China Stakes Its Claim in Latin American Energy:

academics and policy specialists agree that China’s current levels of investment, trade, and loans are not sizable enough to allow Chinese authorities to directly pressure their regional government partners to alter current domestic policies. 59 However, a subset of LAC countries remains vulnerable to China’s economic leverage due to their limited access to international capital markets (some Caribbean states), and a clear lack of alternative DFI sources, as in Argentina and Venezuela. 60 Chinese influence in these countries has prompted changes in labor, land tenure, and contracting regulations, often in favor of Chinese economic interests. Still, some specialists argue that even in the most vulnerable countries, “the policy changes are quite narrow and technical in nature, designed to give China a competitive advantage economically rather than achieve broader political change.” 61 Furthermore, investing in countries with weak governance indicators, which in many cases constitute those most vulnerable to Chinese leverage, presents certain challenges. Self-inflicted wounds from poor policy choices, irrespective of Chinese engagement, can pose serious risks and threaten a positive return on investment. For example, China has allegedly told Venezuela to “use new loan tranches to increase oil

and mining output rather than as general budgetary support.” 62

With Venezuela’s oil production steadily declining amid its general economic crisis, this case elucidates the limited scope of Chinese influence, even in one of the most vulnerable target countries. Since Maduro’s rise in 2013, the Chinese government has not offered additional lines of credit to Venezuela—it has only renewed some pre-existing ones. 63 The corruption, mismanagement, and economic crises endemic to Maduro’s tenure have limited returns on Chinese investments and generated uncertainty about Venezuela’s ability to repay Chinese loans. 64 These negative ramifications have prompted Chinese officials and companies to rethink their investments in countries with poor governance indicators. In its official declarations, China emphasizes that it has no desire to directly influence the domestic policies of governments in Latin America and the Caribbean. 65 However, it would be naïve not to expect “behind the

scenes” or indirect pressure on the political environment to protect Chinese interests.

Although China undoubtedly influences some aspects of LAC regional governance and gives advantages to some domestic actors, such as those with mining or

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