Beijing dismissed media speculation that Venezuela would give China a famous resort island to defray debt incurred by falling oil prices, calling the reports “groundless”.

The steep fall in global oil prices－nearly 40 percent since mid-June－led to increased speculation that Venezuela, a major oil exporter, would have difficulty servicing its debt.

Capital and interest repayments by Venezuela on loans given by China are “going on normally”, China confirmed on Dec 4.

Media reports said that Venezuela was considering giving China Blanquilla Island in the southern Caribbean as payment to cover debt of approximately $50 billion.

Foreign Ministry spokeswoman Hua Chunying told reporters in Beijing that “as far as I know, the report is groundless”.

The island rumors made head-lines as Venezuelan Finance Minister RodolfoMarco Torres started a visit to China on Dec 2.

China and Venezuela have established a financing vehicle whereby oil and fuel shipments have been used to repay loans.

Financial institutions in China planned to exchange views with Venezuelan officials regarding a pragmatic agenda between the countries, Hua said.

XuShicheng, a research fellow of Latin American studies at the Chinese Academy of Social Sciences, said China has a long-standing and mature relationship with Venezuela that has been built up over time.

China is Venezuela’s second-largest trading partner with annual trade close to $20 billion last year. During President Xi Jinping’s visit to the country in July, China and Venezuela signed 16 agreements covering a number of sectors, including energy, mining, finance, infrastructure, agriculture and high-tech.

“The past year has seen both countries harvest fruitful results in pragmatic cooperation in various fields. Currently, all the repayment of capital and interest regarding the loans borrowed from China is going on normally,” Hua said.