves as an alternative source of capital, technology needs and serves also to show progress. "

Ellis, author of China in Latin America: The Whats and wherefores ("China in Latin America: the what and whys"), told the BBC that China seeks a "reliable access to raw materials: oil, minerals, food ; important market opportunities and business benefits. "

Saul Ortega, president of the Foreign Policy Committee of the Venezuelan National Assembly, noted that the "relationship between China and Venezuela is a win-win."

"It has been described by both countries as strategic. China is the world's second largest economy. That tells you the importance from a commercial point of view (...). This special relationship the various countries would like to have," he said.

However, to Rafael Alfonzo, president of the Center for Dissemination of Economic Development Association (CDA), the link is "highly advantageous for Venezuela and highly advantageous to China. Venezuela is taking loans on terms very unfavorable to the country."

Ortega denies that this relationship entails risks for the Venezuelan economy, "Now Venezuela is sovereign. It relates to everyone. There is no dependency. We have diversified our markets so I see no problems."

Rep. highlight the variety of areas in which Venezuela and China work together, "were agricultural cooperation agreements on railways, electronics, military equipment, technology transfer, cell factories, oil tankers ... It is a true strategic alliance with content. "

Attack aircraft

The past weekend, for example, both countries established a joint company to produce food.

Televisions, refrigerators and air conditioners for the Chinese firm Haier became the country to be sold at half price than similar products in other stores, Chavez announced late last month.

Moreover, telecom companies Huawei and ZTE made arrangements to manufacture cell phones in the country.

In the military area, Venezuela agreed to buy 18 light attack aircraft and acquired K-8 air defense radar made in China, which is essential for Beijing in its attempt to enter this field in Latin American market.

China is also building railways in Venezuela and fiber optic lines.

But Alfonzo these projects do not impact on improvements to the country.

"Depends?

Oil is Venezuela's main export to China.

"There is no benefit to the Venezuelan private employer. It is not generating value. You're delivering. The dependence is very strong and the economic process is going to be weakened by debt," he told the BBC.

In Ellis's view that gives Beijing the country is the ability to "maintain a flow of funds that the government uses for its social programs, provides funds for oil investments, thereby increasing the ability to sell more oil, offering expertise in oil and the construction of factories. " (BBC NEWS))

Maintenance

Ultimately, Ellis says, "China helps maintain the viability of the Chavez regime. The unit now is modest, but growing significantly. The investments are not used for sustainable projects. Funding China does not seem to create productive capacity in Venezuela that could be used to pay the debt. " He adds: "In the short term Chávez has benefited from the relationship with China far more than the Venezuelan state itself."