Venezuela Is No Template for Taiwan, Eurasia's Wang Says

China’s Response to Events in Venezuela & Broader Latin American Strategy

Key Concepts:

• Sunk Cost Fallacy: Continuing to invest in a failing venture due to prior investment, even when it’s not economically rational.
• Belt and Road Initiative (BRI): China’s global infrastructure development strategy adopted in 2013.
• Monroe Doctrine: A US foreign policy principle opposing European colonial intervention in the Americas.
• Sphere of Influence: A geographical area where a state exerts significant political, economic, and cultural influence.
• R&D Internationalisation: Expanding research and development activities beyond national borders.
• Economic Coercion: Using economic pressure to influence a country’s political decisions.

I. China’s Limited Response to the Venezuela Situation

The discussion begins by examining China’s reaction to recent events in Venezuela. It’s argued that China’s response has been largely limited to verbal condemnation, lacking significant investment, commitment, or military involvement. This is partly attributed to Venezuela representing a “sunk cost” relationship – a long-term investment in infrastructure that China is hesitant to abandon despite political instability. However, despite limited political inroads during periods of US pressure, China maintains a substantial economic impact in the region.

As stated, “It represents one of those sunk cost a relationship that China has committed long time ago to investing in infrastructure.”

II. China’s Latin American Strategy: Economic vs. Political Influence

China’s broader strategy in Latin America is framed as an important component of its Belt and Road Initiative (BRI). While public financing of projects has decreased over the past decade, private Chinese investment remains substantial. This highlights a key distinction: China wields significant economic influence in Latin America, but lags behind in political and military influence.

A positive trend noted is increasing monetary cooperation, particularly emphasized by President Xi Jinping in a policy paper last December. This focuses on deepening financial collaboration and trade settlement, especially with countries facing US sanctions. This is described as China’s “R&D internationalisation in Latin America will deepen and the trade settlement will have a more of a market, especially when it comes to countries under sanctions from the U.S.”

III. The Monroe Doctrine & Implications for Taiwan

The conversation then pivots to the US’s historical assertion of influence in Latin America, referencing the Monroe Doctrine. The question is raised whether this situation provides China with leverage to claim a similar sphere of influence in East Asia, particularly concerning Taiwan.

The consensus is that Latin America doesn’t serve as a useful “playbook” for China’s Taiwan strategy. China is described as “quite pragmatic” regarding spheres of influence, and would respond far more forcefully to a similar situation in Asia due to the proximity and strategic importance of the region. The cost of control increases “exponentially with distance,” making South America a less critical area for assertive action.

IV. Discrediting the US & Potential Actions Regarding Taiwan

China is seen as leveraging the situation to discredit the US, highlighting perceived disregard for international law and sovereignty. However, regarding Taiwan, a direct military attack is considered a “last resort” due to the high risk of a prolonged and damaging conflict, akin to the situations in Gaza or Ukraine.

It’s stated that, “If it's not really a quick win… the perceived military, military credibility of China will be badly damaged.” Instead, economic coercion – sanctions on Taiwanese companies and restrictions on shipping routes – are considered more likely and realistic approaches.

V. China’s Foreign Policy Priorities for 2024

The discussion concludes by outlining China’s foreign policy priorities for the year. The Venezuela situation is not considered a major risk factor. The primary focus is on stabilizing relations with the US, particularly in anticipation of potential visits by Donald Trump and a reciprocal visit by Xi Jinping to Washington.

The China-U.S. relation and the Taiwan issue are not among the top risks. This year is viewed as a “breathing room” for China to address domestic vulnerabilities, particularly economic ones. Significant emphasis is also placed on strengthening relationships with neighboring countries in Asia, including ASEAN nations, and managing the complex relationship with Japan.

VI. Data & Research Findings

• A recent risk assessment identified the China-U.S. relationship and the Taiwan issue as not being among the top risks for the year.
• Publicly financed projects under the BRI in Latin America have been “steadily declining” in the past decade.
• Private Chinese investment in Latin America remains substantial, indicating continued economic influence.

Conclusion:

China’s response to events in Venezuela and its broader Latin American strategy are characterized by a pragmatic approach prioritizing economic influence over political or military intervention. While China seeks to deepen financial cooperation and leverage perceived US inconsistencies in international law, it remains cautious about escalating tensions, particularly concerning Taiwan. The primary focus for 2024 is stabilizing relations with the US and addressing domestic challenges, with a strong emphasis on strengthening ties within the Asian region. The situation in Venezuela is viewed as a secondary concern, not significantly altering China’s overall foreign policy trajectory.