XI JINPING, China’s president, was chummy in public when he metNicolás Maduro in Beijing in early January (pictured), praising his Venezuelan counterpart as a “good friend of the Chinese people”. Behind closed doors, negotiations must have been far more tense. Chinese banks have lent $50 billion to Venezuela since 2007. With its economy in a deep recession, Venezuela’s ability to repay these debts is in grave doubt. Investors trading Venezuelan bonds would see default as a virtual inevitability but for China’s involvement. Having already lent so much to Venezuela, will it give Mr Maduro yet more to prevent his country from going over the edge?
And Venezuela presents just the first such dilemma for China. The second-biggest recipient of Chinese loans in South America is Argentina, which is also suffering as commodity prices swoon. It has started drawing on Chinese credit to stop its currency reserves from shrinking further. Then there is...
from The Economist: Finance and economics http://ift.tt/1zgwxTQ
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