THE BLOG

The Sino-Venezuelan Strategic Partnership

By David Gosset and Temir Porras Ponceleón

By choosing Trinidad and Tobago, Costa Rica and Mexico, as destinations for his second foreign trip as China's President, Xi Jinping illustrated the strategic importance of the relations between Beijing and the Community of Latin American and Caribbean States (CELAC), a bloc of 33 countries representing 600 million people.

If the economic exchanges between the U.S. and Latin America are still much larger than the China-Latin America trade, the speed of change which characterized the Sino-Latam link is striking, a decade ago the commerce between China and what was often referred as the U.S. backyard was marginal, it is now worth over $250 billion.

In this rapidly evolving international environment, talks are on the way to revive the 19th century project of a Nicaragua Canal which would complement the Panama conduit completed by the U.S. one century ago, however, this time, a Chinese company - HK Nicaragua Canal Development Investment Co. Ltd - is at the center of the discussions.

Within the China-CELAC dynamics the Sino-Brazilian, the Sino-Mexican and the Sino-Argentinian relations constitute intra-G 20 interactions, but when, 12 years ago, Jiang Zemin and the late Hugo Chávez (1954-2013) decided to forge a strategic partnership they gave their relations a special significance.

During six years as the Minister of Foreign Affairs of Hugo Chávez Nicolás Maduro has developed strong connections with the People's Republic of China - the charismatic inspirator of "chavismo" visited China six times after he took office in 1999 - but from September 22 to 24 it is as the new leader of the Bolivarian Republic that he will travel to the Middle Country.

Maduro's visit has been carefully prepared by a series of high level exchanges, in May, Li Yuanchao, China's vice President was in Caracas, Venezuelan Oil and Mining Minister Rafael Ramirez visited China in June, and in the following month, both the President of the Venezuelan National Assembly Diosdado Cabello and Jorge Arreaza, Venezuela's vice President and the son-in-law of Hugo Chávez, had discussions in Beijing with their Chinese counterparts.

The Sino-Venezuelan relations which matter for both sides envelop economic, cultural, political, military and geopolitical dimensions. Last year, 15% of Venezuelan exports were absorbed by the Chinese market while 17% of its imports came from China, Beijing stands as Caracas second largest trade partner and Venezuela ranks fourth for China's trade in Latin America following Brazil, Mexico and Chile. Bilateral trade reached $23 billion in 2012 - it was $350 million in 2000! -, Beijing has provided over $36 billion in financing to Caracas and the strategic partnership is expressed in more than 300 agreements of cooperation.

China shares technology with the Bolivarian Republic, after a first satellite - VENESAT-1 Simon Bolivar - supplied in 2008, Beijing has just delivered the full control of a second one - the Miranda satellite - launched into orbit from the Chinese territory last year. It is in the southern Caribbean country that Huawei, the Chinese global information and communications technology brand, has established its first company store outside its country of origin.

Cooperation in infrastructure - at the Port of Cabello or in the railway sector - and in energy - three new electricity plants will be built by 2016 - also benefits the 30 million inhabitants of Venezuela.

Moreover, the relations between Beijing and Caracas include military ties, Venezuela made the acquisition of Chinese-built Hongdu JL-8 trainer jets, also known as the Karakorum-8. A Shaanxi Y-8 military cargo plane operated by the Venezuelan Air Force recently delivered humanitarian assistance to Syrian refugees in Lebanon.

While the world's second largest economy and a global power capable of balancing the American influence in Latin America is obviously of the highest importance for the Bolivarian Republic, Beijing looks also at the fourth largest economy in Latin America strategically.

With the world's largest oil reserves - by some conservative estimates 297 billion barrels against 265 billion barrels for Saudi Arabia -, Venezuela, a historical pillar of the Organization of the Petroleum Exporting Countries (OPEC), is an element of the Chinese energy security equation.

In the first four months of 2013 Caracas exported 626 000 barrels per day to the Middle Country - it was 754 000 barrels to the U.S. - but it will reach 1 million barrels in the coming two years. Last year, Beijing bought 5.1 million barrels per day from foreign markets.

Besides oil, agriculture can also structure the bilateral relations, the fertile land of Venezuela - 30 million hectares not fully exploited - can be better used in order to benefit the Venezuelan population and to answer China's considerable food security challenge.

In the near future, tourism can also enrich the Sino-Venezuelan link. Venezuela, known as the "Land of Grace", has a highly attractive biodiversity and Caracas can evolve into a transportation hub in the Americas mirroring the role played by Miami in the north of the Caribbean Sea.

During Maduro's visit to Beijing an agreement will be signed on the establishment of a Confucius Institute in Caracas, a platform which will deepen the cultural exchanges between the two regions and which could lead toward more synergy in education.

The Sino-Venezuelan strategic partnership can't be separated from the broader Sino-Latin American relations. Maduro's government is already involved in the rotating presidency of the MERCOSUR - the Southern Common Market among Argentina, Brazil, Paraguay and Uruguay - and the Bolivarian Republic which attaches great importance to the cohesiveness of the Latin American continent will use its position to deepen the dialogue between China and the MERCOSUR. In a sense, China could share the revealing MERCOSUR motto, "Nuestro Norte es el Sur", "Our North is the South".

While the newly formed Pacific Alliance - Chile, Colombia, Mexico and Peru - has been designed to better connect with a China-centered Asia - Chile and Peru have signed free trade agreements with Beijing -, Caracas will work to develop its bilateral relations with the Asian giant but also to have a more autonomous South-South intercontinental dialogue between the Middle Country and Latin America.

With Venezuela acting as one of the internal catalysts for the solidarity among the Community of Latin American and Caribbean States (CELAC) and China calling for more Latin American cohesiveness, the continent is gradually coming closer to the Bolivarian dream of social progress and unity.

David Gosset is director of the Academia Sinica Europaea at CEIBS, and founder of the Euro-China Forum, Temir Porras Ponceleón is Special Advisor to the President of Venezuela and President of BANDES, the Venezuelan Economic and Social Development Bank.

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