China stands by Maduro in Venezuela to safeguard its investments

Venezuela's recent presidential election results have sparked widespread protests domestically and drawn sharp criticism internationally. While the U.S. has thrown its support behind opposition challenger Edmundo Gonzalez, China and Russia swiftly endorsed the incumbent, Nicolas Maduro, who has held power for 12 years.

On Monday, Venezuela's electoral council declared that the president had secured 51% of the vote, compared to 44% for Gonzalez. These results starkly contradicted exit polls, which had shown Gonzalez leading by a significant margin.

The Carter Center, which was invited to observe the election, issued a statement that the vote "did not meet international standards of electoral integrity" and declared the outcome "cannot be considered democratic.

Most Latin American countries, with the exceptions of Bolivia, Nicaragua, Honduras, and Cuba, have either rejected or expressed concern over the official election results. In contrast, China's reaction has been markedly supportive: President Xi Jinping has fully endorsed Maduro, asserting that Beijing will "firmly support Venezuela's efforts to safeguard national sovereignty, national dignity, and social stability."

"China prefers a stable Venezuela, and what they identify as [a] credible source of stability at the moment is Nicolas Maduro," Antulio Rosales, an assistant professor of business and society at the York University, told VOA.

"So, even though Maduro may stay in power via non-democratic means, it's clear that China sees him as a more credible possibility for stability," he noted.

Evan Ellis, a research professor of Latin American studies at the U.S. Army War College, said the mass investment from Beijing is also a factor.

"China has a longstanding commercial and political relationship with the leftist regime of Hugo Chavez and now Nicolas Maduro since the early 2000s, including recognizing it as a strategic partner under Hugo Chavez, and upgrading that relationship to all around comprehensive strategic partner last year under Nicolas Maduro," he told VOA.

Maduro and Xi announced last September that their bilateral relationship had been upgraded to an "all-weather strategic partnership," the highest level of cooperation between two nations.

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China now holds a substantial loan portfolio with Venezuela, representing nearly half of all Chinese loans extended to Latin America and the Caribbean. It's estimated that China has financed more than $60 billion worth of projects in Venezuela.

In return, China has secured essential resources from the oil-rich country, including crude oil and minerals, through an oil-for-loan model.

Strategic importance

Maduro is also repaying China by staunchly supporting the country on the international stage. His administration has provided unconditional backing to China, including endorsing Beijing's one-China principle by recognizing Taiwan as an inalienable part of China. Additionally, Maduro supports China's national security law in Hong Kong, and upholds China's claims in the contested South China Sea.

Venezuela is also collaborating with China in expanding social control measures. The Maduro government has acquired the Homeland Card system from China, which includes a unique personalized QR code capable of tracking individual votes and social media usage.

"Venezuela is important to the full range of China's ambitions in the Americas, including access to resources, markets in strategic sectors, political strategic objectives, and military options if it ever must fight a war with the United States in the Indo-Pacific," said Ellis from the U.S. Army War College.

Antonio C. Hsiang, a research professor at Chile's National Academy of Political and Strategic Studies, told VOA that Venezuela has become a significant battleground in the U.S.-China rivalry.

Hsiang argued that Venezuela's political resistance to the United States and its efforts to undermine U.S. influence within Inter-American institutions serve as a strategic distraction for the U.S. in its own hemisphere, ultimately benefiting China.

Economic liability

The Chinese business community, however, is not as happy with the Maduro government.

Venezuela — once the wealthiest nation in Latin America because of its status as home to the world's largest crude oil reserves — has seen its current government's popularity wane significantly. The decline is attributed to an economic crisis driven by falling oil prices, corruption, and flawed policies.

In 2013, a sharp decline in oil prices, a key export for Venezuela, triggered a severe economic and political crisis. The country's GDP contracted by 75% between 2014 and 2021. Annual inflation surged to upwards of 130,000% in 2018, according to its central bank. These factors culminated in Venezuela's suspension of loan repayments in 2020, including those to its largest creditor, China.

"China is not particularly concerned with issues of transparency or corruption domestically [in Venezuela]," Rosales said. "Beijing is more focused on Caracas' inability to execute some of the projects it has committed to." He observed that Chinese businesses have stopped further investing into the country.

It may take weeks or even months to determine whether China's bet on Maduro will pay off. Rosales suggested that China's concerns regarding Venezuela, though, are unlikely to shift — even if the opposition party comes to power.

"China maintains good relations with countries like Chile, which has long been governed by pro-market regimes, as well as with Brazil, which has been led by center-left governments," he pointed out.

"It's important to recognize that, regardless of who is in power, China's primary concerns will remain the same: long-term stability, the ability to carry out projects, and the capacity to repay debt," said Rosales.