China’s $100 billion in loans at stake in Venezuela after US captures Maduro

Following the US military's "Operation Absolute Resolve" that led to capture of Venuzualean President Nicolas Maduro and his wife Cilia Flores from Caracas, China reacted strongly by condemenining the military action saying such “hegemonic acts of the US seriously violate international law and Venezuela’s sovereignty,” adding that “We call on the US to abide by international law and the purposes and principles of the UN Charter, and stop violating other countries’ sovereignty and security,” the Chinese foreign ministry said in a statement.

Hours before the US strikes on Venezuela, China's Special Representative on Latin American Affairs, Qiu Xiaoqi, held a meeting with President Maduro, as Caracas is central to Beijing's Latin America outreach with nearly $105.6 billion worth of loans and financial aid.

China’s Venezuela Bet

Venezuela has long been viewed as a crucial component of China’s strategy to expand its influence beyond Asia. The relationship took formal shape in 2006, under President Hugo Chávez, with Caracas signing several trade agreements with Beijing and describing China as a “Great Wall” against US influence.

Under these agreements, Venezuela committed to supplying up to one million barrels of oil per day to China. In return, Beijing promised political backing, including support for Venezuela’s bid for a non-permanent seat on the United Nations Security Council, according to media reports. By 2008, Beijing was sourcing nearly half of its oil supply from Venezuela, making it a key component in China's energy dynamics.

The partnership soon turned financial. China began extending large loans to Venezuela, backed by future oil supplies. In 2006, Beijing provided $2 billion in loans, which rose to $7 billion in 2007, according to AidData, a US-based research group. Lending surged in the following years, with $8 billion extended in 2009 and around $27 billion in 2010.

In 2007, the two countries created a joint fund worth $6 billion, with a $4 billion loan from the China Development Bank and $2 billion from Venezuela’s state development fund, FONDEN. Repayment was secured through oil shipments from PDVSA, Venezuela’s state-run oil company. The fund was expanded to $12 billion in 2009 through additional contributions from both sides.

China continued lending even as Venezuela’s economy weakened. In 2014, it provided a $1 billion credit line to PDVSA and another $1.5 billion loan for working capital.

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When global oil prices collapsed in 2014, and Venezuela’s economy plunged under President Nicolás Maduro, China extended a further $10 billion loan to support Venezuela’s balance of payments, again backed by oil exports. In 2015, Beijing eased repayment terms on nearly $50 billion in outstanding loans, reducing daily oil shipments and allowing some repayments in local currency.

Since 2016, China has largely stopped issuing new loans to Venezuela, focusing instead on restructuring existing debt. Despite this slowdown, Venezuela remains one of China’s biggest debtors, and any political change in Caracas could have major financial consequences for Beijing.