CARACAS — Already robust, development cooperation between China and Venezuela got an additional boost with the recent signing of 22 new agreements to strengthen their comprehensive strategic partnership.
The South American economy, which is heavily dependent on oil exports, and was devastated by falling crude prices, is getting a helping hand from China to diversify its production base.
One initiative Beijing has pledged to invest in is a government-backed program to strengthen community supply and distribution networks through Local Supply and Production Committees (CLAP) and a Great Sovereign Supply Mission (GMAS).
Both strategies emerged from a need to provide average Venezuelans with basic goods that became scarce to find amid a protracted “economic war” between politically conservative business sectors and the socialist government.
But the greater objective is to help Venezuela consolidate its productive sector and exports — by increasing energy and technological innovation, among other things — in a way that also benefits people in China.
In a recent interview with Xinhua, Venezuelan Planning Minister Ricardo Menendez described the bilateral relationship as an “authentic process of integration” to build a better future for both countries.
“Everything is part of a strategic framework between our countries and is related to the 2025 Venezuela-China Plan. We are talking about linking China’s Five Year Plan with the (Venezuelan) National Plan ... it is a relationship of profound breadth,” said Menendez.
Six of the 22 accords are related with boosting energy output, including an agreement to build a refinery in southeast China’s Guangdong province, called Nanhai, that will specialize in processing some 400,000 barrels of extra-heavy crude extracted from Venezuela by joint venture firms between Venezuela’s state oil company PDVSA and the China National Petroleum Corporation (CNPC).
Another project aims to boost output at joint Sino-Venezuelan firm Sinovensa, located in Venezuela’s oil-rich Orinoco Belt, by 165,000 barrels per day (bpd) to 230,000 bpd.
The Orinoco region joint ventures Petrozumano and Petrourica also plan to raise output.
The results of these agreements are expected to be felt in the first quarter of 2017, though other plans are more medium- to long-term.
Though not part of the recently signed agreements, there is also a project underway to build a deep-sea port in Araya Peninsula, in the eastern Sucre state, along with a network of oil and gas pipelines from the oil belt, to facilitate export.
“We are breaking with this concept, this idea of Venezuela as a country that lacks investment. That (the port) plus the oil investments speak of the confidence that prevails in our countries, and of how we are going to approach all of the difficulties that may arise, and how we are going to embark on a path towards the future,” said the official.
In the agricultural sector, China and Venezuela plan to build Latin America’s largest industrial park in Anaco, a town in the eastern state of Anzoategui.
The ambitious project aims to produce traditionally imported inputs, such as seeds, fertilizers and other agrochemicals, but with “an environmental perspective,” said Menendez.
Several China-Venezuela joint ventures are already at a stage where they can expand their production lines and seek out new export markets.
The joint venture between Venezolana de Industrias Tecnologicas (VIT) and China’s multinational IT company the Inspur Group is one of them, as it looks to increase its computer assembly operation for export.
Mobile phone makers Venezolana de Telecomunicaciones (VTELCA) and China’s ZTE Corporation “are expanding with another five production lines,” said Menendez.
In the automotive sector, Venezuela’s Chery-brand carmaker is also poised to roll out more vehicles, not just for a government-backed plan to modernize the country’s fleet of taxis, but also for foreign markets.
Finally, as part of a push to diversify its economy, Venezuela has launched Arco Minero del Orinoco, a large-scale mining project in which Chinese companies will be taking part.
Arco Minero is designed to position the country as a key supplier of gold, diamonds, bauxite, copper and coltan.