WASHINGTON (AP) — When it comes to claiming that Venezuelan oil is now under his control, President Donald Trump doesn’t mince words. But no small part of that oil belongs to China under contracts it struck with Caracas years ago, setting the stage for a delicate diplomatic dance over the next few weeks.
Some experts expect Trump to work with China in an effort to stabilize trade relations. After all, Trump is expected to visit Beijing in April as part of an effort to protect the fragile trade truce he reached with Chinese President Xi Jinping late last year.
“The administration seems focused on avoiding unnecessary escalation or new irritants with Beijing while maintaining leverage on Washington’s terms,” said Craig Singleton, senior director of the China program at the think tank Foundation for Defense of Democracies.
He added that he doubted Trump would risk turning Venezuela into a “flashpoint that complicates trade dynamics or Trump’s personal engagement with Xi.”
China is owed at least $10 billion from Venezuela, according to various estimates, a debt that former Venezuelan President Nicolás Maduro had paid off by shipping oil to China. Venezuela’s interim government, which complies with Washington’s demands, is likely to question the legality of these oil loan agreements and stop payments.
Two large Chinese state-owned enterprises—China National Petroleum Corp. and Sinopec — are entitled to 4.4 billion barrels of oil reserves in Venezuela, the largest of any foreign country, according to a research note from investment bank Morgan Stanley.
US companies also have claims for tens of billions of dollars since Caracas nationalized the oil industry, and it is unclear how these IOUs will be honored and in what order.
The United States seized two sanctioned oil tankers this week as part of a plan to assert control over Venezuelan oil shipments. Energy Secretary Chris Wright said the U.S. would handle sales of Venezuela’s oil “indefinitely,” depositing the proceeds into U.S.-controlled accounts that would ultimately “return to Venezuela for the benefit of the Venezuelan people.”
The administration said this week that the U.S. would kick off those sales with 30 to 50 million barrels taken from crude storage facilities in the South American country. Asked for more details, a Trump administration official who is not authorized to comment publicly and spoke on condition of anonymity said US policy is to eliminate “adverse outside influence” in the Western Hemisphere.
The US using such leverage over a crucial natural resource comes after Beijing flexed its muscles last year, choking off critical supplies of rare-earth magnets and buying up US soybeans in the trade war with Washington. When Trump met Xi in South Korea in October, the two men agreed to a one-year truce, waiving skyrocketing tariffs and export controls.
China’s stakes in Venezuela
Between 2000 and 2023, Venezuela was the fourth-largest recipient of Beijing’s official credit, having received $106 billion in loans from China’s official sector lenders, according to AidData, a research lab at the College of William & Mary in Virginia that tracks Beijing’s overseas lending activities. But how much of the total Caracas has paid and what is still owed is unclear, said AidData Executive Director Brad Parks, because Caracas stopped reporting details of the debt several years ago.
While some estimates put the outstanding debt at $10 billion, Parks said the figure could be much higher because US sanctions on Venezuelan oil would have delayed repayment of the loan. China’s loans, under an unusual arrangement, were set up to be repaid with the proceeds of oil exports.
In China, Maduro’s capture evoked memories of another leader who made deals with Chinese companies and then suddenly lost power: Libya’s Moammar Gadhafi.
After the fall of Gadhafi in 2011, Chinese companies were forced to leave behind billions in investments. Cui Shoujun, a professor of international studies at Renmin University in Beijing, told Chinese news and commentary website guancha.cn that the transitional government in Caracas could consider the agreements under Maduro illegal and the debt to China illegal.
As in Libya, Beijing’s stakes in Venezuela went beyond oil. Chinese firms have invested in Venezuela’s telecommunications, railways and ports, all of which are now at risk, according to a report by global financial firm Jefferies.
However, the firm noted that Beijing would likely manage any disruption because Venezuelan oil represented only a small percentage of China’s oil imports and because Beijing has diversified its energy supply and shifted to electrification.
Hours before he was captured by US forces, Maduro hosted a senior Chinese diplomat at the presidential palace and praised ties between the countries that have flourished since the days of his predecessor, Hugo Chávez, and given Beijing a strong foothold in America’s court.
Venezuela is the only country in Latin America that has a high-level strategic partnership with China, on a par with close friends like Pakistan, and Maduro’s ouster will reduce China’s influence in the Western Hemisphere — in line with one of the goals outlined in the Trump administration’s National Security Strategy.
Beijing’s response to Maduro’s capture
Shortly after Maduro’s capture, Beijing said it was “deeply shocked” by the U.S.’s blatant use of force against a sovereign state and actions against its president, and said it “firmly” condemned the U.S. actions. He called for the immediate release of Maduro and his wife.
Chinese Ministry of Commerce spokesman He Yadong said Thursday that no nation has the right to interfere in economic and trade cooperation between China and Venezuela, which he said is between two sovereign states and is protected by international and domestic laws.
“No matter how the political situation in Venezuela evolves, China’s desire to deepen bilateral economic and trade cooperation will not change,” he said.
Singleton said Beijing does not have the influence in the Western Hemisphere that it says it does.
“Beijing can protest diplomatically,” he said, “but it cannot protect partners or assets once Washington decides to apply direct pressure.”
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Condon reported from New York.