Amid Venezuela’s eco­nomic woes, Maduro vis­its China to seek co­op­er­a­tion

Global Times - - Viewpoint - By Wu Zhi­hua

Venezue­lan Pres­i­dent Ni­co­las Maduro’s visit to China from Thurs­day to Sun­day is of great sig­nif­i­cance since Venezuela is mired in a se­vere eco­nomic cri­sis. The visit serves three goals: to learn from China’s eco­nomic re­form and help Venezuela with the ongoing eco­nomic trans­for­ma­tion as well as es­tab­lish and im­prove its eco­nomic sys­tems; to ex­press will­ing­ness to par­tic­i­pate in the Belt and Road ini­tia­tive through en­hanced de­vel­op­ment strat­egy and co­op­er­a­tion in in­dus­trial ca­pac­ity and in­fra­struc­ture projects; to brief Chi­nese en­ter­prises about Venezuela’s in­vest­ment op­por­tu­ni­ties and pref­er­en­tial poli­cies and en­cour­age them to in­vest in the Latin Amer­i­can na­tion.

Venezuela is China’s im­por­tant part­ner in Latin Amer­ica. Since 1974 when the two es­tab­lished diplo­matic ties, they have been en­hanc­ing po­lit­i­cal, eco­nomic and so­cial con­tacts. In the 21st cen­tury, the two have made steady progress in bi­lat­eral ties and co­op­er­a­tion. It was re­ported that the coun­tries have signed agree­ments for over 790 pro­grams, some of which are still un­der way.

Since 2014, a po­lit­i­cal cri­sis has been brew­ing in the na­tion; its econ­omy has been mauled by a steep fall in in­ter­na­tional crude oil price and grow­ing US sanc­tions. Oil pro­duc­tion is the pil­lar of the Venezue­lan econ­omy and oil ex­port ac­counts for 96 per­cent of its for­eign trade in­come. The fall in in­ter­na­tional crude price has cut Venezuela’s ex­port in­come sharply. Due to lack of rein­vest­ment and sound gov­er­nance, the coun­try’s oil pro­duc­tion has plunged by half. Venezuela now faces se­vere eco­nomic and so­cial dif­fi­cul­ties with ris­ing deficits, hy­per­in­fla­tion and wors­en­ing public se­cu­rity.

These dif­fi­cul­ties also pose a chal­lenge to China-Venezuela co­op­er­a­tion. Some co­op­er­a­tion projects have been shelved or de­layed due to short­age of funds. Nev­er­the­less, the two sides forge ahead de­spite hard­ships. With the sup­port of “China-Venezuela Co­op­er­a­tion Fund,” Chi­nese pe­tro­leum en­ter­prises work closely with their Venezue­lan coun­ter­parts to main­tain and re­store the lat­ter’s pro­duc­tion ca­pac­ity by in­creas­ing oil pro­duc­tion in Lago de Mara­caibo and jointly de­vel­op­ing la Faja Petrolífera del Orinoco, etc.

To pro­vide hous­ing for im­pov­er­ished fam­i­lies and those liv­ing in di­lap­i­dated homes, Venezue­lan gov­ern­ment has planned to build 3 mil­lion so­cial hous­ing units by 2019 and to ren­o­vate slums. Chi­nese con­struc­tion com­pa­nies have taken an ac­tive part in the project and de­liv­ered over 10,000 high-qual­ity houses equipped with fur­ni­ture and home ap­pli­ances, win­ning ac­co­lades from lo­cal peo­ple. In Oc­to­ber 2017, China launched the third satel­lite for Venezuela af­ter launch­ing one re­mote sens­ing satel­lite and a com­mu­ni­ca­tion satel­lite. Co­op­er­a­tion in space tech­nol­ogy be­tween the two coun­tries has greatly en­hanced in­ter­net, telecom­mu­ni­ca­tion and tele­cast across Venezuela, es­pe­cially its re­mote ar­eas.

Aside from co­op­er­a­tion in en­ergy, in­fra­struc­ture and science and tech­nol­ogy, Venezuela and China also formed joint ven­tures in pro­duc­tion of mo­bile phones, pas­sen­ger ve­hi­cles, au­to­mo­biles and com­put­ers to sat­isfy lo­cal de­mand. Nowa­days, most home ap­pli­ances, gar­ments and ar­ti­cles for daily use in Venezuela are from China that in turn gets steady crude oil sup­ply while in­creas­ing ma­chin­ery ex­port.

Cur­rently, po­lit­i­cal tur­moil, eco­nomic cri­sis and Amer­i­can sanc­tions are forc­ing the Venezue­lan gov­ern­ment to in­crease pro­duc­tion and sup­ply so as to shake off de­pen­dency on oil in­dus­try and es­tab­lish a pro­duc­tion-based de­vel­op­ment mode.

Since 2016, Cara­cas has fo­cused on “15 en­gines” of eco­nomic de­vel­op­ment in­clud­ing min­ing, in­dus­try, tourism, telecom­mu­ni­ca­tion, es­tab­lished spe­cial eco­nomic zones and opened min­ing ar­eas to for­eign cap­i­tal for at­tract­ing for­eign in­vest­ment. It has also ad­justed the ex­change rate regime for a sta­ble fi­nan­cial mar­ket. This Au­gust, it rolled out a pack­age of eco­nomic re­forms, such as loos­en­ing for­eign ex­change con­trol, is­su­ing new cur­ren­cies and co­or­di­nat­ing do­mes­tic and in­ter­na­tional gaso­line prices, to fa­cil­i­tate eco­nomic trans­for­ma­tion. The Venezue­lan gov­ern­ment has ex­pressed the wish to take an ac­tive part in the Belt and Road ini­tia­tive pro­posed by China and help ex­pand it to Latin Amer­ica.

Venezuela’s ongoing eco­nomic re­form and trans­for­ma­tion has brought new op­por­tu­ni­ties for the two sides to tap into co­op­er­a­tion po­ten­tial, ex­pand fields of co­op­er­a­tion and achieve com­mon de­vel­op­ment. Chi­nese en­ter­prises will fol­low the prin­ci­ple of win-win co­op­er­a­tion and help Venezuela come out of the eco­nomic morass through prag­matic co­op­er­a­tion to­ward eco­nomic pros­per­ity and so­cial sta­bil­ity.

The au­thor is a re­search fel­low with the In­sti­tute of World De­vel­op­ment un­der the State Coun­cil’s De­vel­op­ment Re­search Cen­ter. opin­ion@glob­al­times.

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