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Summarised by Centrist
Much of the commentary regarding Venezuelan President Nicolás Maduro’s seizure by US armed forces has focused on military and diplomatic fallout.
Yet, the more lasting damage could be to China’s financial exposure in the South American nation and its broader ambition to weaken the dominance of the US dollar.
Author Milton Ezrati notes that estimates put Chinese lending to Venezuela, through state institutions such as the China Development Bank, over the past two decades, at around US$62 billion.
Ezrati writes that this is more than half of all Chinese lending in Latin America.
Oil shipments sent to China as part of a barter system tied to debt repayment had been one way Caracas serviced its obligations. With Maduro removed, repayment of those debts is now uncertain, subject to Washington’s decisions.
According to Ezrati, more significant for Beijing, however, is the loss of a partner in its push to internationalise the yuan. Under Maduro, Venezuela priced oil exports in yuan and conducted much of its international trade outside the dollar system.
He argues this made Caracas a showcase for Chinese efforts to challenge dollar dominance. With Maduro gone, those practices are expected to end, reinforcing the dollar’s central role in global trade and finance.
