More bad news for Venezuela today as reports indicate that Chinese officials have had all they can take from a government that’s just too poor to pay the bills. The WSJ has the story:
These days, confronted with a pile of unpaid bills and increasing security headaches for its citizens and companies in Venezuela, China appears to be recalculating its alliance with the nation where it has made about $60 billion in loans.
As a result, Venezuela may not get meaningful fresh loans or investment from China, raising the possibility of deeper cutbacks and shortages in the oil-rich nation or a default on more than $110 billion in government and state-oil-company bonds.
China’s envoy in Caracas conveyed concerns over security and Venezuela’s debt repayment during emergency meetings held between April and June with dozens of representatives from Chinese state companies, according to four officials from Chinese companies.
“The consensus was that no new money was going to be invested,” said one of the officials. “There was a clear message from up top: Let them fall,” said the official. He said Chinese companies were moving employees to Colombia and Panama for personal-safety reasons and because many Chinese-led projects have ground to a halt.
What was once a fruitful arrangement under the Chavez administration has become a massive liability for Chinese investors and officials. Chinese officials have even been meeting with opposition politicians in anticipation of what might come next.
This news comes just months after Beijing renegotiated the country’s repayment schedule in which Venezuela was relieved of financing its debts in exchange for 650,000 barrels of oil a day—a move that was supposed to alleviate the country’s poor cash flow situation.
But that is not all that’s troubling the folks in Beijing. Over the past couple of years, skyrocketing incidents of violence in Venezuela have resulted in a murder rate that now ranks among the highest in the world. Chinese business owners and workers have increasingly found themselves in the midst of the mounting chaos, a circumstance that has resulted in one company issuing an official warning to its workers. The WSJ again:
“As Asian people, to the greatest extent possible, you should avoid traveling by yourselves,” read one advisory from the local office of China’s state-owned Sinohydro Corp.
“At the same time, you should also avoid traveling in groups, which can easily draw the attention of criminals…”
The visual of President Nicolas Maduro being chased through the streets by hungry Venezuelans the other week captivated the world’s media. But if Venezuela’s main sugar daddy really did decide to cut bait as early as April or June (and has been playing footsie with the opposition to boot), then that’s the big story here. Maduro’s fall is perhaps not a question of “if,” but of “how” and “when.”