Well-known Chinese news site Netease recently reported that Venezuela, a long-term Chinese friend, seems to be planning to breach its oil supply contracts with China. Venezuela has been breaching its supply contracts with many oil service providers. China has been providing loans to Venezuela for a long time. Since 2006, the total amount has reached US$50 billion, which is half of China’s loans to Latin America. Currently Venezuela is exporting 330,000 barrels to China every day. However national newspapers in Venezuela have reported that the country doesn’t need to continue those exports any more. The Chinese Ministry of Commerce later confirmed the claim and added that the decision was made based on a request from Venezuela. The loans were apparently extended, but there has been no clear indication of what the new arrangement is. Venezuela is currently going through a major challenge in the lack of foreign exchange reserves. The situation is causing difficulties even in toilet paper supplies. The money saved by not paying back loans will help ease the painful need for cash.
Source: Netease, October 24, 2014