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China: Venezuela's 2nd largest trading partner

Reporter: Martin Markovits 丨 CCTV.com

07-20-2014 13:17 BJT

Full coverage: Xi attends BRICS summit, visits Latin America

After wrapping up in Argentina, Chinese President Xi Jinping will visit Venezuela. The trip will highlight the two countries’ economic and social ties. Despite Venezuela’s tough economic situation, its bond with China remains strong.

Wuko Cen, a Chinese immigrant to Venezuela, has had enough. He’s struggling to keep his business in Caracas afloat amidst one of world’s highest inflation rates. Dollars are crucial for his family’s computer shop. But they’ve become harder and harder to find.

"When President Chavez died the price of the dollar shot up, and it’s made things very difficult because all that you see here is imported," Wuiko Cen said.

Wuiko’s computer store, like many businesses in Venezuela’s import-driven economy, is dependent on dollars. But the country’s financial turmoil has caused foreign currency to become scarce and prices to soar. These problems are among the reasons the World Bank recently placed Venezuela near the bottom of countries attractive to foreign investors.

Still, Chinese investment continues to grow. In exchange for access to Venezuela’s massive oil reserves, Beijing has become the biggest source of investment capital in Caracas.

Housing and new roadway projects over the past decade have helped China become Venezuela’s second largest trading partner.

And Beijing’s interests don’t stop there. Chinese household appliance maker Haier has also set up shop. A refrigerator plant was built in 2012, in Miranda state. Through a joint venture with the Venezuela government-- Haier provides low-cost appliances-in an effort to offset high inflation and shortages of goods.

Analysts say the firm could come out on top in the long term - taking advantage of the situation to gain considerable market share.

"It’s possible that in the short term, Venezuela is unattractive for Haier or any other company. But they’re investing for the future, and since they have huge international capital, they can easily wait out the difficult situation happening now," Rafael Quiroz, economist said.

Yet with prices and crime still soaring, it remains to be seen if more multinationals will be willing to gamble on Venezuela.

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