Eric Olander: After the Maduro Capture — Assessing China's Real Exposure in Venezuela

Summary

Sinica Podcast Summary

Episode Title: Eric Olander: After the Maduro Capture — Assessing China's Real Exposure in Venezuela
Date: January 8, 2026
Host: Kaiser Kuo
Guest: Eric Olander (Host of the China Global South Podcast, Founder of the China Global South Project)

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Episode Overview

This episode examines the ramifications of the dramatic U.S.-led capture of Venezuelan President Nicolás Maduro on January 3, 2026, and what it means for China’s interests and exposure in Venezuela and Latin America at large. Host Kaiser Kuo and guest Eric Olander analyze China's response, the depth of Beijing’s political and economic involvement in Venezuela, the broader context of U.S.-China competition in the region, and how this event is interpreted both by official circles and the public in China. They debunk "hot takes" in Western analysis, reflect on the evolving narrative of "spheres of influence," and consider the future trajectory of China's engagement in Latin America.

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Key Discussion Points & Insights

1. China’s Reaction: Sobriety vs. U.S. Hysteria

• Official response: China’s government reacted by emphasizing sovereignty and international law, but did not frame the U.S. operation as targeting China directly ([04:20]–[05:18]).
• Chinese perspective: “They don’t see this as China-specific action.” — Eric Olander ([05:46] B)
• Continued oil flows: Trump reassured “the oil will continue to flow to China,” downplaying any immediate threat ([05:36] B).
• Public discourse: Arguments linking this event to China’s position on Taiwan proliferated on Chinese social media, with Beijing not suppressing such rhetoric as it often does ([07:01]–[07:50]).

2. The Taiwan Comparison & Chinese Social Media Discourse

• Social media narratives: Social commentary in China included suggestions such as “let’s take Taiwan now” and comparisons to U.S. actions ([07:01]–[07:50]).
• Government’s calculation: The decision to let these narratives stand may be intended to put pressure on Taiwan’s government or simply to gauge public opinion (“barometric read” — Kaiser Kuo, [09:59] A).

Notable Quote:

“Nothing is by coincidence in China on these issues. So there’s clearly an intent to let this percolate…”
— Eric Olander, [07:50]

3. Chinese Expertise & Engagement in Latin America

• Competence has grown: While late to the region compared to Africa, Chinese expertise has increased, especially since Belt and Road Initiative uptake ([11:40]–[13:20]).
• Comparative expertise: U.S. knowledge and institutional connections to Latin America vastly outweigh China’s due to language and migration patterns ([15:16]–[16:51]).
• Nature of investments: Chinese FDI is relatively small and focused on extractives, while trade volume captures headlines ([13:42]–[14:56]).

4. Spheres of Influence and Latin American Agency

• Critique of “spheres” framing: Western commentary asserting a return to great power spheres of influence is simplistic and wrong-headed ([18:03]–[19:04]).
• Latin American agency: Countries like Brazil and Argentina will continue to manage their relationships with China independently of U.S. pressure ([18:48]–[19:03]).

Notable Quote:

“We have to give these countries the agency they deserve...”
— Eric Olander, [19:37] B

5. China’s Real Exposure & Stakes in Venezuela

• Relative economic stakes: China-Venezuela trade ($64B) is minor in the global context; oil imports constitute only about 4.5% of China’s total, and the crude is of lower desirability ("heavy and sour") ([20:08]–[21:19]).
• Panama Canal is bigger concern: U.S. pressure on Panama Canal access poses a far greater challenge to China’s global shipping than the situation in Venezuela ([22:16]–[22:54]).
• Outstanding loans: China has about $10B of non-performing loans to Venezuela after lending over $100B since 2000—painful but manageable by Chinese standards ([24:25]–[27:07]).
• Personnel on the ground: Likely modest embassy and media presence; Venezuela is not top-tier in China’s hierarchy ([27:12]–[27:54]).

6. Political Capital and Global South Narrative

• Sovereignty narrative: China is leveraging the incident to reinforce its role as the defender of sovereignty and rules-based order (at least rhetorically) in the Global South ([28:28]–[29:18]).
• Cautious condemnation: Developing countries may let China take the lead in criticizing the U.S. due to the risk of reprisal ([29:18]–[32:01]).

7. Impact on Regional Politics & Forecasting Outcomes

• No leftward surge: Contrary to some Western analysis, recent elections indicate a rightward shift in Latin America ([37:03]–[38:06]).
• Long-term risk in Venezuela: Instability could produce an anti-U.S. backlash and greater openness to China in Venezuela over time, but it’s too early to judge ([38:06]–[39:45]).

Notable Quote:

“This is a fast-moving situation ... it’s too early to make any kind of, you know, definitive prognosis.”
— Eric Olander, [39:38] B

8. China’s Playbook in Regime Shocks Abroad

• Pragmatic adaptation: China has experience managing sudden regime changes, reaching out to all factions to maintain business continuity, and refraining from moral judgments ([48:06]–[51:23]).
• No military intervention: China’s “all weather partnership” means continued trade/rhetorical support—not military action ([40:33]–[42:30]).

Notable Quote:

“In its doctrine … to not put a PLA soldier on foreign soil and not to interfere in the internal affairs of other countries, that is not part of the Chinese DNA to do that kind of thing.”
— Eric Olander, [41:36]

9. Military Lessons and Technology

• China studies U.S. operations: The PLA examines U.S. interventions for tactical lessons, but sees the scenarios as fundamentally different from what it prepares for in East Asia ([44:26]–[46:36]).
• Venezuelan incompetence: Failures of Chinese-supplied military hardware in Venezuela more likely reflect operator issues than inherent flaws ([46:41]–[48:06]).

10. The “Qiu Xiaoqi Meeting” Myths

• Speculation unwarranted: There is no clear evidence that China’s special envoy knew about or failed to warn Maduro of the operation; labeling this a strategic failure is premature ([51:29]–[54:25]).

Notable Quote:

“The fact that you said ‘I have no idea’ is the right answer.”
— Eric Olander, [51:46]

11. What Changes? What Doesn’t?

• No existential threat: This event does not fundamentally alter China’s risk assessment or position in Latin America; more instability is a concern for business ([58:40]–[61:10]).
• Taiwan competition continues: Political changes in countries with official relations with Taiwan remain a peripheral worry for Beijing ([61:03]–[61:55]).
• Political cycles are fickle: U.S. focus on Latin America is often short-lived; Chinese leaders may expect Washington’s attention to drift before long ([62:18]–[63:22]).

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Notable Quotes & Memorable Moments

• On overreactions:
  “The hot takes are just sorely, sorely wrong.”
  — Eric Olander ([09:01] B)

• On Chinese influence:
  “No one serious thinks that [the U.S. is] going to launch a military invasion into Brazil to stop a BYD factory...”
  — Eric Olander ([19:04] B)

• On the “rules-based order”:
  “The rules-based international order is Western-led ... they want to introduce a new global governance reality.”
  — Eric Olander ([33:56] B)

• On defining “all weather partnership”:
  “We have to define the terms here. The way that the Chinese and ... Iranians, Venezuelans and Zimbabweans define it is very different than it’s being defined in the West.”
  — Eric Olander ([44:05] B)

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Timestamps for Important Segments

• China’s response and muted panic: [05:18]–[07:50]
• Taiwan analogies and social media: [07:01]–[10:45]
• Depth of Chinese expertise in Latin America: [11:40]–[16:55]
• Spheres of influence theory debunked: [18:03]–[19:52]
• China’s economic exposure in Venezuela & more important threats: [20:08]–[22:54]
• Resource-for-infrastructure lending, the “debt trap” and Venezuela’s loans: [24:25]–[27:07]
• China’s sovereignty narrative in the Global South: [28:28]–[33:56]
• PRC’s playbook for regime shocks: [48:06]–[51:23]
• Military implications and equipment in Venezuela: [40:33]–[48:06]
• Qiu Xiaoqi’s controversial visit: [51:29]–[54:25]
• What does this event actually change? [57:44]–[63:30]

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Final Takeaways

• Caution over conclusions: Both hosts repeatedly urge listeners not to jump to conclusions about broader regional realignments or China losing influence—wait for facts to settle.
• China absorbs risk soberly: Beijing views Venezuela as important, but not an existential concern. The event is not a “game-changer” for China’s broader Latin American strategy.
• Global South narrative: Beijing sees opportunities to build political capital by continuing to cast the U.S. as reckless and itself as the defender of sovereignty—but with a shrewd awareness of the limits and risks involved.

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Bonus Recommendations (from the closing segment)

• Eric Olander:
  Zhongyuan Zoe Liu’s article, "China’s Long Economic War" in Foreign Affairs, for understanding persistent debt trap narratives ([64:58]–[66:40]). Alonzo Iuka, China Global South non-resident fellow, for grassroots China-Latin America analysis ([63:52]–[64:48]).

• Kaiser Kuo:
  The Venetian Heretic by Christian Cameron – historical political thriller set in Venice, recommended for escapism and historical intrigue ([67:10]–[68:37]).

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Recommended Next Listen

• Kaiser and Eric both recommend tuning into the China Global South Podcast for deeper dives into China’s engagement with developing countries and more granular, on-the-ground analysis.

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Transcript

[A]

Welcome to the Cynical Podcast, a weekly discussion of current affairs in China. In this program we look at books, ideas, new research, intellectual currents and cultural trends that can help us better understand what's happening in China's politics, foreign relations, economics and society. Join me each week for in depth conversations that shed more light and bring less heat to how we think and talk about China. I'm Kaiser Goal coming to you this week from my home in Chapel Hill, North Carolina. Sinica is supported this year by the center for East Asian Studies at the University of Wisconsin, Madison, a national resource center for the study of East Asia. The Sinica Podcast will remain free, but if you work for an organization that believes in what I'm doing with the show and with the newsletter, please consider lending your support. You can reach [e-mail] and listeners, please support my work by becoming a paying [e-mail] you can you will enjoy, in addition to the podcast, the complete transcript of the show, essays from me, as well as writings and podcasts from some of your favorite China focused columnists and commentators, one of whom joins me today. And of course, you will enjoy the knowledge that you are helping me do what I honestly believe is very important work. So check out the page, see all that is on offer, and do consider helping out in the early morning hours of January 3, US forces carried out a tightly coordinated operation in Venezuela that culminated in the capture of President Nicolas Maduro and his wife and their subsequent rendition to the United States to face drug trafficking charges, narco terrorism. The operation appears to have unfolded quickly and with minimal kinetic escalation, but it has already raised far reaching questions about international law, hemispheric security and the willingness of the Trump administration to use force in the Western Hemisphere. One detail that stands out is timing. Just before the raid, Chinese Special envoy for Latin America Qiu Xiaoqi had met with Maduro in Caracas, a reminder of how abruptly Beijing's plans or Beijing's assumptions were overtaken by events in the days since commentary Somehow linking Trump's action which qualifies as a special military operation linking it to China has ranged really widely. There have been claims that we're back in a world of spheres of influence, and then China gets one. Arguments that this was really all about China all along, or all about oil, or cutting off oil to China, or rare earths, or the strategic minerals, or any combination of the above, with many gratuitous takes on what this means for Taiwan or for China's energy security or its $510 billion two way trade in the region. Just hours after the strike, there were various pundits pronouncing this as a big blow to China or a major setback to China. This struck me, as you can probably guess, as rather premature. Indeed. Any take that basically was this was all about China or this was all about oil, or this was all about any one thing was bound to irk me. What's been harder for me to pin down, though, is how this episode is actually being read outside of Washington and particularly in Beijing. So that is where today's guest comes in. Eric Olander is the host of the China Global south podcast and founder of the China Global South Project. And there is no one better positioned to help us think through China's stake in Venezuela, how deeply Beijing understands Latin America, what this episode does and does not change about China's role in the region and in the Global south more broadly. We'll talk about China's immediate reaction, its concrete exposure on the ground, how it manages political risk when partner regimes collapse, the constraints imposed by sanctions and chokepoints, and what Chinese military planners may be quietly studying here as they assess how this operation unfolded. As always, the goal here isn't to score points or to force analogies, but to think carefully, to think soberly and with context. So Eric joins us from his home in Southeast Asia. Eric, it is great to have you back on Seneca, man, Good to see you, Kaiser.

[B]

It's wonderful to be here. Thank you so much. Looking forward to our discussion.

[A]

Yeah. And let me add, this is a joint show between Sinica and the China Global south podcast and it will appear on both networks. So, Eric, before we get into the interpretations, I want to establish maybe some ground truth about what this looks like from Beijing. So there's China's official reaction that has emphasized, of course, sovereignty and international law, opposition to the US and its unilateral actions, but it hasn't framed the operation as explicitly targeting China or its interests. Not surprisingly, from your vantage point, and without maybe too much by way of just pure speculation, how is this episode actually being read in Beijing, both at the level of official messaging and in terms of whether Chinese policymakers see this as a coherent, long planned U.S. strategy or a more kind of opportunistic contingent move, what do Chinese policymakers think just happened and what matters most to them right now?

[B]

Well, I think it's very hard to tell what's going on inside the corridors of power in Beijing, and most people on the outside will. Either they're lying about it or they're speculating. So let's start with that disclaimer right there. I spent the morning talking with some folks both in Shanghai and Beijing to try and get the read on it. There is a lot more sobriety in this part of the world than I think there is coming out of Washington, particularly out of the media. They don't see this as something directed at them. Let's be very clear here that Donald Trump on Air Force One said very clearly that the oil will continue to flow to China. Right, Right. And they took that as an indication that this isn't about China. That was one thing I heard today. And they don't see this as a China specific action. China, of course, is a player. But let's remember that the Chinese have been bobbing and weaving since Trump came back into power on all sorts of issues. And so this is part of a continuum of trying to adapt to whatever is happening on the day with Donald Trump, whether it's trade, war, rare earths, whether it's sanctions, whether it's tariffs, whether it's South China Sea. And so when we put that all together, this is just one factor among many. And I don't get the sense that there's the same kind of hysteria. I am a little surprised, though, that Chinese social media has been allowed to run quite rampant on, on the narratives of, well, let's take Taiwan. Now. This would be something that, that you would think, would, that the, that the Chinese would actually want to calm some of that, that rhetoric down. And they haven't. It's been a, a huge topic of, of conversation on, on Weibo, WeChat and Xiaohongshu.

[A]

Yeah, let's talk about that. I mean, because the reactions have included these comparisons to, to Taiwan, of course, maybe we can talk about other takes later. But I mean, you've seen some of this popular commentary on, as you say, Weibo and Wei Xin and Chaoshu, suggesting that, hey, maybe, you know, we, China, we could go and do this in Taiwan, go in and grab lighting to put him on trial. And you know, after all, we were back in the law of the jungle now. So hell with international law, Trump's already made that a dead letter. So how much, I guess I want to ask you, how much do you think this social discourse feeds into internal elite thinking or how much does it influence policy deliberations? How much should we read into the fact that this discourse is even being allowed? Usually they've got the fan in the fire hose. They can fan it up or allow it to burn or they can Hose it down pretty easily. And they have not hosed it down.

[B]

They have not hosed it down. And nothing is by coincidence in China on these issues. So there's clearly an intent to let this percolate the way it's been percolating in terms of this whole Taiwan narrative that has been a mainstream of the US Discourse on this. That, and you've heard this from both US Politicians, you've heard it from commentators, you've heard it from any number of stakeholders, usually non China specialists, and who will then draw this equivalency that says, well, because Donald Trump led this military intervention in Venezuela, that now somehow sets a precedent for China to move on. Tyrone. And I'm going to channel my inner Evan Feigenbaum and Ryan Haas and Bonnie Glazer, all the people that I know you respect a lot, and the people I've been following quite a bit on this issue. And one thing that they've all been consistent about is that China does not feel that it needs the United States to set a precedent in order for it to take decisions on Taiwan. It looks at Taiwan as a domestic internal issue. It's. It does not see it as an international affair. That's a big discrepancy between what happened in Venezuela and the way that the Chinese see not only Taiwan, but also the South China Sea.

[A]

Sure.

[B]

The South China Sea, in their view, is also a domestic issue within the 9 or 10 dash line. And so these kind of lines that they're trying to connect in the west to Taiwan in the South China Sea simply don't register the same way in China. And again, I just will ask anybody to go look at Evan Feigenbaum's Twitter Feeder X feed for great analysis as to why that's not the case. And Ryan Haas has done some excellent writing on this as well over at Brookings. Yeah. And so you're seeing real discrepancies between some of the China analysts who really have a deep understanding of this, and the hot takes, and the hot takes are just sorely, sorely wrong. And so the way that this is being framed in China is nothing to do with Taiwan, which is why it's surprising, on the other hand, that the government is allowing this very hot rhetoric coming out of social media to percolate. And again, it's something that surprised me on this.

[A]

It only has been a couple of days right now. I mean, usually what they do is they'll allow it to happen for a little while so that they can get a more accurate sort of barometric read on it they get a sense of what it is and then they'll have made a decision very soon.

[B]

I think on so one of my colleagues in Taipei said to me that the thinking might be that this rhetoric coming off of Chinese social media might be a pressure tactic on Lai and the government in Taiwan. And so they see this pressure building and that might be part of the general pressure campaign that the Chinese are putting on Taiwan. So again, they might be reframing this into a purely what they consider to be a domestic context and nothing to do with Venezuela. Right, right, right, right.

[A]

So we clearly have a decent bench of expertise here, even in Washington. And think tanks like the Carnegie Endowment for International Piece or Evan Sits or at Brookings or Ryan is. But let's look at Latin America more broadly, not just Venezuela specifically. Trade, lending, investment in the region have grown dramatically over the past two decades. I think I mentioned that trade flow now tops $510 billion. So how deep is China's actual expertise on Latin America and where does that knowledge sit institutionally? Is it in the Foreign Ministry? Is it in the party? Is it in the state owned enterprises? Is it in the military think tanks? In your assessment, has Beijing really invested in understanding the political, social and historical complexity of the region or has engagement raced ahead of expertise, as it were?

[B]

No, I mean expertise has gone up quite a bit in recent years. And remember that Latin America was one of the kind of the latter regions of terms of China's going out that started in the early 2000s. So the real push came into Africa in the early 2000s and you saw the start of the forum on China Africa cooperation under Jiang Zemin that started in 2000. And that was really where they kind of put that push. Now remember when. Let's just. I'll just take you back again to the Hu Jiang and that era when they were going out in the, in the going out period, the Chinese looked into Southeast Asia and they said, listen, we've already got deep roots there. There's a big diaspora there. We don't really need to do much that's already well taken care of. When they looked into Central Asia, they said this is still a sphere of influence in the Russian kind of world. Let's not kind of antagonize that very contentious relationship. They looked into the G7 countries, let's try and expand there. The regulatory burden too high. That's why Africa was very appealing because the Europeans and the Americans in the post Cold War era took their eye off Latin America sat out there and early on there was just a cultural bridge that was too far to cross. There wasn't a lot of Spanish language capacity inside the Foreign Ministry, inside the Commerce Ministry. And, and so, and also there was this sense that this was America's backyard. This is not a place that in the early 2000s or the late 90s, that China wanted to pick a fight with the United States on this. And so they kind of held back. That started to change in the mid 2000s. And you can see leading up to when the Belt and Road kicked in in 2013, the engagement just starts really skyrocketing up.

[A]

Right, right, right.

[B]

And there was this pairing where China was a capital rich, resource poor country for the most part. Again, China, you know, at this time started shifting to food imports and started importing more of its energy. And here we have a region in, in Central and South America that is capital poor, resource rich.

[A]

Right.

[B]

And importantly, they could provide resources at a scale that African countries can't. So Brazil's ability to export oil and timber and minerals is much larger than pretty much any African country could do. And that scale is really important for the Chinese. And so as they started to shift, looking for bigger scale and better places to invest, that's where Brazil really starts to come into focus. And then we start looking more broadly around the entire region. And the trade numbers are quite high. But I also want to bring attention to the fact that a lot of people will focus on Chinese economic engagement and they'll focus on these trade numbers and they will overlook the FDI numbers. Overall, Chinese FDI in this region is quite low. The United States is by far the dominant foreign investor in Central and South America. And so while China captures a lot of the headlines, they see half a trillion dollars in trade, which is again, almost twice as much as what China's doing with Africa. That will oftentimes eclipse what the nuances of the relationship are. And that FDI number is still relatively low and very concentrated in extractives like mines and timber, for example.

[A]

Right, right, right, right. So that was a comparative angle in terms of the exposure that the United States and China have. What about a comparative approach to expertise? I mean, my suspicion is, I mean, tell me if I'm wrong. The US still has a much deeper bench of Latin America expertise. I mean, simply by virtue of proximity.

[B]

I mean, you can't compare the two. I mean, not. I mean, listen, the United States is, I think, either the second or the first largest Spanish speaking country in the world today. I mean, we are a bilingual country. When you go to California, Texas, Florida, Arizona and whatnot. The, the human resource advantage that the United States has in, in the Hispanic world is incomparable to what China does. So there's no comparison, people to people, exchanges between the United States, Central and South America, nothing close to what China's doing. And that's one of the reasons why the United States has such distinct advantages that Latin American countries have been pleading with the United States for decades to take better advantage of. The Chinese kind of came in in part for the same reason that they were able to move so quickly into Africa is because the US And Europe and to some extent the Japanese as well, and the big players, the G7 countries, simply weren't interested in these parts of the world and that they had openings because of neglect. And you'll hear from Latin American stakeholders the same thing you'll hear from African stakeholders of like, we want to do business, we want to do trade, and the Americans really weren't interested in it. What we've heard coming out of the Americans is the same thing that Africans hear out of the Europeans. The most important policy priority for the United States is to keep Latin Americans on their side of the border, full stop. And that is more so true today than it's ever been. Same in Europe with Africans. The most important policy priority is to keep Africans on their side of the Mediterranean. That's it.

[A]

Insofar as development is part of that. That. I mean, there is that component.

[B]

Yeah, well, that was, you know, Clinton. In the Clinton administration, they had that idea that if we remember, Clinton bailed out Mexico in a financial crisis with the idea that that would slow down, slow immigration.

[A]

That's right.

[B]

That fell out of favor a long time ago. China doesn't have to deal with African or Latin American immigration. So it is relieved of those political pressures. And that's why it can focus on extractives and it can focus on trade and it can focus on, you know, expanding markets for Meituan and Xiaohongshu and all these things that politically, Europeans and Americans have this big immigration issue that gets in the way.

[A]

Right, right, right. We have to talk about this idea that we're back to spheres of influence. We've already name checked people like Evan Feigenbaum and Ryan Haas who have pushed back on that framing too, arguing that we're more likely to see contradiction and hypocrisy. The US Is not going to. Trump, for all his talk about a grand bargain, is not about to give China the sort of free hand that he expects in the Western Hemisphere. Right. In its own background.

[B]

I Mean, this is such a BS line coming out of the United States. I mean, we just have to say what it is. And again, I don't think people are calling it out enough. Evan is 100% right that this is an artificial construct, that the idea that Russia is going to somehow have severe influence over Europe is absurd. And the idea that China is going to have a sphere of influence over Asia is also equally absurd. And in many ways it reveals the kind of meme driven policymaking that now dominates the White House. And so let's be kind of clear on Latin and Central America or Central and South America that half a trillion dollars of trade with China is not going to go away.

[A]

Right.

[B]

Brazil is not going to stop trading with China because the US has stopped trading with China. That's just simply not going to happen. Look at, even in Argentina, Malay continued to trade with China even after he came to power on an anti China platform.

[A]

Right.

[B]

So these countries have agency in their ability to manage their relations with China completely independent of what they do with the United States. And the United States is not going to launch military interventions across the continent in South America. These are isolated instances of what they're doing in Panama and what they've done in Venezuela because they have extreme leverage in those areas. No one serious thinks that they're going to launch a military invasion into Brazil to stop a BYD factory or they're going to take the Chiang Kai port in Peru. These are just, these are not serious assessments of the situation. So I think we have to give these countries the agency they deserve in managing these relations and also be sober about the fact that the United States doesn't have the leverage to that. I think Donald Trump thinks he has.

[A]

But the US has some leverage.

[B]

It has a lot of leverage to make life difficult.

[A]

Sure, sure, exactly. So let's look at where is China most immediately exposed in Venezuela right now? I mean, which interests really matter for Beijing? I mean, is it oil flows, is it outstanding loans, is it personnel?

[B]

I think Venezuela, listen, let's kind of do the profile of Venezuela. $64 billion of two way trade, 16 billion of that was oil sold to the Chinese from Venezuela. And the remaining 48 or so billion was Chinese exports to Venezuela. Out of a $6 trillion global trade balance that is insignificant. The amount of oil that China imports from Venezuela is about 4 1/2% of its total. That is an amount that it can make up with increased buys from both the Russians and the Saudis very quickly. Also bear in mind that the oil that the Chinese buy from Venezuela is much heavier, which requires more processing and refining that is done by the teapot refiners in Shandong Province. This is, this is a very particular kind of oil. It's the same kind of oil that the Iranians also sell to the Chinese that go to very similar refiners.

[A]

Heavy and sour.

[B]

Very heavy and sour. So it's not an ideal crude heavy and sour.

[A]

Just, just for people who don't know the oil industry well, heavy means there's a lot of content of heavy metals in it that need to be refined out. Sour means high sulfur content, which means it's highly polluting.

[B]

So this isn't their preferred brew of oil because it does require more refining. And also bear in mind that as we look at a trajectory of the next five to 10 years, at the pace that China's decarbonizing, this is going to be less important as an issue going forward. So while Donald Trump is focusing on fossil fuels, China, by many estimates, has reached peak oil. And because of their investments in renewable energy and renewal and green transportation, they're not going to need to report as much energy going forward. So this four and a half percent eventually could be kind of weeded out. But bear in mind Donald Trump gave assurances that the oil from Venezuela would continue to go. Right. So Venezuela is not, in my view, important economically. Again, $64 billion is about 10% of the more than 10% of the total trade balance with South Americ America. But globally, it's very small.

[A]

Right, Right.

[B]

Let's focus much more attention on Panama. That is a very serious challenge to the Chinese. So the Americans are trying to pressure the Panamanians to cut the Chinese out of the Panama Canal.

[A]

Right.

[B]

That's first started with putting pressure on the Panamanians to force CK Hutchinson out of their two ports that they have on both sides, on the Pacific and the Atlantic side, that's been stuck in some kind of court battles and political struggles. But if the Chinese are in fact blocked from using the Panama Canal, that presents a major challenge to Chinese business and shipping.

[A]

Sure, absolutely.

[B]

So when we compare, for example, the threat to the Panama Canal and Venezuela, the Panama Canal is infinitely more important. We can move quickly to the bad takes because we've heard over and over again on cnn, in the Economist, in any number of other publications that what happened in Venezuela is some kind of setback for the Chinese, some kind of blow to the Chinese. They've been so confident and decisive about their assessments of how this has really hurt the Chinese. And I just think that's absurd. We are too early on in this very fast changing story to make that kind of conclusion.

[A]

That's right.

[B]

And this idea that China has at a terrible setback, again, it's just way premature.

[A]

So you were in the midst of zooming in on Venezuela and any exposure that China has there, and you went off on Panama for a little while. But let's continue. We've talked about oil.

[B]

Yeah, I can come back to. On Venezuela. So what a lot of people talk about is the loans. So Venezuela was one of the poster childs, if you will, of China's resource for infrastructure deals. These are these loans that they used oil to barter. And this was an early model of, of China's, you know, outward engagement. By the way, this was a concept that was developed by Justin Ifu Lin at, when he's, he's the former kind of senior official at the World bank who went on to lead a very influential think tank at Beida.

[A]

Sure.

[B]

And this idea of, well, again, these countries like Angola and Venezuela lack money, but they have a resource, we have infrastructure. Why don't we barter these two?

[A]

Yeah. We should point out that Deborah Brodigan has made this sort of a centerpiece of her thinking about China, that this was originally sort of inspired by what Japan did in China in the 1970s.

[B]

That's right. So there was a precedent for this when it was implemented into Chinese policy. It was. And I spent time at the Institute for New Structural Economics at Beida and had an opportunity to kind of hear their thinking behind what they did in Venezuela and what they did in Angola. And it's interesting because a lot of people put a lot of malign language on top of it that it was meant to entrap. This is part of the debt trap narrative and whatnot. And when you hear the kind of the architects of these policies, they genuinely thought that this was going to be a way for what they call a win win, where we have infrastructure, they have resources. Let's do it. The problem is that when you lock in a resource like oil at a fixed price and then you kind of set in a contract, okay, at 60 or 70 or $80 a barrel, we're going to then, you know, multiply that out and we'll give you, you know, $10 billion of infrastructure in exchange for $10 billion of crude at X price, well, the price of oil changes. And so what ends up happening is that the producing country gets shafted and so they lock in a price at $60 a barrel and then the Real price of oil goes to $100 a barrel, and they're missing out on a $40 difference there. And so this is why these deals ultimately never worked. And so Venezuela collapsed under the weight of just massive Chinese lending that kind of zoomed up to $60 billion at one point. Overall, from 2000 to 2023, China lent $106 billion to Venezuela, which is just remarkable. And now. So the outstanding debt is about 10 billion that's left. So that's 10 billion that's at risk. I think, for the most part, and this is the assessment of some folks in Beijing as well, is that they've kind of written some of that off as a loss because of the volatility of Venezuela. Angola, by the way, had a very similar situation and they were up to, you know, in the high 20s for, you know, 20s of billions of dollars in debt. And they've managed to pay down quite a bit of that debt. And. But they said they're not getting into these resource for, for infrastructure loans again in the future. So that's where we stand with the debt. Not a huge exposure by Chinese standards. 10 billion is a lot of money, but it's not going to break the bank of China if they don't get it back.

[A]

Right, right, right. What about things like personnel on the ground? What kind of exposure there?

[B]

I think, I mean, I'll be honest with you, I don't have that insight on that. I suspect it's probably a larger embassy's profile than most countries because of the close relationship between China and Venezuela and because of the close ties with Cuba, there's this communist solidarity that's there as well. So I bet you the party probably has a larger presence in the embassy there. There's probably quite a bit in, in terms of, you know, Xinhua personnel that are writing stories and doing things like that. But I don't think it's an exceptionally large presence. Again, Venezuela, as we look at terms of countries of importance and the hierarchy of importance is not in the top tier of importance. And this is similar to the discussion that we have about Iran.

[A]

Right.

[B]

Whereas we in the US Focus all this attention on China, Iran because Iran is our, you know, rival or the US rival. When you look at what China's priorities are in the Persian Gulf, Saudi Arabia and the Emirates is infinitely more important. And similarly in South America, Brazil is on an order with. Of magnitude higher in their geopolitical priorities than Venezuela is. So I think we have to be, again, really sober about how important Venezuela is to China. Whereas China is very important to Venezuela.

[A]

So if you look at the China balance sheet in Venezuela, it's not all in the liabilities column. There are assets as well, and some of them are sort of political and some of them have actually appreciated because of this event. You know, you've noted China is using this moment to cast the US as kind of a rogue actor, to cast itself as the defender of sovereignty and multilateralism and all these good things, which.

[B]

Didn'T start, by the way, with Venezuela. I mean, that goes back now years that they've been trying to do that.

[A]

It didn't start with Venezuela, of course, but it reinforces this, right? I mean, it's an instance that they can point to where there was this egregious violation of territorial sovereignty, of territorial integrity. How effective do you think this narrative has been in shaping Global south public opinion and will it gain a boost from this?

[B]

100%. It's been incredibly effective. And the reason why I can say that with such confidence is that because again, as I mentioned, this is not something that started on January 3rd. China really practiced a lot of this in the Biden administration over Gaza, where it took very, very strong views and trying to isolate the Americans and, you know, as outliers. And you saw those UN votes, those lopsided UN votes where it was like Israel, the United States and three other in Palau against, you know, 174 other countries vote after vote after vote on the UN on Gaza. And you know, where China leveraged its position in terms of its relations with the Palestinians and brought the Palestinian factions to, to Beijing. So this was very effective. Now, there's a key difference between Gaza and Venezuela here in the Gaza situation. When China would speak out and saying, we think what the US And Israel are doing is terrible, you would get Indonesia, you'd get Pakistan, you get all these countries to line up and go, yeah, we think it's terrible too. In this particular case, we saw this on Sunday when Chinese Foreign Minister Wang Yi met with his Pakistani counterpart and they used the camera time for Wang Yi to read a statement where he blasted the United States for being the international policeman and the world doesn't need an international judge. And interestingly, the Pakistani foreign minister sat there very quiet. Now, that was all choreographed in advance. I have a feeling in this particular case, you're going to see countries very reluctant to speak out forcefully against the United States for, for fear of triggering our very mercurial president. And so there is a lot of joy and glee that let's have The Chinese do this. And so we saw this at the UN on Monday, where Gong Chuang, the un, the deputy UN Ambassador, is just speaking in a tone and language that no other developing country is doing right now. Not even the Europeans, by the way, are doing this. China, in many ways is, is, is the most vocal critic of the White House for what they've done. And so I think a lot of developing countries are going to say, you know what, I'm going to let China do it, even in bilateral visits like we saw on Sunday. So they'll be present, but they won't say anything. But it's not like Gaza, where they're going to join the chorus at the same time, because there is real concern that if the Indonesian foreign minister or the Pakistani foreign minister or the Togolese foreign minister takes part in this kind of condemnation, that that could bring unwanted attention from the United States to them. So let China play that role. And my guess is behind the scenes, they're going to be encouraging China to do that.

[A]

Yeah, encouraging China. And China banks some kind of political goodwill capital in doing this.

[B]

They do. They absolutely do. And so let's be very clear. When Prime Minister Li Qiang came to Indonesia, Malaysia, I'm sorry, for the ASEAN summit, very much part of his rhetoric in Southeast Asia and to Southeast Asian stakeholders was, we are the stable alternative to this madman chaos that's coming out of the United States.

[A]

Right.

[B]

And, and listen, that case, again, this is why it's important to remember that this didn't start on January 3rd. They've been making this case not just in the Trump administration, but going back deep into the Biden administration as well, when. On Gaza and whatnot, when, when a lot of the international community felt that the United States started to lose legitimacy, particularly over Gaza and the, the hypocrisy of objecting to Russia's invasion of Ukraine, but at the same time supporting Israel's, you know, assault on Gaza. So this, again, is the view of a lot of developing countries. And so when China really exploited that, they got a big boost. Come fast forward now to January 3rd, they're just saying the same things over and over again, saying, see, I told you so. These guys are freaking crazy. We're not. We're going to be a stable trade partner. We're going to be a mature partner. Interestingly, in the first statements that came out on January 4th from the Chinese, they never mentioned international law.

[A]

Right.

[B]

They said that China will preserve the UN Charter in the following statements, because the Chinese don't like the idea of international law. They don't like these universalist type of, of doctrines on human rights, on law and whatnot. They really, you know, they believe in national sovereignty. They started now to incorporate the violation of international law in their rhetoric. That has been a very subtle change that I've seen from Saturday through through Monday on some of their positioning.

[A]

And what do you read into that?

[B]

I think they're, they're, you know, they're putting the finger to the wind and they're seeing the vibe and the narrative is that a lot of people feel that this was a blatant violation of international law. This has been the nail in the coffin of the rules based international order. Seeing the Europeans so tepid and cautious in their response, I think has given the Chinese and probably Vladimir Putin as well a boost of confidence. Because remember that the Europeans are really, they embrace this idea of the rules based international order more than almost anybody else and to see and this has been something that both Putin and Xi have wanted to downgrade. They felt that Putin and Xi have both felt that the rules based international order is Western led, it conspires against Russia and China. It is, it's not favorable to them. And they want to introduce a new global governance, you know, reality. And that's what China's been doing with its five GS, the global governance, development civilizations, security and development initiatives.

[A]

You rattle that off so admirably quickly.

[B]

My God, I know because I literally swim in this all day. And so, so seeing what they effectively see as the end of effective international law and effective implementation of a rules based international order, that's music to their ears in Beijing. This is what they've wanted for a long time. And it's not that they want a complete erasure of the international system. They want it downgraded to the point where it's basically there, but not effective enough to contain or confront China.

[A]

Double edged sword there though, of course, because you know, if it's powerful enough to contain the United States, I mean there's, there's, there's very little distance between its ability to contain or to constrain one or both. Right.

[B]

Well, obviously the United States does not feel constrained by international law.

[A]

Clearly not.

[B]

And, and, but, and that's not new. I mean in the Cold War, you know, we, we were doing things that were way outside the bounds. International law was for the weak and the middle powers. It was not for the superpowers and the Soviets, the Chinese. And by the way, let's be honest here, the Chinese have been selective on Their, you know, implementation of international law in particularly in the South China Sea when the UN Tribunal came back with a very clear ruling that didn't favor them and they've just decided to ignore it. So for all the Chinese kind of bravado about the international law and international norms, they're selective as well.

[A]

So zooming back in just to the region itself, away from just the entire global south, there's this argument that I saw in some of the early analysis, including by people I highly esteem like Neil Thomas, that this operation, this special military operation actually is going to push some left leaning governments in Latin America closer to Beijing. Colombia, of course, because it reinforces its perception of US coercion and unilateralism. So how plausible from your vantage point is that? Are there governments or political movements in the region for whom this episode actually strengthens the appeal of China as an economic partner, diplomatic counterweight?

[B]

No, I think what we're seeing is the opposite actually. I mean, what we've seen in recent wave of elections in Chile, Bolivia and Honduras is a shift to the right, not a shift to the left. In many ways the leftist presidents in Colombia, Pedro and then Borich in Chile were tremendously unpopular. And so, so I don't see this at this point in, in, in a shift. Now here's the interesting scenario and this is one of the reasons why I'm really cautioning people to take a beat. And it's too early to say that this is a setback for China. Let's, let's do a little bit of forecasting. Okay. There is a better than 50% chance that this thing just go sideways in Venezuela. Why? Because we've seen this before. We saw this in Libya when we decapitated the Libyan government, Muammar Gaddafi, and then just kind of said, that's it, mission accomplished, we're done. Here we are 15 years later in Libya, is a hot mess still.

[A]

Yeah.

[B]

Okay, so this is probably not going to be Panama. And we did a fantastic interview with our non resident fellow, Alonzo Yuka, who explained that the Panama situation was very, very different. First of all, Panama is tiny compared to Venezuela. So a lot of Americans are saying, well look, we did this in Panama, we got rid of Noriega, this is going to work in, in Venezuela as well. Apples and oranges. So let's do a little forecasting. Already this week in Caracas, around the presidential palace, we've seen chaos start to hit the streets. We're starting to see some of the factions start to fight. We're seeing paranoia. They were shooting drones out of the. Because they thought those were American drones. This is. There's a very good chance that this goes sideways within very fast and potentially within six to nine months. What we could see is a backlash that a lot of people hated Maduro, but they hate the fact that they were invaded by a foreign power even more perfectly reasonable. And that is a unifying factor. So one of the scenarios we could see very well next year at this time is a very anti American leadership that emerges in Venezuela that says, you know what, screw the Americans, we're going to engage the Chinese, as you know, so there's just as much likelihood that that happens than we hear these doomsday scenarios that the Chinese are on the outs in Venezuela. My point, and I think it's your point and it's Evan's point and it's Ryan's point, you got to wait. It's too early to come to these types of conclusions and you have to be more cautious on these things right now. This is a fast moving situation that it's too early to make any kind of, you know, definitive prognosis.

[A]

Eric, while we're going down the litany of hot takes that we can skewer or support, there's a line that you hear often after episodes like this, and we heard it after the Iran strike too, that it really shows China's impotence that Beijing can cultivate these relationships and sign deals. But you know what? A friendly government is hit, actually by the US China can't do anything meaningful on its behalf. Is that a fair reading here? And if not, how should we define what doing something would even mean for China in Venezuela? I mean, short of military escalation. And related to this is, you know, of course, this obviously all these armchair national security experts were talking about the Chinese military hardware that Venezuela had bought, these radar systems that conspicuously failed. And what's your take on all of this?

[B]

Let's kind of table the military piece because I have some opinions on that. And then we'll come first to this question of China. And I got into a real heated discussion with a European, Beijing based, European correspondent for a European publication who said, well, listen, you know, in 2023, Venezuela, you know, upgrade its diplomatic ties with China to All Weather Partnership, which is one of the higher levels that China has. Now here we have this All Weather Partnership, much the same level, by the way, that the Chinese have with Zimbabwe and Iran. So there's some interesting parallels there. And yet when Iran came into trouble, where were the Chinese? We didn't see the Chinese intervene to defend Iran. This has been a very popular narrative. We've also not seen them intervene to defend the Venezuelans. And then I asked back, I said, well, what does intervention actually mean? How would you define that? And then they start to go, well. And so then they say, well, maybe they would deploy force. And I said, no, the Chinese will not deploy military force. In its doctrine of PLA doctrine, to not put a PLA soldier on foreign soil and not to interfere in the internal affairs of other countries, that is not part of the Chinese DNA to do that kind of thing. Notably, they don't even do it to save their own people. So when there's kidnappings of Chinese nationals around the world, it's not like they send a Delta force to go in and save them. They say, you're on your own. Okay, so there's some consistency there, by the way. So when you articulate what does intervention or kind of support actually mean, people kind of come up empty. They kind of default to the US Standard, which is to send in some kind of military or some kind of kinetic force, which is never going to happen because that's not. Again, the Chinese MO wasn't ever going.

[A]

To happen in Iran. It's never going to happen in Venezuela.

[B]

Right. And let me be clear, it's not really, no country really does that anymore. The British aren't going to send in forces. The French don't do that anymore. This is kind of an antiquated way of thinking about the expression of geopolitical power. So. So I try to think about, okay, what is it now be very important here. The Chinese with Iran kept oil sales going even during the sanction period, which has been something that's frustrated, you know, the west considerably. And now that, you know, Iran is selling weapons to Russia that's being used on the battlefield in Ukraine, it's a point of contention. But the Chinese have been very durable in their trading relationship with Iran. Same thing with Zimbabwe, that while the west sanctions Zimbabwe, the Chinese not only continue trade but actually doubled down on investment in lithium. They've created some of the first lithium processing facilities in all of Africa that's happening there. So the definition of all weather to the Chinese tends to come back to trade and also this very strong rhetorical support. So when you see Geng Shuang at the United nations singling out the Americans when nobody else is willing to do it at the level that the Chinese are, particularly among P5 Security Council members, the Venezuelans will say that is an all weather partnership. So again, we have to define the terms here. And the way that the Chinese and I think the Iranians, Venezuelans and Zimbabweans define it is very different than it's being defined in the West. And that's why I think there's this kind of misreading of the situation.

[A]

You want to take that military piece of it now. I mean, because you were one of the people who, I mean, immediately after the dust up between India and Pakistan, back in, what was it, April, you know, you wrote, I think, pretty forcefully about the reasons why Chinese supplied military hardware to the Pakistanis was so successful against the Indian Air Force.

[B]

That was their deep sea moment.

[A]

Right, right, right.

[B]

It was their, their military deep seat moment. So, so we've heard a lot about how. And again, you've seen this from the MAGA kind of side of the political aisle in the United States saying the Chinese should be looking at what technology and the competency of the American forces, which by the way, no one can take away through the effectiveness and the professionalism of the US Military and what they did and how they executed that. The key thing here is that I don't think the Chinese are sitting there shaking in their boots about what they're seeing in Venezuela or what they saw with the B2s in Iran. And the reason why is that the Chinese have. Their entire military kind of posture is really meant to fight wars in the first and second island chains here in the western Pacific. And that is, that's so hypersonic missiles, aircraft carriers, massive drones, all, you know, area denial. That's what they're kind of building for in the largest navy in the world. And they really want to be able to fight Japan, South Korea, the Philippines, the United States and Taiwan simultaneously. So when we see what the United States is doing, it's not a comparison with what China's doing. The United States has a very different competency in their, in their military capacity and what the Chinese are building. So that's one of the reasons why I just don't think that they're intimidated by what they see. When they see American technology being deployed so effectively, I think they study it, they look at tactics. Remember, the United States gives the Chinese so much opportunity to study methods and operations and strategy because we're involved in a lot of conflicts and every time we're in a conflict, the PLA sends researchers, analysts and scholars to go study the American tactics. And they've built up a very, you know, robust library of American tactics because there's been a lot to study. And so I Think this narrative that we're hearing that says, you know, watch out China, because look at what we did in Venezuela is just boneheaded because the tactics in Venezuela are not going to be the tactics that are applied in the Western Pacific in the event of a conflict.

[A]

What do we know about the military hardware that China actually did supply to the Maduro regime?

[B]

Sure. So China is a major weapons supplier, not only to South America, but in Africa and other developing countries. But I think a lot of people don't understand how weapons sales work. And we saw this in the DRC as well, where the drc, the Chinese sold Wing Loong drones to the Congolese government to fight in the Eastern Congo, and they had to bring in Romanian operators to use them because it was just too sophisticated to use. And so the fact is that a lot of the Chinese weapons, how they're used, how they're maintained, China doesn't care. You pay cash, you get the guns. At that point, it's all yours. And so the fact that the Venezuelans weren't effective with their Chinese weapons doesn't surprise me because at the end of the day, the Chinese aren't responsible for maintaining those weapons systems and they weren't manning those weapons systems. So I think putting the accountability on the Chinese is kind of ridiculous. I mean, it's like saying, you know, I bought a Chevy and if I don't bring it in for my oil change every 2,000 miles, then is somehow Chevy's fault that it broke apart, it broke down. And, you know, and so we don't know how well these systems were maintained. We don't know how well the staffing was on them. We don't know what you know. There's a lot we don't know. But I'm not saying this to defend the Chinese. I'm more saying it about the incompetence of the operators. That is more likely to blame than anything else. Eric.

[A]

When a partner regime collapses suddenly, but the state itself doesn't, China is often forced into kind of a rapid transition posture. This is not the first time that it's faced a situation like this. You've tracked a lot of these things, responses of the Chinese after coups in some of its partner countries in Sub Saharan Africa, for example. So based on past cases, whether in Latin America or elsewhere, what does Beijing's playbook usually look like in moments like this? In coups and takeovers?

[B]

Yeah, and the Chinese are particularly good about this because they don't come with any political ideology. It's a very PRAGMATIC approach. And so my guess is right now in Venezuela, the Chinese Embassy is making.

[A]

Outreach to Tulsi Rodriguez.

[B]

Six, seven different. Oh, but beyond that. So they've already. She's already locked in. Remember, she was in the meeting with special envoy. So yeah, Qiu Xiaoqi. So she was in the meeting. So she was one of the few people who actually knows. And we should talk about the Qiu meeting because it's very important because there's been some very bad takes on that. But my guess is they are out there with six or seven of the political factions. Why do we know this? Because one of the things that we've seen, particularly in Africa, but also in South America as well, is that when there are governance changes, either it's through an election and it's a kind of controlled process or an uncontrolled process, as we saw in the Sahel and in countries like guinea, where the Chinese were very, very proactive in reaching out to the juntas. And again, because they don't bring an ideological viewpoint to it, they're not saying, you're violating human rights, you came to power in a non democratic way, therefore we can't deal with you. Nope, that's not the way the Chinese work. So take a look at what happened in Guinea. In guinea. And we could talk about Niger as well. And this I think gives us some insight to maybe what's going to happen in Venezuela. So the military juntas come to power in the Sahel. In Niger, for example, they booted out the French first and then eventually they booted out the Americans. Early on, the Chinese ambassador goes to the junta leadership and says, are we good? And the junta leadership says, are you going to tell me how I'm supposed to run my fares? Are you going to kind of, you know, lecture me? Are you going to, you know, manipulate and play games with me and the Chinese? Like, nope, I just want to make sure the Nair Benin pipeline keeps flowing. And they're like, if that's your only focus, we're good. Now China's ties in Niger have run into problems lately, but for different reasons. Guinea is a better example. The Huna comes into power. The Chinese have the same conversation, you know, and they're very strict. And now we have the Simandu Mine that's up and running, you know, several years later that's been built under the military junta's leadership. And again, it shows you the dexterity of Chinese diplomacy in these countries, absent of any kind of governing ideology that many Western governments have. If they don't like the government for human rights reasons or democracy or any number of reasons. Ironically, this is an area where Donald Trump and the Chinese very much align. It's all business. It's no morality. It's just that's, you know, we don't care about democracy and we don't care about human rights. And I think Donald Trump would agree with that.

[A]

You wanted to talk about the raid and about Cho Xiaoqi's presence there, his meeting with Maduro beforehand.

[B]

Yeah.

[A]

What do we take away from that? I mean, what were some of these bad takes you talking about? I mean, I've seen everything ranging from, I think that Cho had intelligence about this planned operation and was there to warn Maduro. I have no idea.

[B]

Okay. The fact that you said I have no idea is the right answer. And so then I usually have the right answer.

[A]

I usually have no idea.

[B]

I mean, so when I read Sinocism today, and I like Bill Bishop, I read Bill very closely, and I do respect a lot of the work he does. But when he called it a strategic failure because Cho was there right at the time of the bombing and the military intervention and the incursion, I thought, well, how do you know? We don't know what that was about. So there's a number of different theories that are circulating, and this is why I think, again, it would be prudent to hold judgment. So Cho goes to Caracas on the eve of the intervention. We have heard from sources that said that he was bringing in intelligence to Maduro to tell him that an attack like this was imminent. And Maduro, who was famous for ignoring warnings about the Americans, not just from Cho, but from others for years, disregarded that. And that's why Cho looked like a fool. Other people like Bill and others have said that, well, he went to try and do this goodwill mission, and here they look stupid because they were caught off guard. They didn't know about what was going to happen. We don't actually know that's true. And we don't know if this was, in fact a strategic failure, because we don't know what the substance of that conversation between Chiu and the Chinese Ambassador Lu was there as well, and Maduro and Vice President Rodriguez. So I think for people to call this a strategic failure without knowing the substance of the conversation to me, is problematic. Again, if he was, in fact bringing intelligence, and we know that China's signal intelligence of the United States is probably very good now because the Trump administration has taken down many of the defenses. They've dismantled many of the. Of the, of the anti China, anti Russian intelligence units that were there to protect against some of these things. So there's a very good chance that the Chinese had pretty solid signals intelligence that something was going to happen. And so if Cho was the special envoy to deliver that message, then that's hardly a strategic failure in my part if Maduro didn't take the advice. But I'm not going to pretend I'm going to say what you said, I don't know. So I'm not going to get out there and say this was a failure or this was a success. You simply can't do that because we don't know what was said.

[A]

So let me ask you this, was this whole episode viewed from Beijing, was it chastening, was it clarifying? Was it largely confirmatory for Chinese planners? How might it shape their thinking about coercive options short of full scale war going forward?

[B]

It's too, listen, we're not even a week into this thing.

[A]

Yeah, I know, I know.

[B]

And I think they're still digesting it. You know, the Chinese, it's interesting. They, you know, if you study Chinese foreign policy and you speak to Chinese diplomats long enough, they have a very different timeline and approach to these things. And I don't think that they are thinking in the minute to minute, you know, cable news kind of timeframe because they don't face the same political pressures that Western diplomats and Western foreign policy, you know, architectures have to deal with. So I get the sense that they're, they're studying it. This is not viewed as an existential threat to them. This is not viewed as an immediate tier one, you know, set the alarms on fire. I don't think that, you know, Xi convened his closest advisors at 2 in the morning to figure out what's going on. I'm sure this is shocking to them. So when they said, when they used the word shocking in their statement on Saturday, I think that was an honest assessment. I mean, it was shocking to everybody. I mean, this was, this was a blatant violation of international norms. Let's, we can debate whether it was a blatant violation of international law. That can be, that can be, you know, adjudicated. But this was no doubt a violation of international norms. When one country using, again, the rationale here was not that there was a military reason to go in, not that there was a threat to the United States, an imminent threat to the United States that would require the President to go to Congress to get approval to deploy military force. They did it because there was an indictment in a Brooklyn court. And I think that's pretty concerning for people. If that's the justification now to deploy the US Military to do renditions, that is concerning not just to the Chinese, I think, but to a lot of people around the world.

[A]

Sure.

[B]

And by the way, here in Southeast Asia, there's a lot of attention now focused on Cuba. And if these threats that the United States is going to go after Cuba, I can guarantee you that the Communist government in Vietnam is not going to be very happy about that. So these have ramifications far beyond what's happening right now. And I think that the Chinese are, are kind of just sitting back and waiting to see what happens. Again, Venezuela, not a Tier 1 priority in South America for the Chinese, not like Brazil, for example, not like Panama and the Panama Canal. The financial exposure is significant, but not necessarily existential. I mean, if they lose $10 billion and $64 billion of trade, okay, they'll wake up the next day and they'll figure out a way to get out of that. And so I think right now they're watching to see where the wind goes, and you're going to see their rhetoric kind of align with that. So that's why I think we saw the change of rhetoric from, you know, protecting the UN Charter to protecting international law. So, again, that's what they're hearing from partner countries.

[A]

Again, it's too early to tell. But when you know here less, as you say, it's only four days in now at the time of recording, when we pull all this together, when you step back from the headlines, he stepped back from the Twitter punditry. What does this episode actually change and what doesn't it change? I mean, look, Beijing has not lost a foothold in Latin America, as some people have said. We probably can conclude that. But is China's role in Latin America and the global south more broadly changed by this? Does it meaningfully alter how Beijing thinks about political risk, about partnerships, about exposure in the region? So, looking ahead, what would you also look for as signs? Because, as you say, it is early, but as days go by, what are we going to be looking for in terms of signs that it has had a lasting impact on China's global posture, rather than just being absorbed as just a dramatic but ultimately quite bounded event?

[B]

China doesn't want instability around the world because instability is bad for business. When you have instability, you're not building roads, you're not signing contracts for construction deals, you're not importing Huawei phones, you're not building Railways that the Chinese sell. It's bad for business. And the Chinese, first and foremost, when it comes to the global south, it's a commercial relationship, a very robust commercial relationship, multifaceted commercial relationship. Also bear in mind too, that China's ability to sell things in the world is constrained. They face tariffs in the European Union. They face obviously sanctions in the United States. Japan, South Korea have limits on what the Chinese can sell. There's tariffs that are starting to pop up around the world on Shein and Temu products. And so it's become a much more complicated environment, as we've seen in a country like Mexico, which has increased the tariffs now on Chinese imports and effectively banned Chinese cars in many respects, you know, made it much more difficult to sell Chinese cars in response to US Pressure. So all of this chaos and instability that's starting to gain momentum is something that the Chinese don't like and makes them very nervous. And so they, in order to maintain their economy, need very large markets. So even though Venezuela is not a huge market, they still were selling $40 billion worth of products to that. That's $40 billion of products that came out of Chinese factories that now have to find another home. That's not easy to do when the Chinese were already trying to relocate trade from the US into Indonesia, into Vietnam, into Africa and other places. And this contributes to this surge of exports leading to a trillion dollar trade surplus that ultimately the end of the day is self defeating for the Chinese. So you can see how all of these things do eventually tie together and ultimately comes down to instability. I think there is concern that this right wing shift in Latin America could present problems for them, especially in Central America, where the reversal in Honduras from China back to Taiwan. Remember a couple of years ago, Shiomara, the president shifted allegiances from Taiwan to China. There was a big deal about the new president came to power and saying, well, he hasn't gone back yet, but.

[A]

He'S clearly in the worst.

[B]

His presidential campaign was talking about shifting that back. And that's something that the US Is really encouraging. So this Taiwan question comes into the mix in the Caribbean and Latin America as well. Paraguay, for example, has been adamant that it will not change its allegiance to Taiwan. But yet the business community in Paraguay has said that it wants to, you know, shift. So there's pressure domestically in Paraguay to shift. That's a concern to China as well. And China's been rather clumsy in Paraguay on the Taiwan issue. So they've created a whole bunch of problems for themselves with, you know, with very kind of awkward types of pressure being put on to the Paraguayan government and others. So anyway, I think there's a lot for the Chinese to be worried about in the Americas right now. However, I do want to caution something and I think this is a good point for us to think about in our closing. Donald Trump is a uniquely unpopular American president. His favorability is in the high 30s. Even his own base is starting to fracture to some extent. He is going to potentially face a major setback in November in the midterms if they go.

[A]

Inshallah, they go.

[B]

Yeah. Well, I mean, again, you know, if you're a betting man, you, you think that if the Democrats get their, their act together, they can gain enough seats to gain a majority. If that happens, you Washington's going to be consumed by domestic politics. And then we have the presidential election coming up basically that will kick off in earnest in 27 right next year. That means that all this attention on Venezuela, on Panama, on Peru, on Chile, on all goes away. And we've seen this over and over again in US Politics where there's interest in Latin America for a brief shining moment. And then domestic politics consumes us, whether it's Bill Clinton and his sex scandals, whether it was the Iraq War, whether it was other things that take the attention away from Latin America. So I bet you there's some folks in Beijing who are saying, wait, everybody, chill out. These guys don't have the staying power to stay this focused on Latin America. And you know, and so there again, we may be in a very different situation next year domestically in the US and also in Venezuela. So that's again, the thing I'm just preaching, just wait and hold, hold judgment.

[A]

Well, it's clear to me that I was very wise to have asked you to join me on this show to talk through this stuff. I mean, it's always exactly what I was hoping for and this is no exception. Eric, thank you so much for taking the time. Let's go on to our Paying it Forward segment where I ask you to, you know, name maybe one of your colleagues who we've heard not as much from in the China Global South Network.

[B]

So I want to so for my paying it Forward, I want to really recognize Alonzo Iuka. He's our non resident fellow for Latin America and the Caribbean. He does some amazing work on China, Latin America and China, Panama. We've done a lot of great things on with him on the Venezuela situation. I did a Q and A with him on Monday. If you go to our website, look for Alonzo's work. It's front and center on what we've been doing in our coverage. And he just provides this on the ground perspective. He just, again, it's a perspective you're not going to find in mainstream media. And so Alonzo's contribution to the discourse is invaluable. And so that would be my paying.

[A]

Eric, you just did an interview with him. Right. And that's going to be on Seneca as well.

[B]

So newsletter that's on Seneca. Yeah, and we'll have the video up on the Seneca website this week as well. And so he talks much more credibly about Panama and about Venezuela than I do. And so I really want to defer to him.

[A]

Thanks. That's an excellent recommendation. Thanks. And everyone check out Alonso's work. All right, what about recommendations? Just straight up recommendations. You have an article or books or something that you want to recommend?

[B]

I have an article that was, you know, every once in a while you read an article and you just blows your mind. You've been thinking about a topic one way for so long, and then someone comes along and completely changes how you see it. And I want to give credit to Zhongyuan Zoe Lu Liu from the Council on Foreign Relations, who wrote a fantastic article in Foreign Affairs, China's Long Economic How Beijing Builds Leverage for Indefinite Competition. She has a section. It's an amazing piece, and she just agreed to come on the show. So I am so excited to have the chance to speak with her. But she has a piece, a part of it on the debt trap and saying that one of. And we've been struggling for years to understand why has this meme that has been proved wrong and inaccurate for so long so durable? And she attaches it to the lack of Chinese credibility more broadly about. Because China's system is so opaque, because there's so much secrecy in how they do things that regular stakeholders in the global south just go, you know what? I just don't know enough about these guys. And so, you know, if there's these. If there's smoke, there's fire. And I really encourage people to look at Zoe's article in Foreign Affairs. I'm not doing it justice with my summary, but it is one of the best takes on the debt trap that I've seen ever. And that's that. That really goes a long way. She's not just debunking it. She's explaining why it introduces, why it's so dur. Why it endures in a way that actually resonates and Makes sense. So China's long economic war in the January, February edition of Foreign Affairs.

[A]

Yeah, I just thought it was confirmation bias.

[B]

But this lack of credibility I think resonates that the Chinese have struggled to build credibility. And you see this in the US too. They invest all this money in CGTN and China Daily free inserts in the Washington Post. Nobody buys it, nobody pays attention to it because it lacks credibility. And I think that's a major weakness of the Chinese that then contributes to narratives like the debt trap.

[A]

Great, okay, check it out. I will definitely. I mean, I have read it and I'll put a link to that piece clearly in the podcast notes. So please read Zoe's piece. My own recommendation is just for a novel which I think is really good to take your mind off our own troubled times. It's called the Venetian Heretic by a writer that I really like named Christian Cameron. It's a kind of late medieval or early modern political thriller set in Venice. It's a city where he sets a lot of his work in the years after the Treaty of Westphalia, after 1648. So it's about this English fencing master who lives in Venice and he gets caught up in a really complicated plot involving anti clerical libertines and the Inquisition and the Pope and maybe surprisingly, the opera. But it's great. It's got lots of swashbuckling adventure and romance and intrigue and politics and really well researched history as well. So just like I said, great stuff to take your mind off of our own times of turmoil. Check it out. It's called the Venetian Heretic by Christian Cameron. If you've not read any of his other stuff, start with the ill made knight in this series called Chivalry. It's fantastic stuff. All right, Eric, thank you once again. Real pleasure as always to have you on and great to see you.

[B]

Thank you. It's always fun to have this conversation and I always love coming on your show because I get so much feedback from the audience and so it makes me jealous that you have this huge audience that, that I hope to have.

[A]

Nonsense. No, I mean it's. We're sisters, right? I mean we're all in it together. So.

[B]

Yeah. Thanks so much.

[A]

You've been listening to the Seneca Podcast. The show is produced, recorded, engineered, edited and mastered by me, Kaiser Guo. Support the show through substack@seneca podcast.com where you will find a growing offering of terrific original China related writing and audio. Email [e-mail] if you've got ideas on what I could be doing better or to help out with the show. Don't forget to leave a review on Apple Podcasts. Enormous gratitude to the University of Wisconsin Madison's center for East Asian Studies for supporting the show this year. Huge thanks to my guest, Eric Olender. If you are not already listening religiously to the China Global south podcast and of course the China Podcast, you need to do that. It's really just the best. Thank you so much for listening. We'll see you next week.

[B]

Take care.