The China Hangover Is Here

The New York Times ^ | Aug. 19, 2024, 1:00 a.m. ET | Michael Beckley

[E. Pluribus Unum]

In the 2000s, former President Hugo Chávez of Venezuela bet his country’s economic future on a rising China, securing tens of billions of dollars in investments and loans-for-oil deals. It paid off at first. China voraciously consumed Venezuelan oil and financed infrastructure projects from a high-speed railway to power plants.

The 2010s brought a reckoning. Oil prices fell, and growth in Chinese oil demand slowed along with its economy. Venezuela’s oil export revenues plummeted, from more than $73 billion in 2011 to $22 billion in 2016. Misrule by Mr. Chavez and his handpicked successor, Nicolás Maduro, and myriad other domestic problems already had Venezuela on the brink; the gamble on China helped push it over the edge. In 2014, Venezuela’s economy collapsed. People scavenged for food in garbage dumps, hospitals were short of essential medicines and crime surged. Since then, nearly eight million people have fled the country. China largely cut Venezuela off from new credit and loans, leaving behind a slew of unfinished projects.

Venezuela’s over-dependence on China was an early warning that the world ignored. Dozens of other countries that rode China’s rise are now at serious risk of financial distress and debt default as the Chinese economy stagnates. Yet China refuses to offer meaningful foreign debt relief and is doubling down at home on its protectionist trade...

[Billthedrill]

China's principal problem with Venezuela is that their loans were secured by oil still in the ground. The infrastructure failed to the point where more loans would be necessary to pay off the present ones, and at this point getting that oil out would cost China more than what is owed. The Russians are nine billion dollars into that same mess and have just left the consortium.

[wbarmy]

It’s difficult to understand how stupid both Chavez and Maduro have been. They could have kept this going on forever if they just kept the infrastructure intact. There are many companies which would have done the job for them.

But they killed the goose, smashed the eggs, and stole everything that wasn’t nailed down.

And it will bite Maduro sooner or later.

[Billthedrill]

Yup. And even worse, Gazprom apparently investigated restoring the extraction infrastructure far enough to help fund the thing only to discover that they’d also let their hydro system degenerate too far to supply the electricity necessary to do that. Double whammy.

[utahb52]

This is what happens when you replace managers who know their business and what they’re doing with political cronies who are “reliable”.

[lurk]

They’ll be fine. The BRICS coalition will keep them afloat.

[packrat35]

Many African countries fell for this too...

[9YearLurker]

China hangover? We’re just getting to the slurred speech and unsteady walk stage...

[dennisw]

It’s difficult to understand how stupid both Chavez and Maduro have been. They could have kept this going on forever if they just kept the infrastructure intact. There are many companies which would have done the job for them. But they killed the goose, smashed the eggs, and stole everything that wasn’t nailed down.

I must be racist about this. These two are half-breed mongrel retards. Chavez was worse. Venezuelan oil is heavy, so difficult to extract out of the ground. They messed up the Venezuelan national oil companies via socialism. Who then drilled so haphazardly that oil field pressure has gone down. To where it is even more difficult to get the oil out of the ground.

Spanish elites and the military ruled Venezuela for decades. They respected their oil wealth. Brought it foreigners and their petroleum expertise.