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Venezuela’s Maduro visits China to talk finance

January 5, 2015

CARACAS, Venezuela (AP) — Venezuela’s President Nicolas Maduro was travelling to China Monday to discuss financing as the South American nation attempts to dig out of a deep recession.

China is the socialist country’s largest creditor and Maduro said Sunday that he would talk about Venezuela’s oil-for-loans agreements with President Xi Jinping, as well as economic, education and technology projects.

Venezuela is struggling with the world’s highest inflation, a newly confirmed recession and a cash crunch brought about partly by a steep fall in the price of oil.

“To me, this is Venezuela really needing the money,” said Evan Ellis, professor of Latin American Studies at the U.S. Army War College Strategic Studies Institute.

China has loaned Venezuela more than $40 billion over the past five years, some of which Venezuela has already paid down with oil deliveries.

At the end of December, Maduro announced that he would make the economy his chief focus in 2015. Critics say Venezuela must make painful adjustments to right the economy, such as a currency devaluation or a hike in gasoline prices.

Maduro also announced that he will visit other members of the oil cartel OPEC. Venezuela has unsuccessfully urged OPEC nations to work together to drive up oil prices, which have fallen by half in six months. Venezuela has the world’s largest proven oil reserves, and depends on oil for 95 percent of its export income.

Maduro called the trip “a very important tour to take on new projects, given the circumstance we have in our country, including falling revenue and the plummeting price of oil.”

China finds itself in the uncomfortable situation of needing to invest in the South American country to ensure its alliance remains strong, and that Venezuela can eventually pay back its loans, but also being reluctant to loan more money to the struggling country, according to Ellis. This fall, China loosened the term of its loan, extending a repayment deadline and scrapping minimum shipment requirements.

“The Chinese have been throwing good money after bad for a while. If Maduro is asking for even more money now, it will be interesting to see how the Chinese react,” he said.

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Follow Hannah Dreier on Twitter: https://twitter.com/hannahdreier

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