The China Deals Transparencia Venezuela Oct 2020

THE CHINA DEALS
Agreements that have undermined Venezuelan democracy
The China
xxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxx
Deals
Agreements that have undermined
Venezuelan democracy
August 2020
1 I Transparencia Venezuela
THE CHINA DEALS
Credits Agreements that have undermined Venezuelan democracy
Transparencia Venezuela
Mercedes De Freitas
Executive management
Editorial management
Christi Rangel
Research Coordinator
Drafting of the document
María Fernanda Sojo

Editorial Coordinator
María Alejandra Domínguez

Design and layout
With the collaboration of:

Antonella Del Vecchio
Javier Molina
Jarmi Indriago
Sonielys Rojas
Table of Contents Introduction 4
1 Political and institutional context 7
1.1 Rules of exchange in the bilateral relations between 12
Venezuela and China
2 Cash flows from China to Venezuela 16

2.1 Cash flows through loans 17
2.1.1 China-Venezuela Joint Fund and Large 17
Volume Long Term Fund
2.1.2 Miscellaneous loans from China 21
2.2 Foreign Direct Investment 23
3 Experience of joint ventures and failed projects 26

3.1 Sinovensa, S.A. 26
3.2 Yutong Venezuela bus assembly plant 29
3.3 Failed projects 31
4 Governance gaps 35

5 Lessons from experience 38
5.1 Assessment of results, profits and losses 41
of parties involved
6 Policy recommendations 45
Annex 1 50
List of Venezuelan institutions and officials in charge of
negotiations with China
Annex 2 58
List of unavailable public information
Annex 3 59
List of companies and agencies from China in Venezuela
THE CHINA DEALS
The People’s Republic of China has been viewed as a key

Introduction
partner by Venezuela’s Chávez and Maduro administrations. In
the last 20 years, the two countries have expressed common
interests, been co-signatories of more than 470 agreements,
and negotiated multiple multimillion-dollar loans resulting
in huge debts for the South American country. There is little
transparency about the terms of these loans.
Following an eight month investigation, this report analyzes
the economic and political relationship between China and
Venezuela from 1999 to 2019 and assesses the impact of
Chinese capital on Venezuela’s democratic institutions and
public administration. During this period, checks and balances
in Parliament and the Comptroller General’s Office failed. To
date, the Venezuelan justice system has not sanctioned failures
to comply with national legislation while government agencies
entrusted with ensuring transparency, access to public
information, and accountability have also failed to act.
Furthermore, the investigation reveals how the Chinese
“Going Global Policy” was applied in Venezuela, including
requirements put in place for loans, foreign direct investment
and donations. China used four types of rules when granting
loans to Venezuela, which may be classified as political,
embedded, emerging conditionalities, and confidentiality. The
last of these appears in several agreements signed by the two
countries and is also evident in the limited information on
agreed exchanges, projects and results.
As part of its expansion strategy, the Chinese government
supplied more than US$350 billion, mostly in the form of loans,
to some 140 countries between 2000 and 2014. Venezuela
was the largest recipient in Latin America. According to
research conducted for this report, Venezuela received an
estimated US$68.7 billion from China, 91.2% of which came
in the form of loans. Through the Venezuela-China Joint Fund
and the Large Volume Long Term Fund alone, US$50.24 billion
were transferred, of which more than US$16.73 billion were
due by the end of 2019. This figure is three times higher than
Venezuela’s international reserves as of March 2020.
Of the 23 loans granted by China to Venezuela, only one was
included in the Annual Debt Law and there is no detailed
information on the terms of any of the agreements. However,
THE CHINA DEALS
all of them were approved by the National Assembly, which at

the time of signing was controlled by the ruling party. China’s
banks, unlike other multilateral sources of financing, did not
demand fiscal discipline, transparency of spending, or the use
of good governance and anti-corruption measures.
More than 790 projects between China and Venezuela have
been mentioned in official statements since 1999, but specific
data about the funding mechanisms and projects plans are
almost non-existent. This report documents fifteen cases of
failed projects, which altogether squandered at least US$19.6
billion. The most notable projects are the Termocarabobo
power plant and the Tinaco-Anaco Railway, which, if fully
operational, would have given a much-needed boost to the
nation’s electricity and transportation systems.
The research also reveals the presence of 90 Chinese
companies and government agencies in Venezuela. They
operate in over 25 sectors, although Chinese interest in oil
is illustrated by their focus on the energy and technology
industries. These companies have underperformed despite
the high domestic expectations of a positive economic impact,
as reflected in the report “Ni los chinos pudieron con la (mala)
gestión petrolera del chavismo”1.
China has not granted additional loans to Venezuela since
2017, even though the Maduro administration made several
trips to Beijing to attempt to secure more funds. However,
the China National Petroleum Corporation (CNPC) acquired
9.9% of the shares in the oil production company JV Petrolera
Sinovensa, which provided some financial support. Since 2017,
most interactions between China and Venezuela have focused
on renegotiating the existing debt, improving hydrocarbon
production and maintaining oil shipments to honor payments.
This report shows that the economic relationship between
China and Venezuela has been harmful for Venezuelan
society. However, it has provided the Chávez and Maduro
administrations with vast funds to capture key institutions and
to finance clientelist and populist agendas and the military.
The conditions under which the relationship between the
two countries has developed have exacerbated existing
governance gaps such as the lack of transparency in decision-
making and the gradual elimination of checks and balances
on the executive branch. The relationship with China has also
contributed to growing corruption risks related to bribery,
1 A. Figueroa and C. Camacho, “Ni los chinos pudieron con la (mala) gestión petrolera del chavismo” Transparencia Venezuela, 2020.
[Online] Available at https://transparencia.org.ve/project/petroleo-historia-1/
THE CHINA DEALS
clientelism and political corruption. This report attempts to

outline a full account of who and what has led to these results,
information that has not previously been published.
In order to overcome the opacity surrounding the links
between Venezuela and China while preparing this report, an
extensive review was made of available sources. These sources
included academic papers, news reports, databases, and
official publications. The report also includes unofficial sources
such as interviews with academic experts, business leaders,
and consultants in relevant sectors including oil and energy
production.
From these sources, the report develops a timeline of
exchanges between China and Venezuela. Included in this
timeline are two case studies of joint ventures and a list of
failed projects. This report also reviews the institutional context
of the China-Venezuela relationship and its deterioration over
time. Since the relationship between the two countries has
a strong influence on the management of loans, associated
projects, and governance, an analysis of the overall partnership
and its effects is also included.
Finally, the report outlines policy recommendations to counter
the negative effect of corrosive capital, based on the results of
this investigation.
THE CHINA DEALS
1
Economic relations between China and
Venezuela expanded considerably after
the turn of the 21st century. First, China’s
leadership realized that increased access to
fuel and commodities was essential to maintain
their rapid economic growth. This situation
Political and was compounded by the fact that the Beijing

government decided to undertake a new global
strategy entitled the Going Global Policy.2 This new
institutional policy targeted Latin America and the Caribbean,

with the aim of increasing trade, investments and
financing agreements as well as expanding the
context reach of Chinese companies3. As a result, China

became either the largest or second largest
commercial partner of several Latin American
countries, including Venezuela.4,5 According to
AidDATA6
between
2000 2014
The Chinese government sent funds to
for an amount
140 US $ 350
countries billion
These transfers were made in the form of loans,
export credits, grants, debt restructuring deals,
free technical assistance and scholarships.
2 R. Castro, “Desestadounizar no es descolonizar: apuntes sobre las relaciones entre China

y Venezuela de cara a la crisis venezolana” de La crisis venezolana: impactos y desafíos,
Bogotá D.C., Konrad Adenauer Stiftung, 2019, pp. 297 – 323.
3 The Going Global Policy of the early 2000s, has been superseded by other policies, notably
since 2013 by the Belt and Road Initiative (BRI).
4 M. Ferchen, “Why did China stand by Maduro in Venezuela?” The Washington Post, Feb.
5, 2019.
5 C. Brandt and C. E. Piña, “Las relaciones Venezuela China (2000–2018). Entre la
cooperación y la dependencia,” Friedrich Ebert Stiftung, Caracas, 2019.
6 M. Ferchen, “¿Dónde está el desarrollo financiado por China?,” Jan. 5, 2018. [Online].
Available at: https://dialogochino.net/10449-wheres-the-development-in-chinas-global-
development-finance/?lang=es
THE CHINA DEALS
Second, President Hugo Chávez sought to the Chávez government implemented legislative
diversify international buyers of its oil and reduce changes to consolidate its power and recruited
Venezuela’s dependence on the United States sympathetic officials to the judiciary and other
oil market by exporting to Asian countries such branches of government7. Most importantly,
as China and India. Soon after his inauguration President Chávez gradually gained control of the
in 1999, Chávez made his first visit to China. On nation’s main public resources and used them to
May 24, 2001, the High-Level Joint Commission support his party’s dominance.
(HLJC) was created between the two countries. In the early 2000s, the oil fields in the Orinoco
This commission served as the main bilateral Belt were renamed from a Bituminous Belt to an
decision-making body for the economic, trade Oil Belt. Several discoveries and expansions of
and political integration projects that would be certified reserves made Venezuela the country
approved over the next 17 years. with the largest proven oil reserves in the world.
The enabling powers granted to President In recognition of Venezuela’s newfound status,
Chávez in 2001 were used to approve laws that Venezuela’s massive new reserves made it very
prompted unrest in the private sector and civil attractive to Chinese energy interests.
society organizations. These laws also raised At the same time, President Chávez saw China
tensions between political representatives of as a valuable political ally and a source of new
opposition parties, local authorities and the funding. China was seen as a potential trading
government. Massive protest for and against partner in the energy sector, a provider of
the government took place in 2002. The services and inputs, and an ideological partner
involvement of business leaders in the failed in geopolitical affairs. For their part, Chinese
coup led President Chávez to rally against authorities were not only looking for energy
the private sector and its top executives. In security but international markets to expand
2003, some employees of the state-owned oil exports of Chinese companies and implement
company Petróleos de Venezuela S.A. (PDVSA) China’s new capital export project. These
went on strike and pressed for the resignation matching interests made Venezuela an ideal
of President Chavez. Prior to this, PDVSA had space for Chinese companies to participate in
kept its corporate governance moderately large and diversified investment projects and
independent of government interference. were instrumental in making Venezuela the first
However, after the strike, PDVSA’s corporate Chinese loan beneficiary in Latin America and the
independence was eliminated and came under Caribbean. China’s highest priority in Venezuela
Chávez’s direct control. These events led to was gaining access to its hydrocarbons8.
deteriorated relations between Venezuela and
the United States. Consequently, the bilateral relationship between
China and Venezuela was classified in 2001 as a
The political confrontations during the first Strategic Partnership for Shared Development,
few years of the Chávez government led the and in 2014 it was upgraded to a Comprehensive
Executive Branch to do away with checks and Strategic Partnership.
balances. In defiance of constitutional provisions,
7 Acceso a la Justicia, “La toma del poder absoluto en Venezuela” Acceso a la Justicia, Caracas, 2019.
8 C. Brandt and C. E. Piña, “Las relaciones Venezuela China (2000-2018). Entre la cooperación y la dependencia” Friedrich Ebert Stiftung, Caracas, 2019.
THE CHINA DEALS
Moreover, between 2001 and 2018 the As a result, President Chávez’s supporters won an
HLJC met 16 times to coordinate the flow of absolute majority in Parliament in the 2005–2010
capital to Venezuela through loans, foreign term. This allowed the government to approve
direct investment and other exchanges. the main investment and debt agreements
President Chávez’ desire to deepen with neither objection nor oversight from other
bilateral relations with China was politically government agencies and public administration.
viable from the outset because as head Although opposition political parties were
of state, the Constitution granted him the represented in the 2010–2015 legislature, the
power to establish foreign relations and ruling party retained a majority and continued
to enter into agreements and contracts to support the government’s agreements with
of national interest (Art. 236). His ruling China.
party maintained a majority in the national
parliament throughout his time in office. This
was crucial because Venezuela’s Parliament
has the authority to approve new debts and
to enter into agreements of national interest.
It should be noted that opposition political
parties boycotted the elections for the 2005–
2010 legislature, protesting the conditions
imposed by the National Electoral Council.
THE CHINA DEALS
The table below shows the meetings of the High-Level Joint Commission
Table No. 1
Between 2001 and 2018, 269 agreements were Commission and of each country’s highest
signed within the framework of the 16 meetings leaders show that the exchanges were based on
of the HLJC. To put this in historical perspective, state-to-state relations: President Hugo Chávez
diplomatic relations between Venezuela and visited Beijing six times, while President Nicolás
China have existed since 1974, and by 2018, Maduro has visited four times. The presidents of
a total of 500 agreements have been signed China have visited Venezuela twice and their vice
between the two countries. Data shows that just presidents three times.
30 agreements were signed between the two
The agreements approved at the HLJC meetings
countries before 1999 while 470 were signed
and the loan conditions imposed by China
after President Chávez came into power. Thus,
represented the main rules of the game in
there were also agreements outside the HLJC9.
Venezuela’s use of Chinese development capital.
The agreements cover more than 25 economic However, some terms were set up by the
sectors, including strategic areas such as Venezuelan government and will be explained
hydrocarbons, mining, telecommunications later.
and defense. The numerous meetings of the
9 This information was obtained after checking own data and data from Venezuelan Centre of China Studies. «China y Venezuela. Una relación estratégica integral. Report on the bilateral
relationship between the People’s Republic of China and the Bolivarian Republic of Venezuela 2018 - 2019». Caracas: CVEC, 2019.
Available at: https://cvechina.wordpress.com/2019/07/19/informe-china-y-venezuela-una-asociacion-estrategica-integral/
NEGOCIOS CHINOS
Acuerdos que socavaron la democracia en Venezuela
THE CHINA DEALS
Rules of exchange in the bilateral relations between Venezuela and China
China’s “Going Global Policy” is based on the with Taiwan13. To this end, the Venezuelan
export of capital, mostly commercial loans that government made a statement in 2000
are promoted as development aid funds10. The recognizing the government of the People’s
conditions established by China’s policy banks Republic of China as the sole representative
for granting these loans are in sharp contrast of the Chinese people, with the one-China,
with typical Western multilateral banking two-system scheme. Later, in 2007, Taiwanese
requirements, which focus on macro-fiscal trade representatives in Caracas had their visas
rules of balance and transparency of spending, suspended. It was also documented that the
as well as market liberalization. In China, such PetroCaribe agreement (under which Venezuela
conditions are seen as interference in the ships oil to several Caribbean countries)
internal affairs of countries and run counter was used as a platform to pressure those
to its doctrine against intervention. “Chinese countries into reducing their links with Taiwan14.
academics, officials and experts often highlight Thus, China took advantage of Venezuela’s
this non-Western approach to exchanges11.” dependence on capital to expand its political
Kaplan and Penfold point out that China’s influence and used the Venezuelan government
interest is to promote long-term business as an intermediary in China’s foreign relations
opportunities, secure contracts for its state- with other countries in the region.
owned enterprises, export machinery and The embedded conditionality refers to China’s
have commodities as payment guarantees for requirement to secure contracts for Chinese
the return of its loans. Moreover, Cardona12, companies and labor, to use Chinese technology,
who also agrees with these statements, delves and to purchase Chinese raw materials. Thus,
deeper into China’s loan conditions. She the loans granted to Venezuela implied,
classifies them into three modalities, according from the outset, the participation of Chinese
to the ideas of Mattlin & Nojonen: political companies as contractors or suppliers of inputs
conditionality, embedded conditionality and and technology. Indeed, 790 projects were
emerging conditionality. concluded with China15, most of them in the
Political conditionality is explicit in official framework of the High Joint Level Commission
policy documents concerning Latin America meetings. The Asian country delegation
and the Caribbean (White Paper). To promote positioned their companies in projects in various
the cause of reunification and the one China sectors (see annex 3). For example, in 2010 a
principle, China requires beneficiary countries loan was granted for the creation of the Large
to abstain from official relations and contacts Volume Long Term Fund, of which US$14 billion
10 For Ferchen, defining the flow of funds from China as development assistance or development financing is misleading, since more than 75% of the funds are commercial loans for
investments in energy and infrastructure, whose impacts on sustainability of domestic debt or the environment of the recipient countries have not been thoroughly studied. M. Ferchen,
«¿Dónde está el desarrollo financiado por China?» Jan. 5, 2018. [Online].
Available at: https://dialogochino.net/10449-wheres-the-development-in-chinas-global-development-finance/?lang=es
11 S. B. Kaplan and M. Penfold, «China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics» Woodrow Wilson Centre, Washington, 2019.
12 A. M. Cardona, «China en Venezuela: Los préstamos por petróleo» Asociación Ambiente y Sociedad, Bogota, 2016.
13 Ibid
14 J. Briceño-Ruiz and N. Molina. «China–Venezuela Relations in a Context of Change,» chapter on China–Latin America Relations in the 21st Century edited by Bernal-Meza and Xing.
Palgrave Macmillan, 2020.
15 According to statements by Venezuelan authorities cited by Venezuelan Centre of China Studies. «China y Venezuela. Una relación estratégica integral. Report on the bilateral relationship
between the People’s Republic of China and the Bolivarian Republic of Venezuela 2018 - 2019» Caracas: CVEC. 2019.
Available at: https://cvechina.wordpress.com/2019/07/19/informe-china-y-venezuela-una-asociacion-estrategica-integral/
NEGOCIOS CHINOS
(70 billion in renminbi and 4 billion in dollars) It was found that a number of projects run
were to be invested in cooperation projects by Chinese companies hired mostly skilled
undertaken jointly by China and Venezuela. and unskilled labor from China, in violation
This investigation identified 90 Chinese of Article 27 of the Venezuela’s Labor Law
companies and government agencies present (LOTTT)18 and impacting job opportunities for
in Venezuela that are working on various Venezuelans. During the years of close ties with
projects. Notable Chinese companies on this list China, Venezuela had an informal employment
include the following, based on the number of rate of around 40% of the workforce and an
exchanges16 in which they are engaged: unemployment rate that averaged over 12%19.
The embedded conditionality accepted by the
• China National Petroleum Corporation Venezuelan government placed the nation’s
(CNPC), participating in 17 interactions workers at a disadvantage and prevented
• China CAMC Engineering Co., Ltd (CAMCE), the improvement of employment indicators.
participating in 17 interactions Examples included the construction of the Luis
Zambrano thermal power plant in Mérida, the
• Huawei Technologies Co., Ltd., in 17
Power Plant for the Batalla Santa Inés refinery
interactions
in Barinas, the construction of the Tinaco-Anaco
• Citic Construction Co., in 16 interactions railway and the construction of housing in
• China Zhong Xing Telecommunication Ciudad Tavacare and Ciudad Tiuna20.
Equipment Company Limited (ZTE), in 10 The emerging conditionality is described as
interactions. increasing the recipient nation’s dependence
• China Petrochemical Corporation (SINOPEC), on the creditor’s provision of services, and
in 6 interactions thus, the need for new credit in the future in
order to comply with established agreements21.
• Sinohydro Corporation, in 5 interactions Examples include technological dependence
In the hydrocarbons sector there are two key in telecommunications and satellite operation
issues17. The first is that projects have gone projects, where there is no real technology
beyond mere exploration and exploitation of oil transfer. A number of the projects analyzed
and gas. China has also been awarded contracts were not sustainable because their production
for refining and for supplying infrastructure, decreased, ceased altogether or, in some
capital equipment and inputs needed for cases, was never initiated. Another problem is
upstream activities as well as maritime transport the volatility of crude oil prices, which makes it
of oil and by-products. The second issue is that difficult for Venezuela to use oil shipping quotas
China has managed to position its oil companies to honor payments. The November 2014 drop in
in a market previously dominated by U.S. and oil prices was a precursor to the 2020 plunge in
European companies. prices after the COVID-19 pandemic.
16 These exchanges include agreements, memorandums of understanding, letters of intent, business start-ups, covenants, loans, between others.
17 A. M. Cardona, «China en Venezuela: Los préstamos por petróleo» Asociación Ambiente y Sociedad, Bogotá, 2016: p. 27.
18 Article 27 of the LOTTT states: “In businesses with ten or more workers, at least ninety percent must be Venezuelan men or women…”
19 J. Ramoni and G. Orlandoni, «The Size of the Informal Economy in Venezuela» in El Norte – Finnish Journal of Latin American Studies, Finland: University of Helsinki, 2010.
20 This information was obtained from interviews with employers, researchers and workers in the projects’ industries.
21 A. M. Cardona, «China en Venezuela: Los préstamos por petróleo», Asociación Ambiente y Sociedad, Bogotá, 2016.
THE CHINA DEALS
There were two types of contracts that used in the protocols amending the Agreement
oil shipments as debt repayments22. For the between the two governments on the China-
first, China’s policy banks supplied money Venezuela Joint Fund27. It is also included in
in dollars and renminbi to the Venezuelan cooperation agreements on iron, hydrocarbons,
government and the state-owned oil company petrochemicals, mining and electricity. In
PDVSA. For the second, oil purchases made by reference to this issue, Professor Pedro Mora,
importing companies in China from PDVSA were Director of the School of Electrical Engineering
considered debt repayment. In the second case, of Universidad de Los Andes, stated in an
“the policy bank loan to the national government interview28 that he requested on two occasions
is collateralized by the daily inflow of oil income to visit and train students on the construction
from the country’s state oil company.”23 Oil- site of the Luis Zambrano thermal power plant
backed loans have also been used in Brazil in Mérida, but both requests were rejected for
and Ecuador24. In the case of Venezuela, the security and confidentiality reasons.
minimum amount of oil shipments agreed to In sum, the exchange relations between China
repay each loan has been documented. In fact, and Venezuela took place based on the following
Venezuela sent an average of 373,700 barrels rules:
per day between 2007 and 2016, with a peak of
627,000 b/d on average in 2015. The terms of • Venezuela recognizes only one China and
these deliveries gave Venezuela advantageous refrains from having official ties with Taiwan.
interest rates with respect to the international • The funds to finance projects to promote
credit market25. However, these advantages do economic and social development are jointly
not take into account the rates that might have agreed at the meetings of the High Level Joint
been provided by multilateral banks such as the Commission. They limit the opportunities
International Monetary Fund, the Inter-American for Venezuelan companies and workers,
Development Bank and the World Bank. The since they require guarantees that Chinese
Venezuelan government did not wish to enter companies participate as contractors and
into financing agreements with these institutions suppliers of inputs and technology as well as
to avoid complying with their economic policy the hiring of Chinese labor.
conditions.
• Most loans are paid for with daily shipments
The third condition was the confidentiality or of oil in the amounts set out in the
secrecy condition. This requirement is featured agreements, at near-market interest rates.
in the Agreement between the Government of
• The information in the agreements is handled
the Bolivarian Republic of Venezuela and the
confidentially between the parties.
Government of the People’s Republic of China
on Cooperation for Long-Term Financing26;
22 S. B. Kaplan y M. Penfold, «China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics», Woodrow Wilson Center, Washington, 2019.
23 Ibid, p.3.
24 N. Boza, «El financiamiento chino a cambio de petróleo: implicaciones jurídicas para Venezuela» Revista Venezolana de Legislación y Jurisprudencia, No. 10, pp. 381-418, 2018: p. 383.
25 Carlos Piña compared the amount of oil barrels sent per day, the interest rates, and the risk coverage rate (spread) in said period. C. E. Piña, «Chinese Financing in Venezuela (2000 - 2018).
Joint funds and loan-for-oil» in China’s financing in Latin America and the Caribbean, Mexico City, Universidad Nacional Autónoma de Mexico, 2019b, pp. 337 - 371.
26 Official Gazette 39.511 of September 16, 2010
27 Official Gazettes 39,927 of May 22, 2012; 40,299 of November 21, 2013; 40,516 of October 10, 2014; and 40,692 of June 30, 2015.
28 P. Mora, Interviewee, Cash flow from China. [Interview]. November 11, 2019.
THE CHINA DEALS
When looking solely at Venezuelan regulations Furthermore, of the 23 officially recorded

governing the country’s ability to enter into loans granted by China to Venezuela, only
bilateral agreements, which requires presidential one is mentioned in the debt laws of the
and parliamentary approval, these agreements 1999–2018 period. The National Public Credit
have apparent legal backing. Additionally, Office, responsible for the administration,
international agreements are excluded from the oversight, authorization, and setting limits
statues in Venezuela’s Public Procurement Law and rules in relation to public credit and the
that relate to the execution and contracting of disclosure of debt balances, (Article 76 of
works and the purchase of goods and provision the LOAFSP) was left out of most financing
of services. However, three situations contradict agreements, which prevented the consolidation
the Venezuelan legal system29: of debt commitments and proper planning to
1. The arrangements for the payment of the ensure fiscal sustainability.
debt of the Venezuela-China Joint Fund with
oil shipments were made back in 2007. But,
they only appear in international treaties
signed from 2012 onwards after several
renewals.
2. In the second and third amendments to
the agreement of the Venezuela-China Joint
Fund, Venezuela assumes obligations in Additionally, the requirement for the secret
accordance with the provisions recorded in handling of information in the agreements
diplomatic notes and other communications violates the principles of public administration
that were not overseen by Parliament. provided for in Article 141 of the Constitution,
Article 2 of the Decree of the Law on Public
3. The loans are collateralized with future sales Sector Financial Administration, Article 8 of the
of oil, which translates into a public credit Decree-Law against Corruption and rules of
operation guaranteed by privileged access to international treaties signed by Venezuela.
national goods or income, which is forbidden
in Article 105 of the Law Decree on Public
Sector Financial Administration (LOAFSP).
29 N. Boza, «El financiamiento chino a cambio de petróleo: implicaciones jurídicas para Venezuela», Revista Venezolana de Legislación y Jurisprudencia, No. 10, pp. 381-418, 2018: p. 418.
THE CHINA DEALS
2
Chinese capital inflows in Venezuela came
through commercial loans, foreign direct
investments and grants. The following table
Cash flows summarizes the amount and proportion of

funds received by source.
Cash flows from China to Venezuela in 1999–2018

from China Quantity MM US $
Table No. 2
to Venezuela Loans 23 62,631.14 91.20
FDI 22 6,045.50 8.80
Donation 1 1,57 0.00
TOTAL 46 68,678.21
Source: Prepared by the authors with Official Gazettes; OFDI Monitor of the LAC-
China Academic Network; Gallagher, Kevin P. and Margaret Myers (2019) “China-
Latin America Finance Database”; Debt Law of 2009; Piña (2019) Chinese investments
and loans in the Venezuelan oil sector (2000-2018); and agreements signed between
the Bolivarian Republic of Venezuela and the People’s Republic of China (registered by
the Embassy in Beijing as of March 25, 2010)
The table shows that most of the funds (91.2%)

are commercial loans. Venezuela is the largest
Latin American loan recipient from China30. It
has received 45% of all Chinese loans granted
between 2000 and 2019. These loans were
granted by state-owned financial entities in
China; primarily the Bank of China, the China
Development Bank and the Export-Import Bank
of China.
It is important to note that World Bank figures
show Venezuela enjoyed a favorable balance
of bilateral trade between 2000 and 201731.
However, for the purposes of this research only
the information on loans and foreign direct
investment (FDI) will be broken down.
30 K. Gallagher and M. Myers, «Scaling Back: Chinese Development Finance in LAC, 2019»
The Dialogue, March 18, 2020. [Online]. Available: https://www.thedialogue.org/analysis/
scaling-back-chinese-development-finance-in-lac-2019/According to data from Gallagher,
Kevin P. and M. Myers. “China-Latin America Finance Database” (2020)
31 Bilateral trade reached US$150.1 billion, of which Venezuela sold US$96.4 billion to China
and China sold US$53.7 billion to Venezuela.
THE CHINA DEALS
2.1 Capital inflows through loans assistance, among others...”32 The repayment of
After the global financial crisis of 2008, the these loans is a condition for their renewal33.
Venezuelan government decided to reduce Although not explicitly mentioned in the first
Venezuelan participation in multilateral funds. agreements approved by the FCCV (2008, 2009
Given the lack of alternative low interest credit and 2011), loans were negotiated to be repaid
options, the Chinese offer of loans was favorably with oil shipments from PDVSA to the CNPC. The
received. exchange of payments occurred as follows: CDB
The flow of funds through loans will be described transferred funds to BANDES, the institution
in two groups. The first includes the loans responsible for administering the Fund; PDVSA
agreed through the Joint Chinese Venezuelan sold oil to CNPC, which then deposited the
Fund (FCCV) and the Large Volume Long Term payment for the crude in BANDES accounts at
Fund (FGVLP). the CDB to cover the loan’s principal, interest
and other amounts due34. It is noteworthy that
Although these were not the first loans granted, BANDES was created in 2001 as a development
they are by far the largest with a total of bank with authority similar to that of the
US$50.24 billion, or about 80% of the loans defunct Venezuelan Investment Fund35. It is
granted by China to Venezuela. In the second supervised only by the Superintendent of Banks
group, we will describe all other Chinese loans and other Financial Institutions (without the
agreements. power to object to debt operations or sanction
irregularities) and the General Comptroller.
This minimal oversight has enabled the bank
2.1.1 China-Venezuela Joint Fund and
to conduct operations without the limits set by
Large Volume Long Term Fund
macro-fiscal rules.
During the 6th High Level Joint Commission
The FCCV was structured in renewable tranches
held in Caracas in November 2007, Framework
that resulted in seven disbursements and three-
Agreements for the establishment of the Joint
year payment terms. Table 3 shows the dates
Venezuelan-Chinese Fund (FCCV) were signed
on which the agreements were formalized and
between four organizations: two Chinese and
legalized, although these do not always coincide
two Venezuelan. These included the China
with the dates of the disbursements.
Development Bank (CDB), the Economic
and Social Development Bank of Venezuela In addition to the FCCV, the Large Volume Long
(BANDES), Petróleos de Venezuela (PDVSA) and Term Fund (FGVLP) was approved in 2010.
China National Petroleum Corporation. These involved similarly sized transfers from
the China Development Bank in US dollars
The CDB and Venezuela’s National Development
and Chinese renminbi over 10 years. FONDEN
Fund (FONDEN) provided capital to finance
was not required to contribute any funds. This
“economic and social development projects in
agreement was drafted at the 9th High Level
the areas of infrastructure, industry, agriculture,
mining, energy, technology and technical
32 Article 1 of the Law Approving the Agreement between the Government of the Bolivarian Republic of Venezuela and the Government of the People’s Republic of China on the Joint
Financing Fund Official Gazette 39.019
33 C. Brandt and C. E. Piña, “Las relaciones Venezuela China (2000–2018). Entre la cooperación y la dependencia,” Friedrich Ebert Stiftung, Caracas, 2019.
34 N. Boza, «El financiamiento chino a cambio de petróleo: implicaciones jurídicas para Venezuela», Revista Venezolana de Legislación y Jurisprudencia, No. 10, pp. 381-418, 2018.
35 Decree-Law of the Economic and Social Development Bank of Venezuela, published in the Extraordinary Gazette No. 6,155 of November 19, 2014.
THE CHINA DEALS
Joint Commission, held in Beijing in August 2010,

“with the purpose of promoting cooperation
between the Parties in major projects in the
areas of infrastructure construction, social
development, energy, mining and agricultural
development and to accelerate social and
economic development in Venezuela36”. For the
first time, this agreement explicitly mentions
the decision to honor commitments with oil
shipments from PDVSA to the China National
United Oil Corporation (CNUOC), a CNPC
subsidiary.
36 Article 1 of the Law Approving the Agreement between the Government of the Bolivarian Republic of Venezuela and the Government of the People’s Republic of China on Cooperation for
Long-Term Financing Official Gazette 39.511.
THE CHINA DEALS
Flow of Funds from China in loans from the Joint Venezuela-China Fund and the Large
Volume Long Term Fund Table 3
AGREEMENT: Agreement on AGREEMENT: Cooperation AGREEMENT: 2nd AGREEMENT: 2nd Renewal

the China-Venezuela Joint for Long Term Financing in Amendment to the FCCV of Tranche A of the FCCV
Financing Fund. Tranche A US $ and RMB Convention Tranche B - II Tranche A - III
LENDER: LENDER: LENDER: LENDER:
China Development Bank China Development Bank China Development Bank China Development Bank
AMOUNT US$: AMOUNT US$: AMOUNT US$: AMOUNT US$:
4,000,000,000 10,000,000,000 4,000,000,000 4,000,000,000
10,240,000,000
TERM / YEAR: 3 TERM / YEAR: 3 TERM / YEAR: 3
TERM / YEAR: 10 / 10
INTEREST RATE: Libor plus INTEREST RATE: Libor plus INTEREST RATE: Libor plus
spread INTEREST RATE: - spread spread
MAY SEPT FEB JAN

2008 2010 2012 2014
FEB JAN SEPT JUN

2009 2011 2013 2015
AGREEMENT: 1st AGREEMENT: 1st Renewal AGREEMENT: 3rd AGREEMENT: 5th

Amendment to the FCCV of Tranche A of the FCCV Amendment to the FCCV Amendment to the FCCV
Convention Tranche B Tranche A - II Convention Tranche C Convention Tranche B - III
LENDER: LENDER: LENDER: LENDER:
ChinaDevelopment Bank China Development Bank China Development Bank China Development Bank
AMOUNT US$: AMOUNT US$: AMOUNT US$: AMOUNT US$:
4,000,000,000 4,000,000,000 5,000,000,000 5,000,000,000
TERM/YEAR: 3 TERM / YEAR: 3 TERM / YEAR: 3 TERM / YEAR: 3
INTEREST RATE: Libor plus INTEREST RATE: Libor plus INTEREST RATE: Libor plus INTEREST RATE: Libor plus
spread spread spread spread
TOTAL 50,250,000,000
Source: Prepared by the authors with data from Official Gazettes and data from Carlos Piña “Chinese
Financing in Venezuela (2000 - 2018). Joint funds and loan-for-oil.
THE CHINA DEALS
The financial conditions for the payment Following the onset of an economic crisis in
of the FCCV and the FGVLP were allegedly Venezuela after the November 2014 fall in
advantageous for Venezuela because they oil production and prices, in 2016 the debt
were cheaper than issuing bonds in the capital payment conditions were renegotiated. During
market. Also relevant are the withdrawals by this renegotiation, the parties agreed to suspend
PDVSA from the FCCV between 2010 and 2017 the payment of principal quotas and only pay
for the remaining oil shipments to China, which interest until 2018. The debt balance as of
were made after settling the debt.37 38 December 2019 was US$16.73 billion, with
US$3.1 billion expected to be paid in 202039.
This amounts to 57% of the approved national
Yearly balance of Debt-for-oil exchanges budget for 2020. Due to the size of Venezuela’s
payment commitments to China, covering debt
Table No. 4 repayments precluded public expenditures in
fundamental sectors. This implies that concerns
Year FCCV PDVSA withdrawals in MM US$
about fiscal sustainability were not addressed.
2010 1,320
In 2020, after the drop in oil production and
2011 6,724 general economic activity aggravated by the
COVID-19 pandemic, there has been discussion
2012 13,208
of a second debt renegotiation. A grace period
2013 9,640 was granted until December 2020, but the
details of the new debt renegotiation and its
2014 7,223
implications are unknown40.
2015 2,945
2016 2,987
2017 3,848
TOTAL 47,895
Source: Petróleos de Venezuela S.A., Ministry of Economy and Finance
The table shows that PDVSA did not access

the remaining funds before 2010 and that the
largest withdrawals were made between 2011
and 2014, when average daily oil production
stood at around 2.8 million barrels and
international oil prices reached all-time highs.
37 They are explained in detail in Carlos Piña’s work, where he describes the interest rates, the risk protection margin, the expected and actual yields by China, the maturity of the loans, among
other analyses, based on the PDVSA reports published until 2016. C. E. Piña, «Chinese Financing in Venezuela (2000 - 2018). Joint funds and loan-for-oil» in China’s financing in Latin
America and the Caribbean, Mexico City, Universidad Nacional Autónoma de Mexico, 2019, pp. 337 - 371.
38 The data was obtained unofficially from a source at Venezuela’s Ministry of Economy and Finance.
39 According to unofficial data from BANDES.
40 M. Armas and C. Ponds, «Venezuela recibe otro período de gracia de China para postergar pagos con petróleo: fuentes». Reuters Aug. 12, 2020 [Online]. Available at
https://lta.reuters.com/articulo/venezuela-china-idLTAKCN2581W7
THE CHINA DEALS
2.1.2 Miscellaneous loans from

China
Loans from China began in 1999
during the first year of President Hugo
Chávez’s government at a modest
amount of US$30 million for the
purchase of agricultural machinery41.
Other larger loans followed until
a total of 15 disbursements were
made, totalling US$12.39 billion. The
largest portion of these loans was
committed to projects linked to the
hydrocarbon sector (US$9.7 billion).
These investments were made to
increase production of the Sinovensa
joint venture and other oil companies
owned by PDVSA and CNPC and to acquire Piña45, Myers & Gallagher46, as well as reports
fixed capital42. It is noteworthy that although from several media outlets have highlighted the
Venezuela is the largest Latin American/ loss of dynamism in financial relations between
Caribbean recipient of financing from China, the China and Venezuela in the last four years. This
flow of loans peaked between 2010–2013. This fact contradicts the rhetoric of the government
period, which coincided with surging global oil representatives of both countries who stand
prices, saw Venezuela receive an average of 64% by the deepening of their countries’ economic,
of China’s total loans to Latin America and the commercial and political ties. However, it is also
Caribbean (LAC). By contrast, during the 2014– true that China’s lending policy towards Latin
2017 period loans to Venezuela accounted for America in general has shifted since 2016. New
just 18% of loans to the region43. loan amounts have fallen every year and loan
There have been reportedly been no new recipients have become more diversified.
loans from China since November 2016.
Various previously cited researchers, including
Matt Ferchen44, Kaplan and Penfold, Carlos
41 According to an official document from the Venezuelan Foreign Ministry: Embassy of Venezuela to the People’s Republic of China, «Agreements signed between the Bolivarian Republic of
Venezuela and the People’s Republic of China» Beijing, 2010.
42 C. E. Piña, «Chinese Financing in Venezuela (2000 - 2018). Joint funds and loan-for-oil» in China’s financing in Latin America and the Caribbean, Mexico City, Universidad Nacional
Autónoma de Mexico, 2019b, pp. 337 - 371.
43 S. B. Kaplan and M. Penfold, «China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics» Woodrow Wilson Center, Washington, 2019: p.3
44 M. Ferchen, «Carnegie - Tsinghua Center for Global Policy» Aug. 16, 2018. [Online]. Available at: https://carnegietsinghua.org/2018/08/16/china-venezuela-and-illusion-of-debt-trap-
diplomacy-pub-77089.
45 C. E. Piña, «Las relaciones China Venezuela a la luz de las inversiones chinas en el sector petrolero venezolano (2000 - 2018)» China-Mexico Study Centre - UNAM, Mexico, 2020.
46 M. Myers & K. Gallagher, «Scaling back: Chinese development finance in lac, 2019» China-Latin American report. The Dialogue, Global Development Policy Center, March 2020.
NEGOCIOS CHINOS
Table No. 5
Flow of Funds from China by Miscellaneous Loans
Date Agreement Lender Quantity Purpose
Agricultural
Oct-99 Bank and credit loans 30,000,000
Machinery
Construction of the
Mar-02 Water project loans Bank of China 239,000,000 Bolivarian Aqueduct
of Falcon
Loan to finance
Rehabilitation of the
Dec-03 complementary The Export 150,789,844
Central-Western Railway
agreement No. 1
Document confirming the
agreement between the The Export
Jan-05 Ministry of Finance and Import Bank of 13,875,205 Agricultural Machinery
the Export - Import Bank China
of China
Framework Agreement
Jan-05 51,470,588 Not available
on Preferential Credit
China
Dec-09 Loan Development 1,000,000,000 Mining Project
Bank
Dec-09 Loan China Ex Im Bank 500,000,000 Not available
China Trade credit line.
Development According to Piña
May-10 Commercial credit line 1,100,000,000
Bank and (2019b) for the
Portugal’s BES Abreu e Lima Refinery
China Financing part of 40% of the
Nov-11 Loan Development 1,500,000,000 Abreu e Lima Refinery in
Bank Corporation Recife
China
Funding activities from
Feb-12 Loan Development 500,000,000
the oil industry
Bank
China
Increase Sinovensa’s
Jun-13 Loan Development 4,015,000,000
production
Bank
China
Exploitation of Las Cristinas
Sept-13 Loan Development 700,000,000
mines.
Bank
China Ex Im Pequiven Marine
Sept-13 Loan 391,000,000
Bank Terminal
Increase the
China
production of
Nov-16 Joint venture financing Development 2,200,000,000
Sinovensa and other
Bank
oil projects
Total 12,391,135,637
Source: Prepared by the authors with Official Gazettes; OFDI Monitor of the Academic LAC-China Network; Gallagher, Kevin P. and Margaret Myers (2019)
“China-Latin America Finance Database”; Debt Law of 2009; Piña (2019) Chinese investments and loans in the Venezuelan oil sector (2000-2018); and the agreements
signed between the Bolivarian Republic of Venezuela and the People’s Republic of China (Registered by the Embassy in Beijing as of March 25, 2010).
NEGOCIOS
THE CHINA
CHINOS
DEALS
Agreements
Acuerdos
that
que
have
socavaron
undermined
la democracia
Venezuelan
endemocracy
Venezuela
The following table summarizes the amount of

funds received by Venezuela compared to the
rest of the Latin America and Caribbean region
between 2010 and 2017:
Relative weight of flows sent to Venezuela compared to the region

LAC. Latin America and the Caribbean
Percentage of funds Relative weight Percentage of funds Relative weight

to Venezuela of funds to the rest to Venezuela of funds to the rest
of LAC of LAC
64% 36% 18% 82%

2010 - 2011 - 2012 - 2013 2014 - 2015 - 2016 - 2017
PERIOD PERIOD
Source: S. B. Kaplan and M. Penfold, «China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics» Woodrow Wilson Centre,
Washington, 2019: p.3
2.2 Foreign direct investment Also included in FDI-related agreements

Capital inflows to Venezuela through Chinese is the sale of shares of the Sinovensa joint
foreign direct investment have been small venture made by PDVSA to CNPC in 2018 for
compared to both the amounts provided to the an estimated US$1.58 billion. This deal was
country in loans and the amounts China has part of an effort on behalf of the Venezuelan
invested in other LAC countries. Investments government to reduce PDVSA’s debt with CNPC
in Venezuela account for only 5.2% of China’s but should be considered as an acquisition of
total investments in LAC47. Research conducted fixed capital (shares) by CNPC49. The amount
for this report revealed 22 total investment of the agreement is equivalent to 22% of
deals, including new projects, joint ventures and Venezuela’s international reserves as of March
mergers and acquisitions by mostly state-owned 2020.
Chinese companies totaling US$6.05 billion The following table lists the investments and
between 2003 and 2018. However, data was shows the greatest amount of FDI activity
unavailable for China‘s contributions to four of occurred between 2006 and 2014, after
the joint ventures: Sino-Venezolana, Petrolera which FDI inflows started to decline and were
Paria, Petro Zumano and Chery Venezuela48. strictly aimed at boosting the productivity of oil
companies.
47 Ibid.
48 In relation to Chery, there are two transactions. First, there was an agreement authorising the Chinese company to produce vehicles in Venezuela. Then, the JV Chery Venezuela was
established, with a majority Venezuelan capital.
49 C. Piña, «Chinese OFDI in Venezuela (2000 - 2017) » of China’s Foreign Direct Investment in Latin America and The Caribbean, Mexico, China Mexico Study Center. UNAM, 2019,
pp. 211-230.
THE CHINA DEALS
Chinese foreign direct investment in Venezuela

Table No. 6
Date Agreement Investor Amount, US$

Orifuel Sinoven Strategic
Sept-03 CNPC 480,000,000
Association Orimulsion Plant
Agreement for the Joint Exploration
of the Gloria I mining area between
Dec-04 Shandong Gold Group 13,000,000
CVG Minerven and Shandong Gold
Group
Formation of the Venezuelan
Inspur International Ltd,
Oct-05 Technology Industry Joint Venture 20,000,000
49%
(VIT)
Formation of the Sino - Venezolana
Oct-06 CNPC 25% Undef.
Joint Venture
Formation of the mixed
Oct-07 Venezuelan telecommunications ZTE Limited, 15,7% 10,000,000
company C.A. (VTELCA)
Conformation of the JV Petrolera
Nov-07 SINOPEC 32% Undef.
Paria, S.A.
Formation of the Petro Zumano

Nov-07 CNPC 40% Undef.
Joint Venture
Conformation of the Mixed Oil

Jan-08 CNPC 40%. 132,000,000
Company Sinovensa, S.A.
China Petroleum
Establishment of JV Industria China Technology and
Jun-08 22,500,000
Venezolana de Taladros S.A. Development Corporation,
S.A. (CPTDC)
Establishment of the Electronic
Mar-09 Industry Joint Venture Orinoquia Huawei 35% 1,000,000
S.A. (ORINOQUIA)
Agreement for Chery Vehicle
Aug-09 Chery Automobile Co. Ltd. 220,000,000
Production in Venezuela
Design and construction of
the Industrial Complex for the
May-10 Haier 59,000,000
manufacture of Haier household
appliances
Private investment for the
Aug-10 installation of a vehicle assembly Great Wall Motors 65,000,000
plant.
Wuhan Iron & Steel Group
Aug-10 Agreement on iron production 2,000,000
(Wisco)
THE CHINA DEALS
Purchase and sale of 10% China International Trust

Feb-12 of the shares of the joint venture and Investment Company 944,000,000
Petropiar (CITIC)
Creation of Chery Venezuela Joint Corporación Automotriz
Aug-13 Undef.
Venture authorised ZGT, C.A. 49%
China Development Bank opens China Development Bank

Jul-14 31,000,000
Caracas office Corporation
Agreement for the construction
Sept-14 of housing for the Gran Misión CITIC Group 1,608,000,000
Vivienda Venezuela
Special Economic Zone for
the industrial production of Sany Heavy Industry Co
Sept-14 31,000,000
construction materials in the state Ltd
of Carabobo
Formation of a joint venture:
Oct-15 Yutong Hongkong Ltd 15% 278,000,000
Yutong de Venezuela Bus Plant
Contributions to the Sinovensa Oil

CNPC 549,000,000
joint venture
Purchase and sale of 9.9% of the

Sept-18 CNPC 1,580,000,000
shares of Sinovensa Oil Company
TOTAL 6,045,500,000
Source: Authors, with data from the Latin American and Caribbean Network on China, China OFDI monitor in LAC and data from C. Piña, Chinese OFDI in
Venezuela (2000 - 2017).
Most investments contributed to joint ventures (JVs), China’s JVs in other sectors such as Vtelca and
and most JVs were involved in the oil sector. More VIT (telecommunications), Chery (automobiles),
than 60% of the Chinese investment entered this Orinoquia (electronics), Haier Plant (household
industry with the aim of guaranteeing the supply appliances) and Yutong Assembly Plant (buses),
of oil to China and successfully positioning Chinese operate as monopsonies since the Venezuelan
oil companies in the region. More recently this State pledged to buy the entire production50. In
investment has contributed to national production addition, a major investment of China’s CITIC for the
and helped Venezuela honor its debt. construction of residential complexes was contracted
by the national government for the Gran Misión
Vivienda Venezuela social housing programme.
50 Ibid
THE CHINA DEALS
3
3.1 Oil Joint Venture Sinovensa, S.A.
Sinovensa was created on February 29, 200851 and
became the fifth joint venture to be created between
state-owned companies Petróleos de Venezuela S.A.
(PDVSA) and China National Petroleum Corporation
Joint ventures
(CNPC), with an investment by CNPC of US$132
million52. This company was awarded the Carabobo
block of the Orinoco Oil Belt (150.07 km2).
and failed
After the China-Venezuela Joint Fund was created in
the 6th High Level Joint Commission of November
2007, the Venezuelan government pledged to
guarantee Chinese companies the rights to exploit
projects
hydrocarbons in joint ventures. Early that year, a
Presidential Decree approved the Law of Migration
to Joint Ventures of the Association Agreements of
the Orinoco Oil Belt and the Exploration at Risk and
Shared Profits Agreements. These laws changed
the legal framework of associations with private
companies for the exploration and exploitation of
hydrocarbons. All associations were to migrate to a
joint venture scheme, in which PDVSA would retain a
majority share.
The new legal context in the oil sector and the
prerogatives of the bi-national agreements signed
by the president and approved by the ruling-
party parliament allowed the establishment of
joint ventures without a bidding process and
under a secret and discretionary management.
Although the Contracting Law was not violated,
the entire agreement contravened good practices
of transparency, competitiveness and minimum
guarantees of efficient resource management.
Sinovensa was established53, started operations
and received loans between 2013 and 2016, as
well as capital contributions (investments) in 2016
and 2018. The government agencies directly linked
to the formation of Sinovensa were the Ministry of
Petroleum, PDVSA, the National Development Fund
(FONDEN) and the Venezuelan Economic and Social
Development Bank (BANDES).
51 According to Official Gazette 38,860

52 LAC-China Network and OFDI Monitor, «OFDI China en América Latina y el Caribe»
2017. [Online]. Available at: https://www.redalc-china.org/monitor/informacion-por-pais/
busqueda-por-pais/37-venezuela.
53 The company’s articles of incorporation are published in the Official Gazette No. 38,868 of
February 12, 2008
THE CHINA DEALS
The largest loan received by the company was for stagnant between 105,000 and 130,000 b/d since
US $4 billion in 2013 to increase production from 2013, which in 2019 accounted for around 13% of
105,000 to 330,000 b/d of extra-heavy crude oil from Venezuela’s total production57.
the Orinoco Oil Belt and upgrade its infrastructure.
In relation to the capital contributions received, the
It later received part of a $2.2 billion loan in 2016 to
Latin American and Caribbean Network on China and
boost production from 160,000 to 230,000 b/d, pilot
the FDI monitor states that in August 2016 Sinovensa
an alternative steam injection process, and increase
was the recipient of a US$549 million investment
crude storage, transportation, and processing
by CNPC. In addition, as mentioned above, in 2018
capacity54.
there was a transfer of shares in Sinovensa that
However, subsequent government announcements reshaped the shareholder composition, leaving
and media reports indicate that Sinovensa’s PDVSA with 50.1% and CNPC with 49.9% of the
production expansion projects did not materialise; in shares. This transfer was considered a payment of
fact, production dipped in 2018 about 20%. In 2019, debt commitments of PDVSA with CNPC as well as an
the company again announced that it would increase investment. Summing the funds invested by CNPC
production to 165,000 b/d, a much lower target and the loans received from banks in China, the
than those announced in 2013 and 201655. Later, in Sinovensa joint venture has received close to
September 2019, CNPC declared that Sinovensa’s US$7 billion.
expansion plan was suspended due to PDVSA’s
failure to comply with agreements56. This information
suggests that Sinovensa’s production has remained
China loan to boost production

US$ 4,015 million
2013 Production target

From 105,000 b/d to 330,000 b/d
CNPC’s China loan to boost production

contributions US$1,256 million
and Sinovensa’s
2016
Production target
expansion targets From 160,000 b/d to 230,000 b/d
China loan to boost production

PDVSA sells 9.9% of Sinovensa shares to CNPC.
2019 CNPC declares that it suspends Sinovensa’s expansion
plan due to PDVSA’s non-compliance
54 Y. Sandoval, “Venezuela y China firman acuerdos por 2200 millones de dólares. PDVSA” November 17, 2016. [Online]. Available: http://www.pdvsa.com/index.php?option=com_content&vi
ew=article&id=6656:venezuela-y-china-firmaron-acuerdos-por-2-mil-200-millones-de-dolares&catid=10&Itemid=589&lang=es
55 Petroguía, «PDVSA y CNPC se fijan como meta que Sinovensa aumente 27% su producción en 2019» February 18 2019. [Online] Available at: http://www.petroguia.com/pet/noticias/
petr%C3%B3leo/pdvsa-y-cnpc-se-fijan-como-meta-que-sinovensa-aumente-27-su-producci%C3%B3n-en-2019
56 El Estímulo, «Petrolera China CNPC acata embargo contra Maduro y suspende producción en Venezuela» September 4,2019 [Online] Available at: https://elestimulo.com/elinteres/
petrolera-china-cnpc-acata-embargo-contra-maduro-y-suspende-produccion-en-venezuela/
57 According to OPEC data, reviewed by Reuters, Venezuela’s production in 2019 averaged 1,013 mb/d. Reuters Graphics https://fingfx.thomsonreuters.com/gfx/editorcharts/VENEZUELA-
OIL-RAMIREZ/0H001QXSTB69/index.html
THE CHINA DEALS
There is not access to complete and to refinance Venezuela’s debt with China—
verifiable information about the company’s which opened a two-year grace period for the
governance, current corporate structure, payment of the loan principal—and the transfer
financial statements, number of staff, historical of shares to CNPC in violation of provisions that
production data and tax contributions. No PDVSA should retain at least 60% of JV capital.
documents were found that explicitly described In April 2020, the lack of proper maintenance
the terms of the loans to this company. at the company is alleged to have led to a
However, it is probable that these were granted fire that caused serious damage to pipes and
under the same conditions as other loans: storage tanks and damaged the company’s oil
payments with oil shipments to pay principal, production59.
interest at the Libor rate, and additional risk Regarding the company’s impact on the sector,
coverage stipulations. political scientist and researcher Carlos Piña60
In this context of opacity and lack of stated in an interview for this report that:
accountability, there were alleged acts of “despite the large amount of money invested in
corruption. In October 2019, Sinovensa the Sino-Venezuelan joint ventures operating
president Alberto Emilio Bockh and two other in our country (Sinovensa, Petrozumano,
officials were arrested by Venezuela’s General Petrourica and Petrolera Sino-Venezolana), the
Directorate of Military Counterintelligence estimated production targets of the investment
(DGCIM) for “embezzlement, conspiracy of projects have not been achieved. Thus, it can be
officials with contractors, arrangement of argued that the presence of Chinese capital in
bidding procedure or false allegations, as well as the Orinoco Oil Belt has not translated into an
conspiracy to commit a crime58”. increase in Venezuelan oil production, or into
Through Sinovensa, Chinese state-owned technology transfer, human capital training and
company CNPC has participated in hydrocarbon investment in infrastructure in the sector61”.
exploration and exploitation as well as in The following graph of Venezuela’s oil production
downstream activities such as the expansion reported to OPEC shows the steep and
of crude oil storage, transportation and sustained drop in production since 2014.
processing capacity at its Mixing Plant in the
Jose Antonio Anzoátegui Industrial Complex.
For the Venezuelan government, Sinovensa and
other joint ventures in the hydrocarbon sector
have helped meet the objective of diversifying
partners and clients in this sector.
However, neither the investments nor the
loans have yielded the expected results for
Sinovensa. This is evident from the recurrent
calls to increase production, the agreements
58 Runrun.es, «Arrestaron a presidente y otros dos funcionarios de Petrosinovensa» October 5, 2019. [Online] Available at: https://runrun.es/noticias/390011/arrestaron-a-presidente-y-a-
otros-dos-funcionarios-de-petrosinovensa/
59 J. Gutiérrez, “Un incendio arrasa el icónico proyecto de amistad petrolera entre Venezuela y China”, May 26, 2020 [Online] Available at https://dialogochino.net/es/actividades-extractivas-
es/35547-un-incendio-arrasa-el-iconico-proyecto-de-amistad-petrolera-entre-venezuela-y-china/
60 C. Piña, Interviewee, Relationship between China and Venezuela. [Interview]. February 7, 2020.
61 C. Piña, Interviewee, Relationship between China and Venezuela. [Interview]. February 7, 2020.
THE CHINA DEALS
Fall in Venezuelan oil production

Average
production*
4,500
4,000
3,500
3,000 2,795 2,804 2,786

2,683
2,654
2,500 2,373
2,035
2,000
1,510
1,500
1,013
1,000 568
500
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year
2nd quarter
* Figures expressed in thousands of barrels of oil per day
Source: Data provided by the Venezuelan Ministry of Petroleum for OPEC’s monthly reports.
3.2 Yutong Venezuela Bus Assembly Plant The Chinese company invested US$278 million62,
or 15% of the company’s shares, leaving the
The entry of Yutong Hong Kong in Venezuela began
Venezuelan government with the remaining 85%.
in 2005, but the government of Venezuela only
The company´s development was planned in two
began purchasing buses from the company in 2011,
stages. The first involved the manufacturing of
a few months after the creation of the Large Volume
semi-completed testing units and the subsequent
Long Term Fund. On October 8, 2015, a joint venture
construction of fully assembled units63. By the end
of the State was authorised through Official Gazette
of the second stage, the plant was expected to have
No. 40.763, in the form of a corporation. Given the
a capacity to assemble an estimated 3,600 units per
name Planta de Autobuses Yutong Venezuela, S.A.,
year. Construction of the first phase was completed
the joint venture had its ownership distributed as
in December 2015 and the second phase was
follows:
scheduled for completion by mid-2016. As of March
• 45% for the Venezuelan Ministry of Land 2019, construction of the second stage was still in
Transportation and Public Works progress and President Nicolás Maduro approved
• 40% for the Venezuelan Ministry of Industry and an additional 7 million euros for the “civil works for
Commerce the expansion and completion of the Yutong bus
assembly plant and factory” (approximately US$7.9
• 15% for the China’s Yutong Hong Kong Limited. million)64.
62 LAC China Network and OFDI Monitor [Online] Available at https://www.redalc-china.org/monitor/

63 (2015). Official account of the Presidential Press. Retrieved from: https://twitter.com/PresidencialVen/status/672099517806833664
62 Venezolana de Televisión, “Venezolana de Televisión,” March 21, 2019. [Online]. Available at: https://www.vtv.gob.ve/gobierno-aprobo-recursos-fabrica-yutong/.
THE CHINA DEALS
Four agreements were signed with the government

of Venezuela.
• In 2011, a contract was signed for the Venezuelan
government to purchase, through the Ministry of
Transport and Communication’s Urban Transport
Fund (FONTUR), a total of 1,216 buses worth 1.49
billion yuan (approximately US$230 million). In
addition, the contract included a smart public
transport system, staff training and technical
transfer.
• The second agreement was concluded during
the 12th High Level Joint Commission in 2013
and included the purchase and sale of 2,000
buses and the public transport management and
operation system. The amount of the contracts
totalled US$353 million (not including value Reports show that only 1,600 units have been
added tax), equivalent to 2.16 billion yuan, and assembled at the Yutong plant in Venezuela. Thus,
the unit price of each bus was about 1.08 million the estimated number of completed units should
yuan65 (approximately US$176,477.5066). stand at 6,316. However, the president of the Yutong
Venezuela plant, Carlos Osorio, during a satellite
• On June 21, 2014 and again within the framework broadcast on March 21, 2019, explained that there
of the 13th Joint High Level Commission, a were 1,600 Yutong buses in operation throughout
Memorandum was signed between Minister of the country and the government had ordered the
Land Transport Haiman El Troudi and Yutong repair of 2,000 units by the end of that year.
President Tang Yuxiang for the purchase of 1,500
buses, spare parts, tools, maintenance and the This indicates that only 23% of the buses
smart management system for public transport purchased from Yutong Hong Kong were
operation. No information is available on the cost operational in Venezuela in 2019, at a cost of
of this transaction. The parties also agreed to US$944 million, not including the amount of the
establish a bus assembly joint venture. third agreement. The purchase and manufacturing
of buses in Venezuela was aimed at ensuring the
• The fourth agreement, signed in April 2015, supply of urban and inter-city public transport in 55
consisted of the US$361 million purchase of cities in the country, through the Misión Transporte
2,300 semi-assembled transport units that China programme, but the service coverage targets were
would send to be completed in Venezuela. The not met. In fact, the supply of urban and extra-urban
agreement included the training of the company’s public transport in Venezuela remains insufficient,
staff in China and was finalized after the plant unsafe, and costly, considering the average salary of
had begun construction. Venezuelans67.
Altogether, an estimated 4,716 assembled units were
imported, and 2,300 units were shipped in parts for
assembly in Venezuela, for a total of 7,016 units.
65 Yutong, “Yutong Noticias y Medios,” Sept. 17, 2013. [Online]. Available at: https://es.yutong.com/pressmedia/marketexpress/2013/0917/2014LdRDAR0scd.html.
66 (2013) Conversion based on USD/CNY exchange information by the Bank of England by the time of the announcement. https://www.poundsterlinglive.com/bank-of-england-spot/
historical-spot-exchange-rates/usd/USD-to-CNY-2013
67 Transparencia Venezuela, “Transporte Público,” April 11, 2018. [Online]. Available at: https://transparencia.org.ve/project/transporte-publico/.
THE CHINA DEALS
Based on press statements by Yutong Co., the unit 3.3 Failed projects
prices for the purchase of 2,000 units assembled in
Table 7 lists a number of projects in the water,
Venezuela after the second agreement was around
electricity, transport, hydrocarbons, housing and
US$176,400 per unit. Little is known about the
manufacturing sectors that did not meet anticipated
specifications of the buses; however, compared to
targets. The amount invested by the Venezuelan
market prices for similar transport units this cost is
government in these projects totals US$19.6 billion,
high. For example, a relatively recent precedent is
largely financed with Chinese loans.
the sale of 140 units at a unit price of $70,000 per
bus by Yutong Company to the government of the The failure of these projects can be explained by the
Philippines in 2014. During 2016, in Chile, Yutong governance gaps addressed in the following section.
buses models V7 Urbano (7.7 meters) and V7 Full The risks of abuse of power in the management
(8.3 meters) went on the market at a retail price of of public funds are very high if management is
US$42,500 and US$48,000, respectively. conducted in secret and there are no controls,
checks and balances, and enforced rule of law. The
As in the case of other joint ventures, there is no
Venezuelan public sector, in addition to being prone
access to complete, timely and verifiable information
to corruption, was underprepared to negotiate with
on the company’s financial statements, number of
a superpower like China. The list of contributing
staff, operational capacity, corporate governance and
factors include insufficient training of Venezuelan
budget. The lack of information on the company’s
public officials engaged in project negotiations; a high
management violates Venezuelan regulations
turnover rate for authorities and officials; constant
on public financial administration and impedes
improvisation in management; the prevention of
parliamentary and civil oversight.
private sector participation; and the involvement
Regarding the Yutong Venezuela assembly plant, a of the Venezuelan military sector in the projects to
businessman linked to the automobile sector stated guarantee the support to the government regime70.
in an interview for this investigation:58 “We also
met with this company (Yutong) to coordinate the
manufacture of auto parts here, but there were no
purchases or development. They claimed (as in the
case of Chery Venezuela) that Yutong China has the
blueprints. The companies told us that this is part
of China’s tradition worldwide; they are interested
in selling their products, rather than buying foreign
products.” Furthermore, changes in Venezuelan
government policy in the automotive sector69 in 2007
gave large advantages to Chinese companies.
68 Automotive entrepreneur, Interviewee, Relation between China and Venezuela. [Interview]. February 12, 2019
69 The joint resolution of the Ministries of Finance, Light Industries and Commerce, and Energy and Petroleum, published in Official Gazette 38,800 dated August 31, 2007, established that the
importation of semi-knock down vehicles for completion in the country could be authorised, while traditional vehicle assemblers installed in the country imported the assembly material
completely knock down.
70 Academic expert 1, Interviewee, Relation between China and Venezuela. [Interview]. March 24, 2020. The source states: “it is not that there is no corruption in China, on the contrary, it is
one of its main scourges, but its public and private sectors are widely trained in their skills.”
THE CHINA DEALS
Table N° 6
Name of failed Body or entity Start China Description
Cost in US$ Status State
projects in charge date Company of the problem
The Comptroller
in 2007 reported
non-compliance,
Ministry of China CAMC irregularities and
Falcón Aqueduct Ecosocialism
450,000,000 Completed 2003
Engineering
Falcón
cost overruns. It
then failed. There
is no reliable water
supply In Falcón.
The project is at a
Rehabilitation standstill, and has
Yankuang Lara, had cost overruns.
of the Railway
871,000,000 Ongoing 2007 Group Yaracuy, Rolling stock
Central-Western Institute
Corporation Falcón purchased from
Railway System China has since
been abandoned.
The satellite was
Ministry of
put into orbit. It had
Putting the Science and China’s General
an estimated life
Technology Control Centre
Venesat- 1 “Simon span until 2024. It
(Bolivarian 406,000,000 Completed 2005 for Satellite
Bolivar” Satellite Agency Tracking and
stopped working
on March 24, 2020,
into Orbit for Space Launching.
four years ahead of
Activities)
schedule
It was declared
Ministry of
Haier Appliance completed but no
Science, Te-
appliances have
Manufacture chnology and 800,000,000 Ongoing 2010 Haier Group Miranda
been assembled.
Industrial Complex Intermediate
It has only served as
Industries
a warehouse.
The plant should

have been ready in
Yutong Venezuela Ministry of Zhengzhou Y 2016. It is still under
417,000,000 Ongoing Jun-14 Yaracuy
Bus Assembly Plant Transport utong Bus Co. construction. It is
producing below
targets.
Only the refinery’s

Batalla de Santa Wison
PDVSA 2,900,000,000 Ongoing 2010 Barinas power generator
Inés Refinery Engineering
was built.
The contract is
estimated to be
overpriced by
US$805 million.
Planta Centro China
It operates below
Machinery
Thermal Power Corpoelec 1,465,000,000 Ongoing 2013
Engineering
Carabobo capacity. Andorran
Plant investigations
Corporation
suggest a US$55
million bribe for
awarding of the
contract
THE CHINA DEALS
Name of failed Body or entity Start China Description

Cost in US$ Status State
projects in charge date Company of the problem
The NA claims there

Luis Zambrano China CAMC is a surcharge and
Thermal Power Corpoelec 956,000,000 Completed 2011 Engineering Merida the real cost is US$
Plant (CAMC) 371 million (2005
prices)
The NA claims
José Félix Ribas there is a surcharge
Thermal Power Corpoelec 604,000,000 Completed Apr-11 Sinohydro Aragua and the real cost
Plant is US$ 359 million
(2005 prices)
The plant was not

China Camc completed, the
Delta Amacuro Rice Delta
PDVSA Agrícola 200,000,000 Ongoing 2010 Engineering related works were
Processing Plant (CAMC)
Amacuro
not done, promises
were not fulfilled.
China Electric
Power
Transmission Line Ministry Equipment and
Works were not
from Manuel Piar Energy Technology,
1,315,000,000 Ongoing Mar-09 Táchira completed.
Plant to Uribante and Mines; China
Project is halted.
Corpoelec Gezhouba, and
Caparo
China CAMC
Engineering.
The company
enjoyed tax breaks.
Ministry of CITIC Quality of housing
Ciudad Tavacare Habitat and 200,000,000 Completed 2009 Construction Barinas is precarious;
Housing Co, LTD quality controls and
procedures were
not followed.
Operation
was handed
over without
Revamping Ministry of China Camc controls and at a
Ecological Engineering disadvantage to the
Carbozulia Mining
400,000,000 Completed Jun-17
(CAMC) y Yang
Zulia
national company.
(coal mining) Development Kuang Group Production dropped
and the project was
then handed over to
another company.
China Railway
Project should have
Tinaco-Anaco Railways Engineering
7,500,000,000 Ongoing 2009 Guárico been completed in
Railway Institute Corporation
2012. It is still halted
(CREC)
The NA claims
there is a surcharge
TermoCarabobo Sinohydro
PDVSA 1,116,000,000 Completed 2012 Carabobo and the real cost
Power Plant China
is US$572 million
(2005 prices) (156%)
Source: Authors, with data from the Venezuelan Embassy to China “Agreements signed between the Bolivarian Republic of Venezuela and the People’s Republic of China”;
Prodavinci, “Vivir sin agua”; Cedice, “Gasto público en infraestructura de transporte colectivo y carga”; Joint commission for the electric crisis of the National Assembly;
Transparencia Venezuela, “Ciudad Tavacare, un complejo urbanístico sin ley”; Reuter, How a Chinese venture in Venezuela made millions while locals grew hungry” and
Armando Info, “Al rescate millonario de SIDOR se le salieron las costuras” and “Turquía aterriza en el carbón del Zulia y el oro de Guayana”.
THE CHINA DEALS
The current status of JVs Venezolana de of the costs imposed by these failed projects, in
Industrias Tecnológicas and Venezolana de both money and opportunity.
Telecommunications C.A. also stand as evidence
Venezolana de Industrias Tecnológicas (VIT) was established in October

2005. China’s state-owned Inspur International, Ltd. holds 49% of the
shares while the Venezuelan government holds the remaining 51%. The
company manufactures and assembles technological equipment such as
computers, laptops, tablets and servers for the domestic market. There is no
reliable data on the company’s production, but official websites claim that
between 2007 and 2014, 700,000 pieces of equipment were manufactured,
and a good portion was used for programs aimed at providing public
schools and universities with this technology. However, people could only
access these products through the Ministry of Industry and the National
Telecommunications Company (CANTV). In 2014, the official channels for
the purchase of the products were closed and the programs for the target
population (students) were suspended. Currently, the company’s official
website has a sales link only for Venezuelan government agencies and for
clients abroad. However, some VIT products can be found in online markets
such as mercadolibre.com, with several models available, which claim to be
brand new (built in April 2019), and with prices ranging between US$250 and
US$30071.
Venezolana de Telecommunications C.A. (Vtelca) was created in October

2007 to manufacture mobile phones. The Venezuelan government owns
84.3% of the capital and the remaining 15.7% is held by JV “ZTE de China”. The
plant started operations in 2009 with a projected production of 1.5 million
telephones per year, but according to official data only around 7.7 million
cell phones had been assembled by 201872. That is approximately 70.7% of
the projected target. From 2014 onwards, the Ministry of Industries reported
that production started to drop due to difficulties importing parts from China.
Starting even earlier, in 2013, there have been reports of equipment losses,
malfunction, lack of inputs, labor disputes, corruption, and the resale of
equipment73. As further evidence of the broken process, Vtelca’s phones are
meant to be distributed by CANTV and Movilnet. Investigation revealed that
Vtelca phones were not for sale in their stores.
71 Mercado Libre, https://articulo.mercadolibre.com.ve/MLV-554792984-lapto-core-i3-nueva-en-su-caja-_JM?variation=49472189079&quantity=1#reco_item_pos=13&reco_

backend=machinalis-v2p&reco_backend_type=low_level&reco_client=vip-v2p&reco_id=2702ca37-7d8f-4485-9226-491ed033e9d3
72 Vice Presidency of the Bolivarian Republic of Venezuela, «Vice Presidency of the Bolivarian Republic of Venezuela» 2 February 2018. [Online]. Available at: http://www.vicepresidencia.gob.
ve/jefe-de-estado-celebra-10-anos-de-inauguracion-de-la-fabrica-vtelca/
73 Producto «Intervienen la empresa estatal Vtelca» 14 de mayo de 2014. [En línea] Disponible en http://producto.com.ve/pro/intervienen-la-estatal-vtelca
THE CHINA DEALS
4
In the sections above, governance gaps have
been described that limited monitoring and
oversight on the inflow and use of funds. The
evidence collected and described in this report
clearly indicate that these funds have had a
pernicious effect on democratic institutions,
fiscal sustainability and economic performance.
Governance Even though Venezuela’s constitution and

legal provisions guaranteed the functioning of
checks and balances on power, the rule of law,
gaps
transparency, and accountability, there were
several factors that minimized the scope of the
law, including:
• Hugo Chavez’s charismatic leadership and
strong popular support.
• Strategic mistakes made by the opposition
leadership that expanded the power of the
executive’s party.
• The significant increase in public revenues as
a result of the rise in international oil prices,
which also gave more power and autonomy
to the executive.
• China’s interest in Venezuela’s oil and mineral
resources and its global expansion strategy.
• The government’s alliance with the Cuban
government, the oldest totalitarian regime in
the Americas.
The parliamentary oversight set forth in the
Constitution to manage the bilateral agreements
proposed by the Executive Branch was not
implemented consistently because the ruling-
party majority in the National Assembly was
allied with the Chavez government. In addition
to the bias in Parliament, the opposition parties
boycotted the parliamentary elections for the
2005–2010 legislature. This gave the regime
almost absolute freedom to implement its
projects.
THE CHINA DEALS
During those years the regime made significant included principles of efficiency, solvency,
changes in the political and economic transparency, accountability and fiscal balance.
institutions. These included changing the They also established that the national budget
conditions for private-sector participation in the should be the only instrument for economic
exploitation of hydrocarbons; designing the legal and financial administration, include all national
framework for money-for-oil loans to advantage public expenditures and revenues, and must
Chinese companies; creating and managing be approved by Parliament75. A Multi-annual
extra-budgetary funds that were not submitted Budget Framework was also created to
to the National Assembly for discussion; and the establish expenditure and debt ceilings in the
creation of the Joint Chinese Venezuelan Fund national budgets for a period of three years,
and the Large Volume Long Term Fund. The with indicators and rules for fiscal discipline.
FCCV and the FGVLP brought US$50.25 billion In addition, a constitutional status was given
into the country, under the rules imposed by to the Investment Fund for Macroeconomic
China. Stabilization, created in 1997 to ensure stability
In 2004, President Chávez managed to change in public spending in the face of volatility of oil
the number of Justices of the Supreme Court, revenues.
from 11 to 20, and later to 32. The selection However, the LOAFSP was amended 13 times
process for Supreme Court Justices depends from 2003 to 2015 to relax discipline and
on the National Assembly74. Therefore, control sustainability rules. The Multi-annual Budget
over the constitutionality of the laws, their Framework never came into force, and the
interpretation and the decision in relation to Macroeconomic Stabilization Fund was
controversies between two or more cases, dismantled and eliminated from the LOAFSP.
have not been autonomous or independent, Since 2003, extra-budgetary public funds began
impinging on the rule of law, which has been to be created, a practice that was entrenched in
progressively deteriorating since then. As a decision-making in 2005 with the creation of the
result, the Judiciary refrained from reviewing National Development Fund (FONDEN). FONDEN
the constitutionality of bilateral agreements and was used to divert oil revenue and international
from ensuring consistency with macro-fiscal reserves from full Parliamentary oversight. Then
rules aimed at protecting economic stability and came the Venezuela-China Joint Fund in 2008,
debt sustainability. the Large Volume Long Term Fund in 2010, and
Provisions of sound, transparent, sustainable the Independence Fund 200 in 201076.
and efficient public sector financial In the midst of a commodity boom that spurred
administration were set forth in the 1999 growth in public revenue, the removal of formal
Constitution and in the 2000 Law on Public controls or limits on budgetary public spending
Sector Financial Administration (LOAFSP). The and the introduction of unregulated extra-
legal framework was aligned with economic budgetary funds significantly increased the size
recommendations and international best of the state as a percentage of GDP77. Unfettered
practices. The Constitution and the LOAFSP by normal limits, these expenditures formed
74 As provided for in Article 264 of the Constitution of the Bolivarian Republic of Venezuela.
75 Constitution of the Bolivarian Republic of Venezuela, Articles 311-315. Law on the Financial Administration of the Public Sector, Articles 8-27.
76 A. Paredes, «Gestión Fiscal en Venezuela y su incidencia en el desempeño económico 1999-2018», Mérida: Master in Economics, School of Economic and Social Sciences, Universidad de
Los Andes, 2020.
77 G L. Zambrano, «Estructura e Incidencia de la Política Fiscal en Venezuela», Academia Nacional de Ciencias Económicas, 2009. A. Paredes, «Gestión Fiscal en Venezuela y su incidencia en
el desempeño económico 1999-2018», Mérida: Master in Economics, School of Economic and Social Sciences, Universidad de Los Andes, 2020.
NEGOCIOS CHINOS
an aggressive policy of creation, nationalization, International Budget Partnership speak for

expropriation and re-nationalization of themselves. Venezuela has been evaluated since
companies78. It increased the number of 2008 and ranked as follows79:
government ministries and agencies and created China has supported the rationale that loans
social programs that served as instruments of should not be subject to criteria of sustainability,
social coercion during elections. expenditure control and transparency. Instead,
These were only part of a set of nationalist they push for agreements to remain secret and
policies that were fiscally irresponsible and non-competitive to benefit Chinese companies
favored the authoritarian tendencies of the and local well-connected contractors. These
regime. The increased presence of the public practices have contributed to the waste of
sector in the economy had a negative impact public resources and the implementation of
on macroeconomic performance. Productive discretionary decisions even when projects were
activity has been in decline since 2014, annual failing.
inflation has skyrocketed to over 100% since It should be noted that Venezuela’s Decree-Law
2015 and the country has been in default on Public Procurement excludes implementation
since 2017. In relation to the growing opacity of projects, purchase of goods and provision
in the management of public funds, the results of services that are part of international
of the Open Budget Index prepared by the agreements, or any contracts employed to fulfill
these agreements80. Thus, all projects and
purchases agreed with China were made
without a bidding process or quotes. There
was no open competition to attract the most
efficient companies and ensure reasonable
2008 35/100 costs, and domestic entrepreneurs did not
have the opportunity to bid for the projects.
The destination of the funds, the projects and
2010 34/100
the companies participating as contractors and
suppliers were all defined by the High Level Joint
2012 37/100 Commission. This means a group of government
representatives for Venezuela and China made
decisions that left Venezuela as China’s captive
2015 8/100 buyer81.
2017 0/100
2019 0/100
78 Transparencia Venezuela, «Empresas propiedad del Estado, Un modelo de control I y II. 2018» [Online] Available at: https://transparencia.org.ve/empresas-propiedad-del-estado/
79 Transparencia Venezuela, «Venezuela saca cero en transparencia en la administración de los recursos públicos», Jan. 31, 2018. [Online] Available at: https://transparencia.org.ve/project/
venezuela-saca-cero-transparencia-la-administracion-recursos-publicos/
80 Art. 4, # 1 and 2 of Decree-Law on Public Procurement.
81 F. Culshaw, «El Fondo Chino auxilia al gobierno venezolano en la crisis económica» Debates IESA, vol. XIX, No. 2, pp. 64-66, April-June 2014.
NEGOCIOS CHINOS
5
Assessments of the relationship between
China and Venezuela are varied. Some authors
highlight the advantages of the economic
exchange for Venezuela because of three main
beneficial effects: it allowed the diversification of
Lessons
the trade partners in the energy sector, enabled
access to funds for infrastructure and social
spending and led to a favorable trade balance
for Venezuela between the two countries from
learned 2000–2018. “The model of bilateral relations

established between the People’s Republic of
China and the Bolivarian Republic of Venezuela
has represented the most advanced experiment
in economic and political cooperation between
China and any country in Latin America82.”
The common denominator is oil. While other
countries in Asia, Central Africa and LAC also
have large hydrocarbon reserves, none has
received such a large flow of capital from China
as Venezuela83.
On the other hand, a group of authors point out
that China has applied “debt-trap diplomacy”
that forces credit recipients to give up assets,
influence in economic decision-making and part
of their sovereignty in return for capital.84,85 From
this perspective, the conditions described in the
second section on the trade and investment
ties between Venezuela and China worsened
the already existing governance gaps and
impinged on national interests, both because
of the loss of opportunities for Venezuelan
private businesses and workers, and because
failed projects squandered funds without
82 C. Piña, «Las relaciones China Venezuela a la luz de las inversiones chinas

en el sector petrolero venezolano (2000 - 2018)» China Mexico Study Centre
UNAM, Mexico, 2020.
83 Ibid.
84 Brandt and C. E. Piña, «Las relaciones Venezuela China (2000 - 2018). Entre
la cooperación y la dependencia» Friedrich Ebert Stiftung, Caracas, 2019; R.
Castro, «Desestadounizar no es descolonizar: apuntes sobre las relaciones en-
tre China y Venezuela de cara a la crisis Venezolana» in La crisis venezolana:
impactos y desafíos, Bogotá D.C., Konrad Adenauer Stiftung, 2019, pp. 297
- 323.
85 M. Rendon and S. Baumunk, «When investment hurts. Chinese influence in
Venezuela» April 3, 2018. [Online]. Available at: https://www.csis.org/analy-
sis/when-investment-hurts-chinese-influence-venezuela.
THE CHINA DEALS
delivering the promised goods and services. Two of handing over money without demanding
specific situations serve as examples of China’s fiscal discipline, transparency and checks
influence on economic decisions. In 2010, the and balances, assuming that oil shipments
Venezuelan government, through the state would be enough to honor the payments,
owned Corporación Venezolana de Guayana, underestimated the profound weaknesses in
reached an agreement with the third largest public management in Venezuela, especially
iron ore company in China (Wuhan Iron & Steel in state-owned companies like PDVSA, and
Group) for the sale of 40 million tons of iron ore ignoring the Venezuelan government’s own
over a seven-year period at a price US $20 lower moral hazard problem. In truth, China has fallen
than the one on the international market. This into the “creditor trap” and should have made
led to an estimated loss of US$59 million for payment terms more flexible, given a two-year
Venezuela86. In the hydrocarbons sector, PDVSA grace period, postponed due dates and reduced
sold 9.9% of Sinovensa’s shares to CNPC in oil shipment quotas. The failure to do so has
2018 to honor debt commitments. The disposal harmed its interests.
of shares in the Sinovensa JV, without the An economic expert who asked to remain
knowledge or approval of the National Assembly, anonymous pointed out that between 2012-
infringes Article 33 of the Law of Hydrocarbons. 2014 the Venezuelan government diverted
The alleged transfer of operational control of funds that were intended for projects in which
the companies violates Articles 3, 9 and 10 of Chinese companies made investments. This
the cited law and articles of the Constitution. In was done with a promise that the funds for
addition, since the end of 2019 several media the reimbursements would be available in the
outlets have reported that PDVSA began ceding Venezuelan Chinese Joint Fund or in the Large
operational control of joint ventures to avoid Volume Long Term Fund. However, faced with
further production losses in this sector87. unjustified delays, several Chinese companies
Some observers disagree that the idea of China’s whose funds were diverted decided to halt
“debt-trap diplomacy,” applies to Venezuela88. works and abandon the projects. The Chinese
These argue that the relationship between China government asked the companies not to make
and Venezuela has been detrimental to both any complaints or enter into international
parties and that “China’s lending has not only litigation to claim this debt, which came on top
greased the wheels of Venezuela’s path to self- of the debts described herein. Despite these
immiseration, but it has also clearly undermined setbacks, China is still “a country with a large
China’s own economic and geostrategic demand for heavy oil, of which there remains
interests .” In fact, the case of the relationship huge reserves in Venezuela. [China] sees the
89
between China and Venezuela is the most country as a long-term supplier. They believe
extreme example of financing agreements they can still have a lasting and pragmatic
in which both the debtor and the creditor relationship,” the source said. Another serious
have lost . This is attributed to the policies
90 problem for China has been the constant change
86 D. Pratt, «Guayana. El milagro al revés» Ed. Alfa, Caracas, 2012

87 M. Párraga & S. Eschenbacher «Exclusive: Weakened by sanctions, Venezuela’s PDVSA cedes oilfield operations to foreign firms», 3 enero 2020, [Online].
Available: https://www.reuters.com/article/us-venezuela-oil-ramirez/exclusive-weakened-by-sanctions-venezuelas-pdvsa-cedes-oilfield-operations-to-foreign-firms-idUSKBN1Z221R
88 S. B. Kaplan and M. Penfold, «China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics» Woodrow Wilson Center, Washington, 2019.
89 M. Ferchen, «China, Venezuela, and the Illusion of Debt-Trap Diplomacy» Carnegie - Tsinghua Center for Global Policy, August 16, 2018. [Online]. Available at:
https://carnegietsinghua.org/2018/08/16/china-venezuela-and-illusion-of-debt-trap-diplomacy-pub-77089
90 S. B. Kaplan and M. Penfold, «China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics» Woodrow Wilson Center, Washington, 2019.
THE CHINA DEALS
of policy officials in Venezuelan ministries, with poor quality of the raw chemicals or to the poor
no guaranteed delivery of management reports preparation of the final product in Venezuela.
or administrative continuity of the projects. In either case, the use of these products
This has slowed their progress, in some cases harmed agricultural productivity. The Ministry
leading to project halts and to the lack of proper of Agriculture never gave precise information
oversight and monitoring and which, in turn, on the quantity of chemicals purchased or their
created space for embezzlement and abuse. yield; they merely stated that it would be enough
Furthermore, the embedded conditionality of for four years. The opacity on the negotiations
the credits from China forced Venezuela to with these items also led to the emergence
become its buyer. This confirmed an asymmetric of black markets with prices higher than the
market, with advantages for Chinese companies international market.
over the national private sector. The Venezuelan Another example of the negative impact China’s
private sector has been feeling the pressure loan conditionalities had on the economy is in
of price controls, irregularities in the exchange the automotive sector. Various policies such as
system and pernicious labor regulations since the 2007 resolution of the Ministry of Industry
2003. In this regard, Professor Pedro Mora, and Commerce grant privileges to Chinese
an expert in the electricity sector91, noted that automotive companies95. Negotiations between
Chinese companies should not have overseen the Venezuelan national government and these
the main thermal power generation projects companies limited the participation of domestic
since Venezuela was technically able to take auto part suppliers. These policies led to the
charge. As mentioned in the section on failed decline of domestic automotive production,
projects, three thermoelectric power plants which was also affected by the malfunctioning
commissioned to Chinese companies did not of the exchange system, price control and labor
yield the expected results, and according to a regulations. In addition to the prior descriptions
report by the National Assembly were paid at of the negative impact these embedded
prices above international average92. conditionalities had on Venezuela’s economy, it
A businessman from the agro-food sector93 should be recalled that in several projects most
described in an interview his experience of the labor force was hired from China, to the
purchasing and distributing agro-chemicals detriment of Venezuelan workers.
through one of the loans granted by China. Field research in African countries that received
At that time, there were no other bidders due funds from China and the World Bank concluded
to problems in the government-controlled that the funds from China exacerbated local
exchange market94. Since 2013, only corruption and had little impact on economic
agrochemicals from China were available, and activity96. In this matter, authors such as
these turned out to be of poor quality—although Moisés Rendon97, Matt Ferchen98, and Ricardo
it is not certain whether this was due to the Hausmann99 state that the amount of capital
91 P. Mora, Interviewee, Cash flow from China. [Interview]. November 11, 2019.
92 National Assembly, «Mixed Committee for the Study of the Power Crisis in the country. Final Report,» January 15, 2017.
93 Businessman in the agro-food sector, Interviewee, Relation between China and Venezuela. [Interview]. Dec. 12, 2019.
94 While purchases were approved, foreign currency was not transferred to international suppliers, which forced companies to shut down.
95 The joint resolution of the Ministries of Finance, Light Industries and Commerce, and Energy and Petroleum, published in Official Gazette 38,800 dated August 31, 2007.
96 A.-S. Issakson and A. Kotsadan, «Chinese aid and local corruption» AidData, Washington, 2016.
97 M. Rendon y S. Baumunk, «Center for Strategic & International Studies» April 3, 2018. [Online]. Available at: https://www.csis.org/analysis/when-investment-hurts-chinese-influence-
venezuela.
98 M. Ferchen, «China, Venezuela and the Illusion of the Debt-Trap Diplomacy» Aug. 16, 2018. [Online]. Available at: https://carnegietsinghua.org/2018/08/16/china-venezuela-and-illusion-
of-debt-trap-diplomacy-pub-77089
99 R. Hausmann, «El Maligno Secretismo de China» Jan. 2, 2019. [Online]. Available at: https://www.project-syndicate.org/commentary/china-development-finance-secrecy-by-ricardo-
hausmann-2019-01/spanish?theme=acento2018&barrier=accesspaylog
THE CHINA DEALS
inflows as well as the institutional context assessment based on the outcomes for the
increased fiscal spending, corruption and parties involved. In this regard, the profits and
irresponsible financial administration. Hausmann losses for China, Venezuelan society and the
notes: “China’s financing of development often government of Venezuela are listed below.
leads to a corruption-driven bender in the
economy, followed by an unpleasant financial
(and sometimes political) hangover.” China’s gains include:
There have been many allegations of • Venezuela’s willingness not to recognize the
corruption in projects financed with Chinese government of Taiwan and their influence on
funds and in which their companies were PetroCaribe countries to follow suit.
linked, such are the cases of • Positioning of more than 90 companies
• The Delta Amacuro Rice Processing Plant and agencies in various economic activities
as contractors and suppliers in the public
• The deep conversion unit of the Puerto La sector, through direct and secret awarding
Cruz Refinery and procedures under the veil of the nation’s
• The thermal power plants of El Vigía, Morón weak institutions. Noteworthy is the entry
and La Cabrera of Chinese companies in upstream and
• Jose Abreu e Lima Agroindustrial Complex100 downstream activities in the hydrocarbon
sector, previously dominated by U.S. and
Several documents from Transparencia European companies.
Venezuela reveal not only increased corruption
in the country, but also the establishment of • The privileged access to Venezuela’s oil as an
a grand corruption pattern since 2003. Grand instrument for the repayment of loans, which
corruption is the abuse of high-level authorities, made it possible to quickly recover China’s
with cross-border links, that causes serious and expended resources, at least until 2015.
widespread damage to the population. Some • Geostrategic positioning in Latin America as
elements that enable grand corruption are Venezuela’s main trading partner.
discretionary public spending, the declaration of • Hiring most of the labor for large projects
states of exception and emergency, increasing from China.
powers of the Executive Branch and suppressing
checks and balances, irregular procurement, • Guaranteeing the purchase by the
opacity, and lack of accountability101. Venezuelan government of the products of
Chinese joint ventures.
• •Discounted prices on the purchase of iron
5.1 Assessment of results, profits and losses ore for seven years.
of the parties involved
The different perspectives on the relations
between China and Venezuela invite an
100 F. Olivares, «Los grandes negocios de China en Venezuela» Aug. 19, 2019. [Online]. Available at: https://primerinforme.com/index.php/2019/08/19/los-grandes-negocios-de-china-en-
venezuela-i/
101 Transparencia Venezuela, «Manual against corruption. 12 actions and one mandate», Caracas: Transparencia Venezuela, 2019.
THE CHINA DEALS
China’s losses include: joint ventures: Haier household appliances,

• Between 2012 and 2014, the Venezuelan VIT tablets and computers, Vtelca phones,
government diverted funds from joint Chery cars, homes of the Gran Misión
projects with China-funded companies which Vivienda Venezuela.
they were unable to recover, affecting the • Cultural, educational and job training
assets of their companies and bringing works exchange programs benefited an
to a halt. undetermined number of undergraduate and
• China is having a difficult time collecting its graduate students, university professors and
loans from Venezuela. In 2016, the Chinese workers from some of the joint ventures.
government was forced to restructure the
terms of the loans: it extended the maturity However, the promise of Venezuela’s economic
dates, granted a two-year grace period and and social development with the flow of capital
reduced the oil shipment quotas. Some under the principles of equality, reciprocal
publications in the media estimate new consultations, mutual respect for sovereignty
renegotiations of the debt commitments in and reciprocity of advantages102, was not fulfilled.
2020. Venezuelan losses include:
• Several projects failed because of the lack of • Economic activity in Venezuela grew on shaky
preparation of Venezuelan officials, the high ground since the early 2000s until 2013;
turnover of authorities in relevant ministries, however, this period has been followed by six
the lack of administrative continuity and the years of economic contraction. According to
involvement of the military. 2019 data, during this period the Venezuelan
• Since 2016, Venezuela has not complied economy shrunk by 60%.
with the agreed oil supply and conditions to • The large investment projects financed
increase oil production, process by-products with the loans in strategic sectors such as
and improve distribution in joint projects. hydrocarbons, electricity, mass transport
• Chinese companies in Venezuela are not and agro-industry did not meet the
yielding the expected results. expected production targets, but the debt
• Political instability coupled with the remains. Paying it off means sacrifices for
humanitarian and economic crisis in Venezuelans.
Venezuela, following the significant cash flow • In most projects, there was no equal access
from China, is a latent threat to the image of for Venezuelan entrepreneurs and workers;
China’s expansion strategy. in fact, asymmetric markets were created
in several sectors. Venezuela was forced to
become a captive buyer of China.
Gains for Venezuelan society include:
• The oil JVs did not meet the announced
• A part of the population had access to production targets. An assessment of the
subsidized or free products from China or activity of the entire hydrocarbon sector
manufactured by the Chinese-Venezuelan shows great losses in recent years; similarly,
102 Official Gazette 39.019 containing the Law Approving the “Agreement between the Government of the Bolivarian Republic of Venezuela and the Government of the People’s Republic of
China on the Joint Financing Fund”
THE CHINA DEALS
public finances, activities in this production This means that debt service commitments
chain and sources of employment were also with China account for 57% of the nation’s
compromised. budgeted expenditure.
• In SINOVENSA, state-owned PDVSA was
forced to transfer shares to CNPC to honor
debts, expansion projects were halted and
production has continued to fall.
Debt At the end of 2019, Venezuela owed China
US$ 16.73 billion just for the loans received
through the two large funds created between
the two countries, not counting what is owed
• Investments in joint ventures in the for other credits.
telecommunications, household appliances, The commitment to pay the debt to China
for the funds in 2020 represents 57% of the
vehicle and housing sectors did not meet budget approved in 2020.
production targets, nor did they lead to
effective technology transfer or staff training.
Their activities have slowed down or halted,
as in the case of the Haier household
appliance factory.
• The failure of the joint projects was extremely
costly and wasted huge amounts of public National Budget 2020
resources, which now add up to the nation’s
debt.
US$ 5,439 million
• There was a reprimarization of the economy
as dependence on exports of raw materials
and imports of value-added products from
China increased. An example is the case
of the automotive industry and the decline
of the vehicle assembly plants, auto parts
factories and other companies linked to this
production chain. Debt service with China 2020
• The debt policy affected the sustainability US$3,098 million
of public finances and of PDVSA, since the
oil shipments pledged to China reduced the
regular income to cover essential expenses Source: Own elaboration with Official Gazettes; OFDI Monitor of the
and affected the basic investments for LAC-China Academic Network; Gallagher, Kevin P. and Margaret Myers
(2019) “China-Latin America Finance Database”; 2009 Indebtedness Law;
the maintenance and expansion of the oil Piña (2019); Chinese investments and loans in the Venezuelan oil sector
industry. For example, according to leaked (2000-2018); and embassy in Beijing
information from BANDES, the debt service
to China for 2020 is US$3.1 billion while the
nation’s budget (unofficially disclosed) totals
US$5.44 billion103.
103 Transparencia Venezuela, «Entre la oscuridad y la ilegalidad aprobaron la Ley de Presupuesto 2020» Dec. 17, 2019, [Online]. Avilable at:
https://transparencia.org.ve/entre-la-oscuridad-y-la-ilegalidad-aprobaron-la-ley-de-presupuesto-2020/
THE CHINA DEALS
• There was an elite capture through non- In short, the results have been disastrous for
transparent capital flows, followed by Venezuelan society as a whole. However,
repurposing the institutions of democratic Venezuela’s highest authorities and members
governance and eliminating checks and of the ruling coalition received significant
balances in exercising political and economic benefits from their dealings with China,
power. Therefore, it was possible the including:
expansion over time of the governance • Achieved their geopolitical goals, such as the
gaps described in the previous section: diversification of partners and clients in the
concentration of power, guarantees of hydrocarbon sector and displacing Western
impunity, secrecy, corruption, procurement and national companies in other sectors.
with biased, non-competitive markets
and violation of macro-fiscal rules, have • Managed cash in excess of US$62 billion at
significantly reduced the country’s welfare. their discretion, ensuring their permanence
This result coincides with the effect produced in power through the tactics described in the
by corrosive capital104. following bullets.
• Expanded the size of the state in the
economy and its bureaucratic structure.
• Acquired funds that allowed the government
to maintain a high and unsustainable level of
populist and clientelistic public spending.
• Eliminated checks and balances, weakening
democratic institutions and public
management until they achieved the capture
of the State.
• Secured unconditional support from the
Chinese government in international
bodies and in the face of reports from
groups of countries and non-governmental
organizations, denouncing the authoritarian
regime and the complex humanitarian
emergency.
104 Corrosive capital originates in authoritarian regimes and lacks transparency, accountability and market orientation. CIPE, “Corrosive capital” [Online]
Available at https://corrosivecapital.cipe.org/
THE CHINA DEALS
6
The negative consequences on Venezuelan
society stemming from the relationship between
China and Venezuela pose questions about
the causes and the culprits. However, it should
be noted that the policy of secrecy, the failure
of investment projects, the lack of respect for
macro-fiscal rules and for the regulations on
hiring, labor, environment and competition that
exist around certain foreign investments and
financing systems are not an exclusive problem
of agreements and cash flows from China.
Policy Regardless of the specific origin of the funds,
Venezuela’s institutional context combined
recommendations with the amount of funds and the conditions
accepted by the Venezuelan government have
led to disastrous consequences. Authorities in
the Executive Branch are primarily responsible
for these consequences. Other contributing
influences include the complicity of Parliament
and the General Comptroller (CGR), neither
of which exercised proper controls, and
the Judiciary, which allowed the violation
of legislation protecting national interests.
Together, these factors gave the Executive
Branch complete discretion in international
relations decisions, contracting new debts,
the destination of the resulting funds, the
procurement methods for projects, goods and
services, and impunity when projects failed.
Nevertheless, the proposal of this report is
not that Venezuela should cease international
relations with China. Instead, there is an urgent
need for Venezuela to define the conditions
of exchange and internal public management
processes applicable to all foreign investment
and to all new debt, with transparency
incorporated as an essential feature of each
step in the process. To this end, the following
recommendations are proposed:
THE CHINA DEALS
1) Design and approve a long-term b. Eliminate the autonomy of BANDES,

development plan for Venezuela with FONDEN, as well as any parallel funds
defined roles for foreign investment and and their sources, which operate
international debts. outside the control of the National
2) Separation of powers Public Credit Office, the Treasury, the
National Assembly and the Comptroller
a. Ensure that the National Assembly General’s Office.
exercises its powers as legislator and
comptroller with the power to assess c. Require the legislature to approve the
and approve public debt as well as Multi-Annual Budget Framework.
bilateral and multilateral agreements. d. Reform the current legislation on foreign
Re-establish and strengthen the investment (Law on Foreign Investment,
Economic Advice Office of the National O.G. No. 6,152 Extraordinary of Nov. 18,
Assembly on a technical basis. 2014 / Constitutional Law on Productive
b. Strengthen the autonomy of the justice Foreign Investment No. 41,310 of
system to put an end to impunity. December 29, 2017) to eliminate
restrictions, disincentives, excessive
c. Ensure the independence and procedures, corporate responsibility
effectiveness of the Comptroller to oversight, and the state’s right to
support the efficiency and quality of monopolize strategic sectors. At the
public spending. same time, strengthen the conditions
d. Ensure the stability and efficacy of that guarantee openness, respect for
the legal framework including respect labor and environmental regulations
for private property, compliance with and social agreements, competitive
agreements, international arbitration markets, technology transfer and equal
through ICSID and macro-fiscal rules. conditions for investors.
3) Reforms of the legal framework based on e. Set up an entity to promote foreign
open government principles investment in Venezuela composed of
a technical team of experts free from
a. Enforce the macro-fiscal rules; limit
political influence with the power to
the powers granted to the president
supervise compliance with legislation,
in budgetary matters; eliminate the
monitor the results of investments in the
exceptions to authorize debt operations
public sector and ensure transparency
with international financial institutions;
by keeping and publishing a record of all
limit the debt operation prerogatives
investments.
of decentralized entities (BANDES,
PDVSA and other banks) outside the f. Reform the Law on Procurement
control of the National Credit Office to eliminate exclusions, ensure
and Parliament; and incorporate the transparency and disclose the entire
obligation to publish all information on procurement and contracting process,
public financial administration. This will in all government agencies, regardless of
require a reform of the Law on Public the origin of the funds.
Sector Financial Administration.
THE CHINA DEALS
g. Approve regulations that eliminate or e. Submit any new loan agreement

control conflicts of interest, including for approval to the National Public
nepotism, revolving door, etc. Credit Office, which, together with the
h. Reform the Law of the General competent authority in planning and
Comptroller to include an annual audit public finance, must evaluate financial
on the budget to evaluate the efficiency plans to guarantee accountability and
of public spending and to disclose sworn the effective use of funds.
statements of assets and interests of f. Avoid loans that are bound to conditions
employees and officials. that weaken transparency, free
i. Approve the Law on Transparency and competition, human rights and equality
Access to Public Information. before the law for economic agents.
j. Approve a law on lobbying or g. Minimize the state’s participation

management of special interests with in economic activities where it acts
respect to authorities and public officials as the regulatory body. In addition,
to minimize conflicts of interest and clearly identify state responsibilities
abuse of power. in circumstances when it acts as an
investor, promoter, entrepreneur or
k. Eliminate exchange controls, price regulator in different agencies, in order
controls and analyze subsidies in order to prevent the duplication of roles,
to minimize weaknesses of vulnerable conflicts of interest, weak budgetary
groups. restrictions, asymmetric markets and
4) Transparent and effective processes abuses of power.
a. Define clear, stable and transparent h. Strengthen the corporate governance
conditions for foreign investment. of State-owned companies to guarantee
the rationale for public ownership of
b. Ensure the effective organizational unity
the company, the role of the State as
of the treasury.
owner, integrity practices, transparency,
c. Respect the legality of the budgetary autonomy from political interference
process and rules governing new debt. and accountability.
d. Ensure transparency of the budgetary i. Implement transparent processes that
process and the taking out of new follow global best-practices, including
debt, including quarterly publication of the use of digital technologies and
a record of consolidated public sector single-window models that facilitate and
debt, indicating the following in an open streamline government operations.
data format: creditor, debtor, amount
j. Prohibit confidentiality clauses in all
contracted, amount repaid, amount
public procurement and streamline
owed, currency, interest rate, terms and
processes.
methods of payment.
THE CHINA DEALS
k. Select technical teams responsible for Access to information in a timely, complete,

loan, investment and procurement truthful manner and in an open data format,
units through rigorous and competitive together with accountability for all matters
selection processes based on the related to public sector financial administration,
merits of applicants and their strict public procurement and investment, will
commitment to submitting a sworn allow civil society organizations to monitor all
statement of assets and interests. state-run projects. This practice has yielded
l. Create a Foreign Investment Registry positive results in several countries, since it
in open data format, which includes made deviations visible in some cases, and it
all elements of the investment: contributed to the fulfilment of project objectives
identification of the final beneficiary in others105.
(beneficial ownership), sector, projects, The role of investment and debt in designing a
amounts, origin of funds, purposes, national development model, the estimation of
partners, declaration of interests, public losses due to corruption, the macroeconomic
or private shares, contracts, terms, and impact of the cash flow from China, its
timelines. importance in closing the financing gap in other
m. Eliminate incentives for corruption such markets, how cheap or expensive the debt
as measures that facilitate arbitrations was according to its underlying conditions,
and illicit profits, selection of officials and what changes in financial conditions have
for political reasons or cronyism, and occurred over time will be discussed in a
revolving doors for officials in different forthcoming report. Similarly, the next report
public authorities, agencies and will define, at greater length, ideal conditions for
companies. foreign investments and how to implement the
recommendations presented above.
August 2020
105 V. Ramkumar, Our Money, Our Responsibility. A Citizen’s Guide to Monitoring Government Expenditures, Washington D.C.: International Budget Partnership, n.d.
Annex Annex 1
List of Venezuelan institutions and officials in charge of negotiations
with China
Annex 2
List of unavailable information
Annex 3
List of Chinese companies and agencies in Venezuela, linked to the
agreements signed by both countries since 1999
Annex 1
List of Venezuelan institutions and officials in charge of negotiations with
China
Institutions and officials involved in the signing and administration of the
Venezuela-China Joint Fund (2007 - present) and the Large Volume Long Term Fund
(2010 - present):
Government Agency Official
President of the Republic Hugo Chávez (1999 - 2013)
President of the Republic Nicolás Maduro (2013 - present)
Ministry of Petroleum Rafael Ramírez (2004 - 2014)
Ministry of Petroleum Asdrúbal Chávez (2014 - 2015)
Ministry of Petroleum Eulogio Del Pino (2015 - 2017)
Ministry of Petroleum Nelson Martínez (2017)
Ministry of Petroleum Manuel Quevedo (2017 – April2020)
Ministry of Petroleum Tareck El Aissami (April 2020 - present)
Ministry of Foreign Relations Nicolás Maduro (2006 - 2012)
Ministry of Foreign Relations Elías Jaua (2013 - 2014)
Ministry of Foreign Relations Delcy Rodríguez (2014 - 2017)
Ministry of Foreign Relations Jorge Arreaza (2017 - present)
Ministry of Finance and FONDEN Rodrigo Cabezas (2007 - 2008)
Ministry of Finance and FONDEN Rafael Isea (2008)
Ministry of Finance and FONDEN Alí Rodríguez (2008 - 2010)
Ministry of Finance and FONDEN Jorge Giordani (2010 - 2013)
Ministry of Finance and FONDEN Nelson Merentes (2013 - 2014)
Ministry of Finance and FONDEN Rodolfo Marco Torres (2014 - 2016)
Ministry of Finance and FONDEN Rodolfo Medina (2016 - 2017)
Ministry of Finance and FONDEN Ramón Lobo (2017)
Ministry of Finance and FONDEN Rodrigo Cabezas (2007 - 2008)
Ministry of Finance and FONDEN Simón Zerpa (2017 - present)
Ministry of Planning Jorge Giordani (2003 - 2007; 2008 - 2013)
Ministry of Planning Haiman El Troudi (2007 - 2008)
Bandes Rafael Isea (2007)
Bandes Alejandro Andrade (2008 -2010)
Bandes Edmée Betancourt (2010-2013)
Bandes Temir Porras (5 months in 2013)
Bandes Gustavo Hernández Jiménez (2013-2014)
Bandes Simón Zerpa (2014 – present)
Bandes Edmée Betancourt (2010-2013)
Bandes Temir Porras (5 meses en 2013)
Bandes Gustavo Hernández Jiménez (2013-2014)
Bandes Simón Zerpa (2014 – presente)
Annex 1 Institutions and officials linked to the failed projects between Venezuela and China:
Bolivarian Aqueduct Project (2003 – 2009)
Ministry of Environment and Natural Resources Ana Elisa Osorio (2000 - 2005)
Ministry of Environment and Natural Resources Jacqueline Faría (2005 - 2007)
Ministry of Environment and Natural Resources Yubirí Ortega (2007 - 2010)
Revamping of the Centre-Western Railway (2004 – present)

National Railway Institute Fernando Román Lugo (2004)
National Railway Institute Ángel García Ontiveros (2005)
Ministry of Infrastructure Ramón Carrizales Rengifo (2003 - 2006)
Ministry of Infrastructure José David Cabello (2006 - 2008)
Ministry of Infrastructure Isidro Rondón (2008)
Ministry of Infrastructure Diosdado Cabello (2008 - 2010)
Ministry of Land Transport Juan García (2011 - 2013)
Ministry of Land Transport and Public Work Haiman El Troudi (2014 - 2015)
Ministry of Land Transport and Public Work Luis Sauce (2015 - 2016)
Ministry of Transport Ricardo Molina (2016 - 2017)
Ministry of Transport Carlos Osorio (2017 - 2018)
Ministry of Transport Hipólito Abreu (2018 – presente)
Putting Venesat - 1 Simón Bolívar Satellite into orbit (2005 - 2008)

Ministry of Education, Science and Technology Marlene Yadira Córdova (2003-2006)
Ministry of Education, Science and Technology Héctor Navarro (2007-2008)
Ministry of Education, Science and Technology Nuris Orihuela (2008-2009)
Haier Appliances Industrial Manufacturing Complex (2010 – present)

Ministry of Industry José Khan (2010 - 2011)
Ministry of Industry Ricardo Menéndez (2010-2014)
Ministry of Industry Wilmer Barrientos (2014)
Ministry of Basic Industries Juan Arias (2016)
Ministry of Industry and National Production Tareck El Aissami (2018 - present)
Annex 1 Yutong Venezuela Bus Assembly Plant (2014 - present)
Ministry of Land Transport and Public Works Haiman El Troudi (2014-2015)
Ministry of Land Transport and Public Works Luis Sauce (2015-2016)
Ministry of Transport Ricardo Molina (2016-2017)
Ministry of Transport Juan de Jesús García (2017)
Ministry of Transport Carlos Osorio (2017-2018)
Ministry of Transport Hipólito Abreu (2018 - present)
Yutong Venezuela Assembly Plant (President) Carlos Osorio (present)
Batalla de Santa Inés Refinery (2010)

Ministry of Petroleum and Petróleos de Venezuela
Rafael Ramírez (2004 - 2014)
(President)
Petróleos de Venezuela (Vice President of Asdrúbal Chávez (2007 – 2009)
Refining, Trade and Supply) Asdrúbal Chávez (2007 – 2009)
Planta Centro Thermal Power Plant (2013 - 2016)

Ministry of Electric Energy and CORPOELEC Héctor Navarro (2012-2013)
Ministry of Electric Energy and CORPOELEC Jesse Chacón (2013-2015)
Ministry of Electric Energy and CORPOELEC Luis Motta Domínguez (2015 - 2019)
Luis Zambrano Thermal Power Plant (2011 - 2014) and José Félix Ribas Thermal
Power Plant (2011 - 2014)
Ministry of Electric Energy Alí Rodríguez Araque (2010 - 2012)
CORPOELEC Argenis Chávez (2011)
CORPOELEC Alí Rodriguez Araque (2011 - 2012)
Ministry of Electric Energy and CORPOELEC Héctor Navarro (2012 - 2013)
Ministry of Electric Energy and CORPOELEC Jesse Chacón (2013 - 2015)
Ministry of Electric Energy and CORPOELEC Luis Motta Domínguez (2015 - 2019)
“Hugo Chavez” Delta Amacuro Rice Processing Plant (2010)

Ministry of Petroleum and PDVSA president Rafael Ramírez (2004 - 2014)
PDVSA Agrícola Egli Antonio Ramírez (2008-2012)
PDVSA Agrícola Miguel Ruíz (2013 - 2014)
PDVSA Agrícola Humberto Laurens (2015)
Ministry of Agriculture and Land Wilmar Castro Soteldo (2016 - present)
Regional Department of Rural Development
Víctor Meza (2016)
Institute (INDER)
Annex 1 Transmission Line from Manuel Piar Power Plant to Uribante Caparo
(2009 - present)
Ministry of Petroleum and PDVSA Rafael Ramírez (2004 - 2014)
Angel Rodríguez (2009-2010) / Hipólito Izquierdo
Ministry of Electric Energy
(2008-2009)
Ministry of Electric Energy Alí Rodríguez Araque (2010-2011; 2011-2012)
Ministry of Electric Energy Rodolfo Navarro Díaz (2011)
Ministry of Electric Energy Héctor Navarro (2012-2013)
Ministry of Electric Energy Jesse Chacón (2013-2015)
Ministry of Electric Energy Luis Motta Domínguez (2015 - 2019)
Ministry of Electric Energy Igor Gavidia León (2019)
Ministry of Electric Energy Freddy Brito Maestre (2019 - present)
Ciudad Tavacare (2009 - 2011)

Ministry of Housing and Habitat Diosdado Cabello (2009 - 2010)
Ministry of Housing and Habitat Ricardo Molina (2010 - 2013)
Carbozulia Revamping (2017 – present)

Ministry of Ecological Mining Development Roberto Mirabal Acosta (2016 - 2017)
Ministry of Ecological Mining Development Jorge Arreaza (2017)
Ministry of Ecological Mining Development Víctor Cano (2017 - 2019)
Ministry of Ecological Mining Development Gilberto Pinto Blanco (2019 -present)
Tinaco–Anaco Railway (2009)

National Railway Institute Franklin Pérez Colina (2009 - 2013)
National Railway Institute Francisco Torrealba (2013 - 2017)
National Railway Institute Hipólito Abreu (2017 - present)
Ministry of Infrastructure Diosdado Cabello (2008 - 2010)
Ministry of Land Transport Francisco Garcés (2010 – 2011)
Ministry of Land Transport Juan García T. (2011 - 2013)
Ministry of Land Transport and Public Work Haiman El Troudi (2014 - 2015)
Ministry of Land Transport and Public Work Luis Sauce (2015 - 2016)
Ministry of Transport Ricardo Molina (2016 - 2017)
Ministry of Transport Juan de Jesús García (2017)
Ministry of Transport Hipólito Abreu (2018 – presente)
Annex 1 Termocarabobo Power Plant (2012 - 2014)
PDVSA Rafael Ramírez (2004 - 2014)
Ministry of Electric Energy Héctor Navarro (2012-2013)
Ministry of Electric Energy Jesse Chacón (2013-2015)
Continuous Concrete Mixing Machine (2014)

Ministry of Industries Ricardo Menéndez (2013 - 2014)
Ministry of Industries Wilmer Barrientos (2014)
Ministry of Industries José David Cabello (2014 - 2015)
CVG Carlos Osorio (2013 - 2014)
CVG Justo Noguera Pietri (2014 - 2018)
CVG Pedro Maldonado (2018 - present)
Sale of iron ore to China’s “Wuhan Iron & Steel Group (Wisco)” $20 under market
price for 7 years
Ferrominera del Orinoco Radwan Sabbagh (2006 - 2013)
CVG Rodolfo Sanz (2008 - 2010)
Yutong bus acquisition and purchase of spare parts, tools, maintenance, intelligent
administration system of public transport operation.
Ministry of Transport and Public Works Francisco Garcés (2010 - 2011)
Ministry of Land Transport and Public Works Juan García Toussaintt (2012 - 2013)
Ministry of Land Transport and Public Works Haiman El Troudi (2014 - 2015)
Ministry of Land Transport and Public Works Luis Sauce (2015 - 2016)
FONTUR Wiliam Peña
FONTUR José Bernardo Hurtado (2013 - 2016)
Yutong S.A. Plant Carlos Osorio (2016 – present)
Venezuelan authorities that participated in the meetings of the “China-Venezuela

High Level Joint Commission” between 2001 and 2018
1st High Level Joint Commission (2001)
Ministry of Foreign Relations Luis Alfonso Dávila (2001 - 2002)
Ministry of Planning Jorge Giordani (1999 - 2002)
Annex 1 2nd High Level Joint Commission (2002)
Ministry of Foreign Relations Roy Chaderton (2002 - 2004)
3rd High Level Joint Commission (2004)

Ministry of Foreign Relations Alí Rodríguez Araque (2004 - 2006)
4th High Level Joint Commission (2005)


Venezuelan Embassy in China Rocío Maneiro (2004 - 2013)

Ministry of Energy and PDVSA Rafael Ramírez (2004 - 2014)
BANDES Rafael Isea (2007)


Ministry of Planning Jorge Giordani (2009- 2014)
Annex 1 9th High Level Joint Commission (2010)

Ministry of Petroleum and PDVSA Rafael Ramírez (2004 - 2014)

Ministry of Foreign Relations Vice minister David Velásquez Caraballo
Ministry of Commerce Edmée Betancourt (2011- 2013)
Ministry of Science and Technology Vice minister

Organismo o ente público Funcionario a cargo
Venezuelan Embassy in China Iván Zerpa (2013 - present)

Ministry of Planning Ricardo Menéndez (2014 - present)

Ministry of Petroleum and PDVSA Eulogio Del Pino (2014 - 2017)
Annex 1 15th High Level Joint Commission (2017)
Ministry of Petroleum PDVSA Eulogio Del Pino (2014 - 2017)

Ministry of Foreign Relations Jorge Arreaza (2017 - present)
Ministry of Finance Simón Zerpa (2017 - present)
Ministry of Petroleum PDVSA Manuel Quevedo (2017 - 2020)
Annex 2 List of unavailable public information
1. Agreements signed between the Bolivarian Republic of Venezuela and the
People’s Republic of China since March 2010-present.
2. Authorities in charge, status and results of most of the 480 agreements signed
since 1999-present.
3. Name, location, authorities in charge, status, cost, and economic and social results
of the 790 joint projects derived from the agreements.
4. Number of staff hired in the joint projects, by nationality.
5. Details of the financial conditions of the loans granted by China to Venezuela from
1999 to 2016.
6. Detailed breakdown of the US$62.63 billion received through loans from China.
7. Current status of Venezuela, BANDES, and PDVSA’s debt with China and any other
decentralised entity that has assumed commitments, for each year, from 1999 to
2019: amount of debt, amount repaid, balance, interests and terms.
8. Current balance of the consolidated public sector debt broken down by agencies
and entities.
9. Annual budget, financial statements and corporate governance of BANDES and

FONDEN, since their respective creation dates.
10. Amount of China and Venezuela’s initial investment and contributions in the
Chinese-Venezuelan JVs Petrolera Paria, Petrozumano and Chery Venezuela.
11. Authorities in charge, budget, financial situation and annual production capacity
of the Chinese-Venezuelan JVs from their date of creation to date.
12. Names of all Venezuelan authorities that participated in the 16 meetings of

the High Level Joint Commission, commitments assumed by each of them for
execution and follow-up of the agreements.
13. Cost of organisation and transfers for the 16 meetings of the High Level Joint
Commission and other trade meetings with China.
14. Number and description of cultural, educational, scientific and job training
exchange programmes and number of beneficiaries per year.
Annex 3 List of companies and agencies from China in Venezuela
Number of
No COMPANY/AGENCY SECTOR SEGMENT OWNED BY projects
in Venezuela
Chinese Academy
of Space
Technology (CAST)
1 under China Technology Space State 1
Aerospace Science
and Technology
Corporation (CASC)
2 Xinhua Agency Telecommunications - State 1
Alcatel Shanghai
3 Telecommunications - Nokia 7
Bell Co. Ltd.
Aluminium
Corporation of
4 Manufacture Metallurgy SOE -
China Limited
(Chinalco)
Aluminium
International
Engineering
5 Corporation Engineering Aluminium SOE -
Limited (Chalieco)
a subsidiary of
Chinalco
Bank of China
6 Financial Services Banking SOE 2
(BOC)
Bohai Shipbuilding
Heavy Industry
7 Company Limited Manufacture Shipbuilding SOE -
(BSHIC) a
subsidiary of CSIC
Bohai Shipyard Shipbuilding

8 Manufacture - -
Group Co., LTD, and Repair
9 CAME YTO Agriculture Manufacture - 1

Chery Automobile
10 Manufacture Automobile SOE 1
Co., Ltd
China Calvic
11 - - - -
Engineering Co
China CAMC Water, electrici-
Engineering Co., ty, industries,
12 Ltd (CAMCE) a Engineering Services agriculture, SOE 13
subsidiary of communica-
SINOMACH tions
China
13 Development Bank Financial Services Banking SOE 9
(CDB)
China Investment
14 Financial Services - - 1
Corporation
Annex 3 No COMPANY/AGENCY SECTOR SEGMENT OWNED BY
Number of
projects
in Venezuela
China Machinery
Engineering
Thermal Power
15 Corporation Construction - -
Plant
(CMEC) a subsidiary
of Sinomach
China Metallurgical
16 Construction Manufacture Metallurgy - 1
Group Corporation
China Minmetals
17 Mining - - -
Group
Oil,
China National hydrocarbons
18 United Oil Hydrocarbons and - 2
Corporation maritime
transport
China National
Complete Plant
19 Import Export Construction - - 1
Corporation
(Complant)
China National
20 Telecommunications - - 1
Electronic Wire
China National
Electronics National
21 Technology - 4
Import & Export Defence
Corporation (CEIEC)
China National
Machinery & International
22 Trade SOE -
Equipment Corp Trade
Group
China National
Machinery Industry Engineering Services
23 - SOE -
Corporation Ltd and construction
(Sinomach)
China National
Offshore Oil
Hydrocarbons and
24 Corporation - SOE 4
energy
(CNOOC) a
subsidiary of CSIC
China National
25 Paper Industry Financial Services - - -
Corp
China National
26 Petroleum Hydrocarbons Oil and gas SOE 13
Corporation (CNPC)
China National
United Oil
Oil, gas and
27 Corporation Hydrocarbons SOE 3
coal
(CNUOC) a
subsidiary of CNPC
Annex 3 Number of
in Venezuela
China
Petrochemical
Corporation Oil, gas and
28 Hydrocarbons SOE 10
SINOPEC coal
Group Sinopec
Corporation
China Petroleum
Technology and
Development
29 Construction Oil Rigs SOE 3
Corporation
(CPTDC) a
subsidiary of CNPC.
China Railway
30 Engineering Transport Railways - 2
Corporation – CREC
China Railway
31 Transport Railways - 1
Group Limited
China Shipbuilding
and Offshore
32 International Co. Manufacture Shipbuilding - -
LTD. A subsidiary
of CSIC
China Shipbuilding
33 Industry Manufacture Shipbuilding SOE 1
Corporation (CSIC)
China State
34 Shipbuilding Corp Manufacture Shipbuilding SOE 1
(CSSC)
China Zhen Hua Oil
35 Hydrocarbons Oil and energy SOE 2
Company Limited
Citic Bank a
36 Financial Services - SOE -
subsidiary of Citic
Citic Construction
37 Construction Housing SOE 11
Co. Ltd
Citic Group China
International Trust
38 Financial Services Banking SOE -
and Investment
Corporation
Chinese Council for
the Promotion of
39 Diplomatic Relations - JV 1
International Trade
(CCPIT)
Chine Corporation
of Credit and
40 Banking and credit - SOE 1
Export Insurance
(SINOSURE)
Annex 3 Number of
in Venezuela
China National
Oil & Gas
41 Development Hydrocarbons Gas - -
Corporation
(CNODC)
CSR Meishan
Rolling Stock a
subsidiary of China Industrial
42 South Transport Machinery SOE 1
Locomotive & (cargo wagons)
Rolling Stock Co.
Ltd (CSR)
CV Shipping PTE. Maritime
43 Transport SOE 1
LTD. Transport
Freet- Shengli Oil Hydrocarbons and
44 - Privately 1
Field Petroleum energy
Great Wall Industry
45 Technology Space - 1
Corporation
46 Haier Group Manufacture Appliances SOE 5
China National Oil

Orimulsión
47 and Natural Gas Hydrocarbons - 1
Products
Group
Harbour
Engineering
Company (CHEC) a
48 subsidiary of China Engineering Construction SOE -
Communications
Construction
Company Ltd
Helongjiang Xiliang
Hydrocarbons and
49 Grains y Oil Group - - 3
energy
Co Ltd
Huawei Networks and Private
50 Technologies Telecommunications Telecommuni- Multinatio- 16
Co.,Ltd cations nal
Aviation Industry of
51 Manufacture Aircraft State -
the PRChina
Industrial and
52 Commercial Bank Financial Services Banking SOE -
of China (ICBC)
International
Institute of
53 the University Healthcare - - 1
of Traditional
Medicine of China
Annex 3 Number of
in Venezuela
medical,
surgical and
54 Meheco Co Ltd. Manufacture - -
pharmaceutical
supplies
Jianghuai
55 Automobile Co., Manufacture Automobile - 1
Ltd., JAC Motors
Jiangsu Rongsheng
56 Heavy Transport Maritime - 1
Industries
Big data,
Langchao Group applications,
57 Co. Ltd - Inspur Digital Technology servers, SOE 4
Group artificial
intelligence
Metallurgical
58 Construction Manufacture Metallurgy - 5
Group Corporation
Networks and
59 Milco- ZTE Telecommunications Telecommuni- - 1
cations
Inspection
of industrial
60 Nuctech Security - 1
processes and
technology
Diesel, Petrol,
Fuel oil,
Kerosene,
Lubricants,
Petrochina
Asphalts,
Company Limited
61 Hydrocarbons Paraffin, SOE 8
(a subsidiary of
Ethylene,
CNPC)
Propylene,
Benzene, Urea,
ammonium
nitrate
Petro-King Oil Field
62 Hydrocarbons - - -
Technology
Qingdao Techking
63 - - - -
Tire Co
Sany Heavy Mining
64 Manufacture - -
Industry machinery
Shandong Gold
65 Energy Mining SOE 4
Group Co. Ltd
Shandong Kerui
66 Hydrocarbons - - -
Petroleum
Shenyang Cement Industrial Ma-
67 Manufacture - 1
Machinery Co. chinery
Annex 3 Number of
in Venezuela
Shenzhen
Agricultural
68 Agriculture - - 2
Investment Co.,
LTD
Sinohydro
69 Engineering Services Oil and energy SOE 4
Corporation
70 Sinotruk Manufacture Automobile - -
China Central
71 Telecommunications Television State 1
Television (CCTV)
The Export - Import
Export Credit
72 Bank of China Financial Services SOE 1
Agency
(EXIMBANK)
UNIPEC Asia Hydrocarbons and
73 - - 1
Company Limited energy
Wison Engineering Engineering Services
74 Refinery repair - 3
Services Co. and construction
Yankuang Group Mining and
75 Transport - 1
Company Limited coal
Yuan Longping
High-Tech
76 - - - -
Agriculture
Company
Yutong Hongkong
77 Manufacture Automobile - -
Limited
Industrial
78 Zhengtai Co, Ltd Manufacture - 1
machinery
Zhengzhou Yutong
79 Tourism - - 1
Group, Corp.
China Zhong Xing
Telecommunica- Networks and
80 tion Equipment Telecommunications Telecommuni- JV
Company Limited cations
(ZTE)
China National
Aero Technology
81 Import & Export - - - -
Corporation
(CATIC)
China Huanqiu
Contracting &
Engineering
82 Corporation Hydrocarbons Oil - -
(HQCEC)
a subsidiary of
CNPC
Annex 3 Number of
in Venezuela
Bohai Drilling
Service, S.A a
83 Technology - - -
subsidiary of
HQC
China Electric
84 Power Equipment Electric - - -
and Technology
China Gezhouba
Group
International Power plants,
85 Engineering (CGGC) Construction dams, roads - -
a subsidiary of and bridges
China Energy
Engineering Group
Hongdu Aviation
86 Industry Group Ltd. Manufacture Aircraft - -
(HAIG)
Heilongjian
Beidahuang State
87 Agroindustrial Food - -
Farm Business
Trade Group
National
Development &
88 Reform - - State -
Commission
(NDRC)
China Precision
Machinery
89 Import-Export Defence Radar, missiles - -
Corporation
(CPMIEC)
China Great Wall
Telecommunications
90 Industry - - -
/Aerospace
Corporation
Bohai Drilling
Engineering
91 Manufacture Oil rigs - -
Company Limited
filial CNPC
Wuhan Iron and
92 Steel Company Metallurgy Iron SOE -
Limited
THE CHINA DEALS
TransparenciaVenezuela @NoMasGuiso nomasguiso Transparencia Venezuela TransparenciaVenezuela

The China Deals Transparencia Venezuela Oct 2020

Uploaded by

Copyright:

Available Formats

The China Deals Transparencia Venezuela Oct 2020

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The China Deals Transparencia Venezuela Oct 2020

Uploaded by

Copyright:

Available Formats

THE CHINA DEALS

Agreements that have undermined Venezuelan democracy

Credits Agreements that have undermined Venezuelan democracy

María Fernanda Sojo

María Alejandra Domínguez

With the collaboration of:

2 Cash flows from China to Venezuela 16

3 Experience of joint ventures and failed projects 26

The People’s Republic of China has been viewed as a key

all of them were approved by the National Assembly, which at

clientelism and political corruption. This report attempts to

Political and was compounded by the fact that the Beijing

institutional policy targeted Latin America and the Caribbean,

context reach of Chinese companies3. As a result, China

2 R. Castro, “Desestadounizar no es descolonizar: apuntes sobre las relaciones entre China

Rules of exchange in the bilateral relations between Venezuela and China

When looking solely at Venezuelan regulations Furthermore, of the 23 officially recorded

Cash flows summarizes the amount and proportion of

Cash flows from China to Venezuela in 1999–2018

to Venezuela Loans 23 62,631.14 91.20

FDI 22 6,045.50 8.80

Donation 1 1,57 0.00

The table shows that most of the funds (91.2%)

Joint Commission, held in Beijing in August 2010,

AGREEMENT: Agreement on AGREEMENT: Cooperation AGREEMENT: 2nd AGREEMENT: 2nd Renewal

MAY SEPT FEB JAN

FEB JAN SEPT JUN

AGREEMENT: 1st AGREEMENT: 1st Renewal AGREEMENT: 3rd AGREEMENT: 5th

The table shows that PDVSA did not access

2.1.2 Miscellaneous loans from

The following table summarizes the amount of

Relative weight of flows sent to Venezuela compared to the region

Percentage of funds Relative weight Percentage of funds Relative weight

64% 36% 18% 82%

2.2 Foreign direct investment Also included in FDI-related agreements

Chinese foreign direct investment in Venezuela

Date Agreement Investor Amount, US$

Formation of the Petro Zumano

Conformation of the Mixed Oil

Purchase and sale of 10% China International Trust

China Development Bank opens China Development Bank

Contributions to the Sinovensa Oil

Purchase and sale of 9.9% of the

51 According to Official Gazette 38,860

China loan to boost production

2013 Production target

CNPC’s China loan to boost production

expansion targets From 160,000 b/d to 230,000 b/d

China loan to boost production

Fall in Venezuelan oil production

3,000 2,795 2,804 2,786

62 LAC China Network and OFDI Monitor [Online] Available at https://www.redalc-china.org/monitor/

Four agreements were signed with the government

The plant should

Only the refinery’s

Name of failed Body or entity Start China Description

The NA claims there

The plant was not