China at Risk with Venezuela Oil Bet

From Asia Times

By Matt Ferchen

Referring to the evolving political crisis in Venezuela, a Shanghai Academy of Social Science scholar, Zhang Jiazhe, recently remarked, if Hugo Chavez dies, “the diplomatic effect on China won’t be large because China-US competition is in Asia not Latin America. Economically, China-Venezuela relations are based on oil and weapons sales”.

Back in 2006, Beijing University Professor Ha Daojiong, however, sounded a more skeptical note when he wrote, “The search for overseas oil supplies has led Beijing to pursue close diplomatic ties with Iran, Sudan, Uzbekistan and Venezuela – all countries that pursue questionable domestic policies and… foreign policies”. [1]

These two different Chinese foreign policy perspectives highlight an ongoing debate – and not only inside of China – about how Chinese state-owned enterprise (SOE) pursuit of global energy supplies was or was not leading China into unwanted and unhealthy foreign entanglements.

The logic of Chinese SOE energy investments in all these “questionable” countries is straightforward: China needs more energy than it can produce domestically and its SOEs are “going out” to help supply domestic demand. In Sudan and Iran, however, Chinese national oil companies’ (NOCs) investments exposed Beijing diplomatically to internationally controversial political regimes.

Chinese state-to-state energy ties to such “pariah states”, including more recent examples in Libya and Burma (Myanmar), have mostly been based in the Middle East, Africa or closer to China in Central and Southeast Asia. [2]

The geographic focus, however, has now for the first time shifted to China’s presence in the Western Hemisphere as Venezuelan president Hugo Chavez’ health crisis evolves into a broader political crisis not only for Venezuela but for his regional allies and potentially for China.

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