China Eyes Venezuelan and Brazilian Oil

China Eyes Venezuelan and Brazilian Oil

• The burgeoning Chinese/Brazilian relationship
• Why is China going after Latin America's distant commodities?
• Should the U.S. be alarmed by China’s poaching in its own "backyard"?

The accompanying article has been selected by the New York Times as recommended reading in their "Idea of the Day: Must-Reads from the Week in Review Staff."

As China’s economy soared during the 1980’s, its consumption of foreign oil rose as well, culminating in the country becoming a net importer of oil by 1993. Since this transition, China's real gross domestic product has maintained annual growth at about eight to ten percent, with Beijing now holding the distinction of being the globe’s third largest importer of oil behind the U.S. and Japan. China’s consumption of oil is expected to steadily increase in the coming years, yet analysts predict domestic production will begin to decline by 2020.

China’s current and ever increasing reliance on foreign oil has necessitated a broad search for oil reserves around the world. This quest has led China increasingly to Latin America, where it recently signed large oil deals with Venezuela and Brazil. This is in addition to its already existing oil related partnerships with Ecuador, Peru, Colombia, and Argentina. China’s funding of these multiple oil projects raises its already growing presence in Latin America, and will further its ubiquitous image on the continent as a deep pocketed investor. In as much as these oil contracts coincide with the recent explosive growth in trade between China, Venezuela and Brazil, the increase in trade will likely spill over to the entire region. In the coming years other countries on the continent will presumably look to strike lucrative deals with China regarding the sale of their natural resources.

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This analysis was prepared by COHA Research Associate Adam Trombly

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