China continues to pour money into Venezuela in exchange for oil

Chinese President Xi Jinping (left) and Venezuelan President Nicolas Maduro in Beijing on September 14. Photo: Reuters.

President Maduro confirmed on national television that "there are some financial commitments to boost oil and gold production as well as investments in 500 development projects in Venezuela," according toAFP.

Venezuela's president began a visit to China on September 14 in hopes of convincing Beijing to step up support for the country's crisis-hit economy.

Over the past decade, China has poured more than $50 billion into Venezuela through oil-for-loan deals to secure energy supplies for its fast-growing economy and shore up an ally in South America.

However, the money was stopped more than three years ago, when Venezuela asked to change the repayment terms because of falling oil prices and declining crude production.

Venezuela currently owes China $20 billion and is repaying it with crude oil shipments. According to Venezuelan consultancy Ecoanalitica, Maduro, after meeting with Chinese President Xi Jinping, could return with a $5 billion loan and a six-month extension to repay the debt. President Maduro has not yet verified this new loan.

Chinese media reported that in a private meeting with Chinese President Xi Jinping, Maduro thanked China for its long-standing understanding and support.

Xi said the two countries should promote mutually beneficial cooperation and take bilateral relations to a new level, while strengthening political mutual trust. The two sides also signed a memorandum of understanding on energy and mining, worth billions of dollars, according to Maduro.

Oil production, which accounts for 96% of Venezuela's budget revenue, fell to just 1.4 million barrels a day in August, its lowest level in 30 years, according to OPEC figures.

Once the richest country in South America, Venezuela is on the brink of collapse. Its economic growth has fallen by more than 40% since 2013. The Venezuelan government has announced a series of measures including devaluation of the currency, removing five zeros from the value of the bolivar and raising the minimum wage by 3,500%.

More than 1.6 million Venezuelans have fled the country since 2015 to escape food and medicine shortages.