Spill the tea oil:
A Short History of Chinese Investments in Venezuela

Introduction

The capture of Nicolas Maduro, the former leader of Venezuela, by American Special Forces on January 3rd, 2026, is well-known. However, what is less known, is the disruption it caused to Chinese plans in Latin America. As the world analyzes how fast it will take the United States to refine and export Venezuelan oil, less attention has been paid to the fact that China has been actively involved in Venezuela. In late 2025, 80% of Venezuelan oil was exported to China, accounting for 5% of China's total crude imports, demonstrating that Chinese influence in Venezuela has often gone underreported. China has used Venezuela as one of the cornerstones of its Latin American Chinese Belt and Road Initiative since 2018 when both signed a Memorandum of Understanding.

The Belt and Road Initiative: Infrastructure for Influence

Although global investments from China had started around the 1950s, the official Chinese Belt and Road Initiative (BRI) was launched by Chinese President Xi Jinping in 2013. Today, it spans over 150 countries, with participating countries accounting for nearly 75% of the world’s population and over half the world’s GDP.

China’s strategy follows a clear pattern: select developing, resource-rich countries (mainly in Africa and Latin America), expand its international presence by investing massively in these countries’ infrastructure in order to reap the benefits of their resources while consolidating their cultural, political and economic influence in the form of bilateral loans, health aid and educational opportunities.

While a majority of the bilateral investments made have been with African countries, China has expanded into Latin America in an attempt to counter Western influence in the region. Latin America, like Africa, fits the criteria for China to expand its influence. Prior to the BRI in 2013, trade between Latin America and China had increased 1200% between 2000 and 2009, reaching 130 billion dollars, before reaching 240 billion dollars in 2011. The increase in bilateral trade has continued to be steady, with trade volumes surpassing 300 billion dollars in 2020. Furthermore, despite a recent slump due to instability in the region, the World Bank projects it to peak at 700 billion dollars in 2035.

China-Venezuela Relationship, 1999-2013

The Chinese-Venezuelan relationship has been built on deterring US global dominance.

Preceding the start of the BRI, Former Venezuelan President Hugo Chavez, from the start of his mandate in 1999, decided to distance himself from the United States. China, as an emerging global power aiming to rival the United States, emerged as a strategic partner. Between 1999-2013, Chavez visited China more than any other Latin American leader between 1999 until his death in 2013. When Maduro was elected, Chinese-Venezuelan relations continued to be warm. For example, after disputed elections in 2018, when Maduro called for premature elections and used dishonest tactics to rig the election in his favor, China congratulated Maduro on his victory despite Western governments condemning the undemocratic nature of the elections.

Beyond political signaling and the distance from the US sphere of influence, China was the first country to invest in the country's largely undeveloped oil-industry. China has been an economic lifeline for Venezuela through oil-backed loans since at least 2010.

Exploiting the “Black Gold”: Chinese strategy in Venezuela since the early 2010s

Using a similar strategy as what it had in other parts of the world, particularly in Africa (Angola) and in other Latin American countries (Ecuador), China started lending money in the form of oil-backed loans, adopting a system of “cash today, oil tomorrow”, as explained by AIDDATA, a research lab at William and Mary. Such a system requires three elements. First, a policy bank to loan the money in the first place, which for Venezuela is the China Development Bank, the world’s largest financial institution. Then, a separate purchaser in China signs a commodity-purchase contract with raw material companies in the area, preferably state-owned, in the case of Venezuela the state-owned oil company Petroleos de Venezuela (PDVSA). The raw material company, after contracting the loan, develops its infrastructures to produce more resources, and then sells it back to the Chinese purchaser, who uses the money to pay back the debt contracted by the bank to loan the foreign country the money in the first place.

In the case of Venezuela, it now still owes over 15 billion dollars in oil shipments to China, after China invested over 100 billion dollars in the country between 2000 and 2023. This flow of money allows China and its government to secure favored access to energy supplies all around the globe, and specifically in Venezuela, where it quite literally has legitimacy over both the product (the literal resource used as collateral by the lender country, here oil) and means of production (the infrastructure the money China supplied was used for, here the wells and refineries).

This strategy also established China as a major economic partner with these countries. In 2017, Venezuela started experiencing massive hyperinflation as oil prices plummeted globally, leading to the Maduro government defaulting on foreign debt. In the meantime, Nicolas Maduro effectively transferred supreme power to the executive branch in mid-2017 with the creation of the Constituent Assembly.

As a consequence of the economic and political turmoil, the US imposed harsh financial sanctions on the country, deepening the crisis. On the other hand, China, who has already invested hundreds of billions in the country, did not back out, and restructured the debt Venezuela owed them to provide continued economic assistance, essentially keeping Maduro afloat as all other countries turned their back to him.

China also supplied anti-riot gear and surveillance technology, helping keep public unrest and discontent in check whilst using its leverage at the heart of the UN to protect the Venezuelan government. The subsequent resurgence of Maduro’s regime helped further cement China’s position as a global power, serving Chinese interests while maintaining Maduro’s leadership effectively ensuring the continuation of the oil shipments to China.

Slowing Investments and Regional Turmoil (2018-2024)

However, since 2017, Chinese enthusiasm for large investments in Venezuela has dampened. Dealing with its own crises, including the 2015-2016 Chinese stock market turbulence, as well as seeing the vulnerability of its oil-backed loan system, led Chinese leaders to rethink their strategy in Latin America. Mass protests in Chile, Colombia, and Peru from 2019 to 2023 combined with the 2017 Venezuela economic crisis signaled to China the profound instability in the region. In response, China sought more direct control over the resource infrastructures it previously sought to sponsor. Despite a peak in investments in 2018, direct loans have drastically dried up since then, with direct investment decreasing from 3.5 billion in 2018 to 300 million in recent years.

Moreover, the Chinese government has also seen the tightening of US regulations in Venezuela since 2019 further impact its loaning activities. As such, instead of the government implicating itself directly, small refineries called “teapots” (in reference to their distinctive, diminutive shape) have started to replace major Chinese state-owned companies like PetroChina or Sinopec in the China-Venezuela oil trade. This system, put in place to bypass international regulations and keep exports flowing between the two countries, functions with a complex web of traders and shadow fleets; the shadow fleets themselves have started to be under pressure in recent years as US scrutiny intensified, leading China to shift increasingly to Iranian heavy crude.

However, it would be wrong to assume that these complications have entirely suppressed Chinese interest in Venezuela. On the contrary, Chinese projects in Venezuela in recent years have been rekindled, with a 1-billion-dollar project led by China Concord Resources aiming to build a floating offshore jack-up rig aiming to increase oil extraction to 60,000 barrels a day as part of a 20-year production agreement with PDVSA. Chinese-owned China Harbor Engineering Company has also invested in a 600-million project to expand Venezuela's primary Caribbean port, Puerto Cabello. A direct route between the port of Tianjin and Caracas, Venezuela’s capital, is also being explored.

US return: End or New Beginning for Chinese influence?

In that context, Maduro’s capture and the subsequent political turmoil were, at first sight, bad news for China. Maduro’s government had upheld Chinese interests and was indebted to them (quite literally) after Chinese loans had saved his government and his economy in 2017. In addition, China relies on a stable political regime in its favor in order to reap the long-term rewards of its investments. The current government, backed by the United States, is no such regime. Thus, it will be harder for the Chinese government to maintain its activities in Venezuela, despite all the work it has done in the last decade to establish them. Therefore, the January 3rd raid, which also happened to happen while a Chinese official delegation was in the country, greatly tarnished China’s international aura of invulnerability and influence.

Maduro’s capture may still offer China several strategic advantages. First, it allows China to reflect on its position in Venezuela, which has been murky in recent years, and extricate itself from some increasingly stagnant partnerships. It also offers solid arguments to its overall message of support to developing countries. Most countries, Venezuela included, turned to China because of a lack of credible alternatives, especially from the United States. Even today, the United States does not appear as a reliable ally for Venezuela, and the tense history between the two countries gives ammunition to China to criticize the US’ imperialistic ventures and unilateral bullying, as well as blame any future economic or political instability on the US. Knowing the economic leverage China has in Venezuela and the reliance of Venezuela on oil exports (accounting for over 90% of its total exports), this is a great card in China’s hands. As the saying goes, never interrupt your enemy when he is making a mistake. China only has to wait for the US to make one.