China's Venezuela oil debt complicates Trump's seizure strategy

China holds at least $10 billion in outstanding loans from Venezuela backed by crude oil, according to analysts, setting up a potential conflict with the Trump administration’s plan to assert direct control over Venezuelan oil sales. Two Chinese state-owned enterprises — China National Petroleum Corp. and Sinopec — are entitled to 4.4 billion barrels of Venezuela’s oil reserves under contracts signed with the government of former President Nicolás Maduro, the highest share for any foreign country, according to a Morgan Stanley research note. The competing claims emerge as Trump is expected to travel to Beijing in April to protect a trade truce with Chinese President Xi Jinping, creating pressure on the administration to avoid turning Venezuela into a diplomatic flashpoint, analysts said.

Washington’s assertion of control over Venezuelan crude gives it significant leverage in the Western Hemisphere, but China’s deep financial entanglement in the country — spanning oil contracts, telecommunications, railways, and ports — means decisions by any new Venezuelan government about honoring those debts could strain U.S.-China relations at a delicate moment.

The Trump administration has claimed sweeping control over Venezuelan oil, but billions of dollars in Chinese loans secured by crude exports — along with oil reserve rights held by two Chinese state enterprises — have set up a tangle of competing financial claims that experts say will require careful diplomatic management.

China National Petroleum Corp. and Sinopec hold rights to 4.4 billion barrels of Venezuela’s oil reserves, the highest share for any foreign country, under contracts signed with the government of former President Nicolás Maduro, according to a Morgan Stanley research note. China is owed at least $10 billion from Venezuela, according to various estimates, a debt Maduro had been paying down by shipping oil to China.

Brad Parks, executive director of AidData, a research lab at Virginia’s College of William & Mary that tracks Beijing’s overseas lending, said the actual outstanding balance could be substantially higher. Venezuela stopped reporting debt details several years ago, Parks said, and U.S. sanctions on Venezuelan oil may have delayed repayments. Between 2000 and 2023, Venezuela received $106 billion in loans from China’s official-sector creditors, making it the fourth-largest recipient of Beijing’s official credit during that period, according to AidData.

The loans carried an unusual structure: repayment was tied directly to oil export proceeds, meaning China’s financial recovery is bound to Venezuela’s crude output — the same output Washington has now moved to control.

U.S. moves to take over Venezuelan oil sales

The U.S. seized two sanctioned oil tankers this week as part of a plan to assert control over Venezuelan oil shipments. Energy Secretary Chris Wright said the U.S. will handle the sales of Venezuela’s oil “indefinitely,” with proceeds deposited into U.S.-controlled accounts that will ultimately “flow back into Venezuela to benefit the Venezuelan people.”

A Trump administration official, speaking on condition of anonymity because they were not authorized to comment publicly, said U.S. policy was to wind down “adversarial outside influence” in the Western Hemisphere. The administration said it would begin sales with 30 million to 50 million barrels drawn from Venezuela’s crude storage facilities.

A delicate diplomatic calculation

Experts said the administration faces pressure to handle China’s entanglement in Venezuela carefully, given the broader state of U.S.-China relations.

Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, said the dynamic reflects the administration’s effort to maintain leverage without provoking Beijing unnecessarily.

“The administration appears focused on avoiding unnecessary escalation or new irritants with Beijing while keeping leverage firmly on Washington’s terms,” Singleton said.

He said he doubted Trump would risk turning Venezuela into a “flashpoint that complicates trade dynamics or Trump’s personal engagement with Xi.”

Trump is expected to visit Beijing in April as part of an effort to sustain the trade truce he reached with Xi Jinping late last year. The two leaders met in South Korea in October and agreed to pause elevated tariffs and export controls on each other for one year. China had previously flexed its economic leverage by choking off critical supplies of rare-earth magnets and targeting U.S. soybean purchases during the trade dispute.

Beijing protests and the Libya precedent

Beijing condemned Maduro’s capture, saying it was “deeply shocked” by what it called the blatant use of U.S. force against a sovereign state and calling for his immediate release. Chinese Ministry of Commerce spokesperson He Yadong said Thursday that no nation has the right to interfere with economic and trade cooperation between China and Venezuela.

“No matter how the political situation in Venezuela evolves, China’s willingness to deepen bilateral economic and trade cooperation will not change,” He said.

In Beijing, the episode drew comparisons to the 2011 fall of Libyan leader Moammar Gadhafi, after which Chinese businesses were forced to leave behind billions in investments. Cui Shoujun, a professor of international studies at Renmin University in Beijing, told the Chinese news and commentary site guancha.cn that Venezuela’s transition government could deem agreements signed under Maduro unlawful and declare the debt to China illegal.

Beyond oil, Chinese firms have invested in telecommunications, railways, and ports in Venezuela, all now at risk, according to a report by the investment bank Jefferies. The firm said Beijing would likely manage any disruption because Venezuelan oil accounted for only a small share of China’s total oil imports and because Beijing has diversified its energy sources and accelerated a shift toward electrification.

Venezuela is the only Latin American country with a high-level strategic partnership with China, on par with close allies such as Pakistan. Hours before his capture by U.S. forces, Maduro hosted a senior Chinese diplomat at the presidential palace and praised the ties Beijing had built across his tenure and that of his predecessor, Hugo Chávez.

Singleton said Beijing’s ability to protect its Venezuela stakes has limits.

“Beijing can protest diplomatically,” he said, “but it cannot protect partners or assets once Washington decides to apply direct pressure.”