By David Iaconangelo, May 13, 2013 05:58 PM EDT
(PHOTO CREDIT: Reuters) A Chinese flag hangs in a Beijing alley.
Chinese vice president Li Yuanchao arrives in Caracas this week to meet with Venezuelan leader Nicolás Maduro and National Assembly President Diosdado Cabello after having spent the second part of last week in Buenos Aires. In recent years, China has expanded its economic links with Latin American countries, with Chinese manufacturers establishing their presence throughout the region, while China has become a main source of growth in exports of raw materials like petroleum, copper, iron and soybeans. But Argentina and Venezuela are the two countries with which China has had an uncertain relationship.
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In January, Venezuela -- long a beneficiary of Chinese loans that Venezuela pays back in oil -- requested billions of dollars in additional loans to keep its strained economy afloat. The Chinese government agreed, but late in negotiations it introduced a clause that would have toughened the terms of the deal. Venezuela backed out.
In 2012, according to the Center for Inter-American Dialogue, Chinese loans accounted for 25 percent of Venezuela's total external debt, with some $36 billion dollars owed to the Asian nation in recent years. The Venezuelan state oil company has also fallen short on a number of occasions on its promise to deliver oil on time, provoking criticism from China.
"This turn is the perfect confirmation that Chinese diplomacy works, especially in developing countries, to shore up business relations, try to smooth out differences, and generate better relations," Ariel Armony, director of the Center of Latin American Studies at the University of Miami, told El Pais. He added, "The issue of food security is central for China and in this sense, Argentina is an important country."
Argentina is the world's third biggest exporter of soybeans, and the top supplier of soymeal animal feed and soyoil. But Cristina Fernandez' government has angered trade partners by policies which the World Trade Organization has denounced as protectionist and out of line with its obligations as a Group of 20 nation. China has often halted its purchasing of raw materials and soybeans because of tariffs and taxes imposed by Buenos Aires on imports.