How Trump Outplayed China in Venezuela

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Criticisms abound in the Japanese media and political circles, accusing the Donald Trump administration of violating international law through its military strike on Venezuela and the detention of its strongman, President Nicolas Maduro.

But lofty rhetoric, however elegant, has never resolved a crisis on its own.

When it comes to trampling international rules, Xi Jinping's China is the far more blatant offender.

Washington's intervention in Venezuela should instead be understood as the first substantive move to confront Beijing's coercive foreign expansionism.

China's Latin American Foothold

First, it's essential to recognize that Venezuela has functioned as the principal bridgehead for Xi's Belt and Road initiative in Latin America.

After the anti-American leftist Hugo Chavez rose to power in 1999, Venezuela came under US economic sanctions beginning in 2005. As the country's economy deteriorated, China moved decisively to fill the vacuum.

China's infrastructure push in Venezuela accelerated in 2012, coinciding with Xi's rise to power. The arrangement traded Chinese economic cooperation for guaranteed Venezuelan oil supplies.

That model, however, unraveled under Maduro, who succeeded Hugo Chavez after his death in 2013. Catastrophic hyperinflation, combined with the collapse of crude oil prices, devastated the economy. Meanwhile, rampant corruption drove roughly eight million Venezuelans to flee abroad, including to the US.

Crude oil production collapsed, in part due to the withdrawal of US oil capital. Output fell from 2.5 million barrels per day in 2015 to 800,000 barrels per day in 2019, and then to below 500,000 barrels per day in 2020. Faced with increasingly uncertain returns, Chinese capital also began pulling out that year.

A Shady Oil Trade

Still, as international crude prices rebounded in 2022, production gradually recovered, reaching roughly 1 million barrels per day by 2025.

China's trade statistics show that imports of Venezuelan crude fell to zero from October 2019 until early 2024. While shipments resumed through spot transactions in February 2024, volumes remained modest, just 15,000 barrels per day, even in 2025.

However, analyses from the US suggest that China actually absorbs roughly 80% of Venezuela's crude oil output.

*An oil tanker believed to have been seized by US authorities off the coast of Venezuela — Singapore Strait on January 7. (From social media, provided by Hakon Rimmereid, Reuters/Kyodo)*

To sidestep the risk of secondary American sanctions, Beijing largely avoided direct imports by relying on covert channels. These included disguising the oil's origin by relabeling it as Brazilian or routing it through transshipments via Malaysian vessels.

In fact, there is a reason why China has little choice but to continue importing Venezuelan crude. Beijing is saddled with roughly $60 billion USD in bad debt tied to Venezuela, including about $19 billion in oil-backed financing.

Taking crude shipments is one of the few ways to recover those losses, especially when that oil is bought at prices far below international market rates.

Ambitions Cut Short

The Xi administration moved to reassert its interests in Venezuela in August 2025. According to Reuters, China's private oil firm, China Concord Resources Corp, signed an agreement with the Maduro government committing more than $1 billion to develop Venezuelan oil fields.

The project aimed to raise production to 60,000 barrels per day by the end of 2026.

Then, on January 3, a special envoy from Beijing arrived in Caracas, where he met with Maduro and pledged to resume economic cooperation. Just hours later, the US military launched its raid.

*President Trump at his Florida residence, closely monitoring attacks on Venezuela on January 3, 2026. (©Truth Social, Kyodo)*

President Trump quickly declared that the United States would temporarily assume control of the country following Maduro's capture. At a press briefing, he told reporters that American oil companies would take over Venezuela's oil fields and revive production.

Trump later told Fox & Friends, "I have a very good relationship with Xi, and there's not going to be a problem. They're going to get oil."

Trump's Winning Hand

But it would be unwise to assume that Washington intends to accommodate China. The Trump administration's approach is to contain China's economic interests, including oil, and then compel them to purchase Venezuelan crude at inflated prices.

Xi would have little room to refuse, as it still needs to recover its outstanding loans. Rather than ensnaring others in a debt trap, China has fallen into a "creditor trap."

Trump's latest move does two things at once: it pushes the Xi regime out of America's backyard while using Chinese capital to revive Venezuela's economy.

It's a classic case of killing two birds with one stone.

Author: Hideo Tamura, The Sankei Shimbun

(Read this in Japanese)

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