Monday, July 21, 2014

The Amerícas: China's President Xi Jinping Visits Region...Again, Leaving Indebtedness in His Wake

According to The Latin American Tribune, and as part of the meetings leading up to the arrival today (July 21) of Chinese President Xi Jinping, the China Development Bank opened an office in Caracas, its second office in Latin America.

"Our office in Caracas is the second financial institution we have established in Latin America after Rio de Janeiro," says Hu Huaibang, President of the China Development Bank. "We take this opening as a new beginning to further intensify cooperation between our governments, financial institutions and Venezuelan companies." 

Trade between the two nations exceeded US$20 billion in 2012 and China is the second largest buyer of Venezuelan oil after the US.

Venezuela has signed loans-for-oil deals valued at more than US$50 billion, making it the biggest recipient of Chinese financing in the region.

COMMENT: As US President Barack Obama continues to retract from the world, leaving rogue nations to replace US "exceptionalism," there is no greater message-point for US taypayers to learn than how Russia's Vladimir Putin strategically painted Barack Obama into a proverbial corner with the downing of Malaysian Airlines Flight 17 in Ukraine last week. 

This week's message-point is how Chinese President Xi Jinping has also outmaneuvered Barack Obama yet again.

Tragically, when will the message-points end? Perhaps never.

Chinese President Xi Jinping arrived in Caracas on Monday (July 21) from Argentina, the third stop on Latin American trip that started in Brazil. Xi will next travel to Cuba to conclude his trip. 

In Brazil, Xi proposed a $35 billion fund to finance infrastructure and development projects throughout the region. The CDB has made $10 billion in loans to Petrobras. Xi then traveled to Buenos Aires where he signed loans managed by the China Development Bank for $7.5 billion. 

The CDB office opening ceremony was attended by senior Venezuelan officials, including Minister of Economy and Finance, General Rodolfo Marco Torres.

Established in 1994, the China Development Bank is a Chinese government development bank which is responsible for funding large-scale infrastructure, social development and international cooperation projects. According to CDB's 2011 financial report, its total assets reached more than US$1 trillion for the first time, about three times the World Bank's total assets in the same year.

At the same time, China received $10.4 billion in loans from the World Bank in the five years from 2007 to 2012 and has an outstanding loan balance of $13 billion, according to the World Bank's website. It "remained one of the bank's largest borrowers", according to a review of lending to China in that period by the World Bank's independent evaluation group.

According to the Asia Development Bank's website, China has been its second biggest borrower historically, receiving almost $26 billion in loans since joining the bank in 1986.

China President in Buenos Aires Loans Argentina $7.5 Billion

China to Boost Investment in Brazil, President Says

China Offers $35 Billion for Latin America Infrastructure, Development