Why China is lending $5 billion to struggling Venezuela

The deal has not been confirmed by Chinese authorities, but has been reported in the Chinese press. It probably originated from a 2007 agreement with Hugo Chávez which allows Venezuela to borrow from China in tranches of $5 billion in return for oil. It is hard to see any economic advantage to China from the deal. Growth in China’s oil imports has been slowing down. Imported oil is increasingly stored in emergency reserves rather than being consumed. World markets are awash in the stuff. Mr Maduro himself has been urging Venezuela’s OPEC partners to reduce production in order to stop the price slump. More…