China Will Not Help Venezuela Ease Debt Burden as Country Enters Default

BEIJING, Sept. 1, 2015-- Chinese President Xi Jinping, right, meets with Venezuelan President Nicolas Maduro in Beijing, capital of China, Sept. 1, 2015. (Xinhua/Li Xueren via Getty Images)
Xinhua/Li Xueren via Getty Images

The Chinese Foreign Ministry has signaled that it will not offer a debt relief package to Venezuela, yet China reiterated confidence that the Maduro regime will pay off their debt.

Venezuela has borrowed billions of dollars from both Russia and China to help ease the country’s worsening humanitarian crisis, exporting huge amounts of oil in exchange for loans.

However, a series of deadlines on Venezuela’s $120 billion debt has already passed, and creditors have now declared the country is in default.

“We believe that Venezuela’s government and people have the ability to properly handle their debt issue,” Chinese Foreign Ministry spokesman Geng Shuang told a regular news conference on Wednesday, adding that financing cooperation was continuing “as usual.”

Last week, Russia announced that it would throw Venezuela a lifeline by offering them a debt restructuring package after a meeting between leaders Nicolas Maduro and Vladimir Putin. However, the $3 billion owed, used to finance the supply of Russian military machinery, comprises a small fraction of the country’s total debt burden.

Venezuela has held close ties with both Russia and China back to the days of former leader Hugo Chávez, which included a number of favorable loan payments in exchange for Venezuela’s oil resources. Yet in August, Chinese state media warned that Venezuela was no longer a sensible investment opportunity and that Venezuela’s downward spiral “may impact China severely.”

Secretary of State Rex Tillerson last month accused China of “predatory” lending to “fledgling democracies” such as Venezuela, which continues its descent into a dictatorship as the Maduro regime continues to consolidate power.

“We have watched the activities and actions of others in the region, particularly China, and the financing mechanisms it brings to many of these countries, which result in saddling them with enormous levels of debt,” Tillerson said. “This is not a structure that supports the future growth of these countries.”

The Trump administration continues to pursue sanctions against the socialist regime, which include prohibiting Americans from buying any further Venezuelan government debt or that of the PDSVA, as well as personal sanctions against Maduro and other government officials.

Venezuela’s economic problems mean the country is now experiencing the worst humanitarian crisis in its history, with skyrocketing levels of inflation pushing the monthly minimum wage down to under $3 a month. As a result, there is now widespread poverty amid a chronic lack of basic resources from everything such as food and power to medicine and sanitary products.

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