Before leaving Caracas, Chinese President Xi oversaw the signing of dozens of cooperative agreements with Venezuela. One of the deals includes a $4 billion loan from China, to support the Joint Chinese-Venezuela Fund, which will finance infrastructure and economic development across the South American country.
The agreements came on the latest stop of a four-country visit to Latin America. Mr Xi has already signed key deals in Argentina and Brazil. He has now departed from Venezuela and will visit Cuba next. In Argentina the Chinese leader agreed to an $11 billion currency swap providing much needed money for the government of President Cristina Fernandez de Kirchner.
The money will be repaid by oil shipments to China. The 38 new agreements aim to strengthen economic ties between the two countries in industries such as energy, mining and transportation.
“Our relations are going into a comprehensive strategic area. China is willing to work with Venezuela to take advantage of this moment to promote bilateral ties and develop them at a higher level,” Xi said.
“The funding as we all know will not put our country into heavy debt. It’s a financing that is backed by production and the supply of oil barrels. It provides a virtuous formula that allows for financing and development without creating heavy debt like in the old system, when Venezuela applied the neoliberal system,” Venezuelan president Nicolas Maduro said.
Mr Xi also helped launch a new development bank alongside the other emerging powers of the Brics group – Brazil, Russia, India and South Africa – at a summit in Brazil. The new bank is intended to create an alternative to the Western-dominated World Bank. Chinese trade with Latin America has grown rapidly. It is now the second-largest trading partner in Argentina and Cuba, and has been Brazil’s largest since 2009. China is the second-largest market for Venezuelan oil after the United States.
Analysts say the underlying purpose of the visit has been to secure more natural resources from Latin American countries to fuel China’s long term economic expansion. The Chinese president is now on his way to Cuba where he will meet President Raul Castro. The Communist-led island and China are long-term close political allies and China has given Cuba generous trade credits in the past. Read more about the story here.