China's Foreign Ministry confirmed on Tuesday it was willing to continue to strengthen financial cooperation with Venezuela, after media reports said the two countries had reached an agreement to change the conditions of an oil-for-loans deal to give Venezuela's crisis-hit economy a break.
China is Venezuela's largest creditor, having lent the country about $50 billion in the past decade. Although it is unknown what particulars are included in the new deal, it seems China is inclined to increase its strategic investments in Venezuela, holder of the world's largest oil reserves.
Earlier this year, the Venezuelan government announced an economic emergency to deal with its worsening economy, triggering concerns among international investors about Venezuela's capability to handle its debts and prompting more caution over providing financial support for projects in the nation. China appears to be one of the last sources of assistance for Venezuela in resuscitating its economy.
A large portion of China's loans is expected to be repaid with oil, a commodity that accounts for more than 90 percent of Venezuela's export revenue but is relatively scarce in China. Strengthening China-Venezuela economic ties and improving the conditions of the oil-for-loans deal is necessary, but it does not mean the potential financial risks it involves can be overlooked.
One problem faced by Venezuela is rebuilding confidence in the stability of its economic policy. Media reports saying that China had suffered great losses because a Chinese-financed project to build a high-speed rail line in Venezuela had been abandoned were widely circulated on social networks Tuesday, with concerns being expressed that the oil-for-loans deal may also encounter setbacks because of the policy uncertainty in Venezuela.
Venezuela has to learn to respect bilateral agreements and business contracts, if the country is not satisfied with just buying time for repaying its debts through the new deal and wants to get more financial support from China to revive its economy.
Another uncertainty faced by Sino-Venezuelan economic cooperation is possible interference from some Western countries. Although US-Venezuela relations have been strained in recent years, the US remains one of the largest buyers of Venezuela's oil. If Venezuela allows China to further expand its strategic footprint in the country and increases its oil exports to China, it may arouse concerns in the US and some other Western countries.
According to a recent report by US-based National Public Radio, Venezuela is accusing the US of instigating crisis in the country through what it claims to be economic sabotage. Now the US is warning of a possible coup in Venezuela, which would be bad news for the global economy. It is hoped that financial support from international markets can help Venezuela's economy remain stable.
The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn