Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I remain deeply concerned that rules of international law have
Speaker 2: not been respected. President Donald Trump has been teasing military
Speaker 2: action in Venezuela for months now, but the capture of
Speaker 2: Venezuelan President Nicholas Maduro and his wife and the White
Speaker 2: House assertion that the US would run Venezuela for now
Speaker 2: shocked the world. Don't ask me who's in charge, because
Speaker 2: I'll give you an answer.
Speaker 1: And it'll be very concuver.
Speaker 2: What does that mean? We're in charge and leaders at
Speaker 2: the United Nations, the principles of sovereignty, political independence, and
Speaker 2: territorial integrity must be respected. Among the most vocal critics
Speaker 2: of the attack the Chinese government being Yasun trujin Jo.
Speaker 1: I think China was stunned. It came out, so it's
Speaker 1: strongly condemned, and it did it within hours of the
Speaker 1: news breaking that Donald Trumph got into Venezuela and essentially
Speaker 1: sort of kidnapped the sitting leader.
Speaker 2: China decried the US's blatant use of force against a
Speaker 2: sovereign state and called Maduro's seizure in attack on Venezuela
Speaker 2: hegemonic acts that threatened the peace and security of Latin America.
Speaker 2: There's a reason why China's response was so strong. Beijing
Speaker 2: has been one of the most significant supporters of Maduro's
Speaker 2: government amid sanctions and condemnation from the West.
Speaker 1: These two are all weather friends, which is China's second
Speaker 1: highest tier of friendship, so it's the strongest of political friendship.
Speaker 2: That's Bloomberg's Jenny Marsh who oversees our coverage of Greater
Speaker 2: China's economy and politics.
Speaker 1: China underpins sort of the development and infrastructure and industry
Speaker 1: in Venezuela, and today China's the biggest buyer of Venezuelan oil,
Speaker 1: which is its main export. So really Beijing has been
Speaker 1: sort of keeping or is government aflow.
Speaker 2: China is Venezuela's second largest trading partner after the US
Speaker 2: and its biggest creditor. Chinese companies like Sinopek and China
Speaker 2: National Petroleum Corporation have been significant investors in the country,
Speaker 2: which is the world's largest crude reserves. Latin America is
Speaker 2: of growing importance to China as a market for companies
Speaker 2: like electric car maker Byd, e commerce giant Shean, and
Speaker 2: gaming and tech company ten Cent. There's also China's strategic
Speaker 2: interests in ports, perhaps most notably at the Panama Canal,
Speaker 2: that focus on Latin America, says Jenny, is why the
Speaker 2: US's intervention in Venezuela is such a setback for China.
Speaker 1: It's clear from the remarks that Trump Marco Ribu have
Speaker 1: made over the recent days, this doesn't end with Venezuela.
Speaker 1: It's just the beginning of a much larger plan they
Speaker 1: have for reasserting American influence in Latin America, which they
Speaker 1: see is, you know, is their part of the hemisphere.
Speaker 1: Is that part of the world, and so what does
Speaker 1: that mean for Chinese influence in Latin America.
Speaker 2: The US strike in Venezuela could also influence china strategy
Speaker 2: closer to home. In the aftermath of the attack, some
Speaker 2: on Chinese social media were quick to suggest it could
Speaker 2: provide a blueprint for how Beijing handles Taiwan.
Speaker 1: I think that's the first question. A lot of people happen.
Speaker 1: They saw this, well, if Trump can go into Venezuela,
Speaker 1: what's stuff exchanging pain from going into Taipei and sashing
Speaker 1: President Leitchin from Taiwan.
Speaker 2: This is the big take Asia from Bloomberg News I'm Wanha.
Speaker 2: Every week we take you inside some of the world's
Speaker 2: biggest and most powerful economies and the markets, tycoons, and
Speaker 2: businesses that drive this ever shifting region. The US strike
Speaker 2: on Venezuela and capture of its president sent shock waves
Speaker 2: across the globe. On today's show, what the intervention means
Speaker 2: for china strategy in Latin America and why a military
Speaker 2: action nine thousand miles from Beijing could change the calculus
Speaker 2: in its own backyard. Jenny, China's Foreign ministry issued one
Speaker 2: of the strongest statements against the US attack on Venezuela.
Speaker 2: It was quite strongly worded. Can you take us through
Speaker 2: China's reaction and what you found surprising about it?
Speaker 1: For Beijing, normally the playbook here and you saw this
Speaker 1: after the Russia's invasion of Ukraine, they released something very
Speaker 1: sort of vanilla and boiler plate. They let the news settle,
Speaker 1: they get a layer of the land, and then they react.
Speaker 1: And this time it was swift. You saw a lot
Speaker 1: of throat clearing from the lights of the UK, France, Canada.
Speaker 1: But China was unequivocal, and I think they were caught
Speaker 1: off guard. And that was evidenced by the fact that
Speaker 1: just hours before Maduro was caught, his last public meeting
Speaker 1: was with a Chinese delegation of diplomats, which I think
Speaker 1: was just share coincidence, but the optics of that it
Speaker 1: just made Beijing look like they had been caught off
Speaker 1: the backfoot.
Speaker 2: Yeah, definitely not a good look because it means in
Speaker 2: some ways that their intelligence perhaps also failed as well.
Speaker 1: Yeah, they obviously didn't quite have their finger on the pulse,
Speaker 1: and particularly now you know, the Trump has been more
Speaker 1: open about how that unfolded. We know that the US
Speaker 1: had planned this for months and he was waiting over
Speaker 1: Christmas for the weather conditions to improve. So had the
Speaker 1: Chinese had good intelligence, they should really have known that
Speaker 1: this was going to happen. But obviously, you know, would
Speaker 1: have been kept very closely within sort of Trump's in
Speaker 1: a circle.
Speaker 2: Now, China is Venezuela's biggest oil customer. I wonder if
Speaker 2: you can tell us about that oil and why it's
Speaker 2: important for China.
Speaker 1: China on this side of this century extended about sixty
Speaker 1: billion dollars in credit lines to Venezuela. Venezuela was supplying
Speaker 1: China with oil and using the proceeds of those in
Speaker 1: sort of service of paying down this debt. This oil,
Speaker 1: I mean, by volume, is not particularly important to China.
Speaker 1: It's worth but four percent of Chinese oil imports, and obviously,
Speaker 1: since it was sanctioned by the US, it's not coming
Speaker 1: in through official channels. But it's a unique type of oil.
Speaker 1: It's sort of high sulfur crude, and this is very
Speaker 1: important for sort of construction and road building. But it
Speaker 1: is very very steeply discounted, so it's very popular with
Speaker 1: China's independent refiners. So it's helping keep costs lower in
Speaker 1: China at a time when margins are already very squeezed.
Speaker 1: Trump Is said that the oil is no longer flowing
Speaker 1: out of Venezuela, and they've been very clear that this
Speaker 1: is sort of a form of economic coercion. You know,
Speaker 1: Rubio was saying that they're not going to let the
Speaker 1: oil flow because this is a way of sort of
Speaker 1: forcing the new leader to do, you know, to align
Speaker 1: Venezuela's policies with that of the US for China. You know,
Speaker 1: analysts have said that isn't an immediate problem because there
Speaker 1: is so much Venezuelan oil already shipped out and sort
Speaker 1: of in vessels in Asia that are sort of in
Speaker 1: the waters that can still kind of come to port,
Speaker 1: So there won't be an immediate shock to the Chinese market.
Speaker 1: In maybe in a month's time there's a deal struck
Speaker 1: between the US of Finistration and the Venezuelan ship and
Speaker 1: that oil begins to flow again. So I think we
Speaker 1: have to sort of wait and see what the long
Speaker 1: term impact would be.
Speaker 2: Now, Trump is also talking about US investments into the
Speaker 2: country's oil infrastructure, but we know that Chinese oil firms
Speaker 2: have also claims to some of Venezuela's reserves. How is
Speaker 2: that going to play out?
Speaker 1: Yeah, it is a fascinating question, and Trump has offered
Speaker 1: no answers to it. You know, he has claimed going
Speaker 1: to run the country and the US company is going
Speaker 1: to come in and like, you know, get this oil
Speaker 1: flowing in the way that they wanted to and they
Speaker 1: haven't given a ropemap. But how any of that will
Speaker 1: work legally? But again, you know, if US companies come
Speaker 1: in and sort of steal assets and steal rights that
Speaker 1: Chinese companies have paid to acquire, then obviously there's going
Speaker 1: to be political blow black there or he's at least
Speaker 1: risking sort of destabilizing this relationship which I've spent so
Speaker 1: long trying to sort of get to an equilibrium.
Speaker 2: Beyond Venezuela, China has poured billions into Latin American countries
Speaker 2: as part of Beijing's Belt and Road initiative. They're kicked
Speaker 2: off in twenty thirteen. That's how the country invest in
Speaker 2: infrastructure projects, from Bogata's metro system to ports in Peru
Speaker 2: and Chile.
Speaker 1: The Belt and Road has evolved a lot since then.
Speaker 1: You know, they have this phrase now small but beautiful
Speaker 1: projects in China's overall investment into Latin America has declined
Speaker 1: in recent years, but become no less important. It's now
Speaker 1: sort of challenged into much more strategic sectors for China.
Speaker 1: Things that align with this priority is so mineral extraction
Speaker 1: of things like lithium, which are key to its green energy.
Speaker 1: And last year South America became even more important as
Speaker 1: a trade destination. You know is trying to tried to
Speaker 1: find new destinations, and these are markets that are open
Speaker 1: to things like Chinese evs like BYD has a big
Speaker 1: presence in Brazil. So these are very buoyant economies of
Speaker 1: very large populations, and so Forshi this is an important
Speaker 1: part of the world that he certainly doesn't want Trump
Speaker 1: sort of denying him access.
Speaker 2: To, and with the US now effectively reclaiming Latin America
Speaker 2: as its own backyard, what do you think that signals
Speaker 2: for China's ability to still be able to project power
Speaker 2: and influence in the region.
Speaker 1: I think it's a direct challenge to it, and we
Speaker 1: have to see how it plays out. And I think
Speaker 1: now the question is, you know, how far does Trump
Speaker 1: go in sort of pursuing this objective to sort of
Speaker 1: reclaim you know, South America and to be the chief
Speaker 1: influencer there if you like. Because he's just struck this
Speaker 1: very sort of fragile trade truts with China as well,
Speaker 1: which everybody seems sort of committed to keeping in place.
Speaker 2: Now zooming out a bit. Many people are saying that
Speaker 2: Trump administration is steering the world to a new organization
Speaker 2: of global power where you have spheres of influence for
Speaker 2: the US, for Russia, China. Where does China fit into
Speaker 2: this and how could it use this shift to advance
Speaker 2: its own goals?
Speaker 1: Potentially, if you're thinking about spheres of influence, America has
Speaker 1: it his own sphere. It doesn't want China in, but
Speaker 1: it certainly doesn't see China as having its own separate
Speaker 1: sphere that America won't be in. And it also make
Speaker 1: clear that America is not prepared to sort of stand
Speaker 1: back from projecting power around the world. And there was
Speaker 1: very slark language about building a military that can protect
Speaker 1: the first island chain in Asia. So there's a lot
Speaker 1: of sort of contradictions there that I think China will
Speaker 1: be very aware of. I think the lesson they're probably
Speaker 1: learning from the last few days is that might is right,
Speaker 1: and it's very important to build up their own military
Speaker 1: power and to make sure they are projecting power as
Speaker 1: strongly as they can. And then the other side of that,
Speaker 1: I think is the way that she is trying to
Speaker 1: contrast China as sort of a beacon of stability compared
Speaker 1: to Trump. You know, it was quite striking. Yesterday he
Speaker 1: had his first public engagement since Majuro was captured, with
Speaker 1: the Irish Prime Minister in Beijing, and he was talking about,
Speaker 1: you know, Beijing as a peace loving country, you know,
Speaker 1: really very dubbish comments about respecting the international world order.
Speaker 1: On the other side of the world, what Trump talking
Speaker 1: about well, you know, the leader of Columbia could be next,
Speaker 1: you know, making threats against the leaders in Cuba as well.
Speaker 1: So I think Fashin is going to be a lot
Speaker 1: of posturing that China is seat of a peace loving,
Speaker 1: rule abiding power that you can really trust.
Speaker 2: China portrays itself as a force for peace, but the
Speaker 2: reaction at home to what happened in Venezuela was starkly different.
Speaker 2: Some of its own citizens have argued on China's highly
Speaker 2: controlled social media platforms that Washington just handed Beijing a
Speaker 2: template for attacking Taiwan. That's after the break. The US
Speaker 2: strike in Venezuela has stirred a lot of speculation about Taiwan.
Speaker 2: China's president Shi Jinping has said unification with Taiwan and
Speaker 2: island the country claims as its own is unstoppable, and
Speaker 2: after the weekend's ouster of Maduro, Bloomberg's Jenny Marsh says
Speaker 2: that some people have suggested the US may have inadvertently
Speaker 2: shown Beijing how it might use the same playbook on Taiwan.
Speaker 1: When this first happened, you know, Chinese social media was
Speaker 1: a buzz with this. It was full of comments of
Speaker 1: people saying, you know, I suggest the same method to
Speaker 1: reclaim Taiwan in the future. Since the US isn't taken
Speaker 1: international law seriously, why should we care about it. There
Speaker 1: was one particularly sort of colorful comment. You know, the
Speaker 1: US imperialist lightning rate on Venezuela to capture Madeiro and
Speaker 1: his wife is the perfect blueprint for our military to
Speaker 1: launch a surprise attack on Taiwan. Just because the public
Speaker 1: sort of jumps to this doesn't mean that she didn't
Speaker 1: think himself is changing his calculus and is suddenly going
Speaker 1: to invade. I will say, though, you know, the more
Speaker 1: Trump changes the sort of international norms about what the
Speaker 1: US will and won't do, the more it sort of
Speaker 1: waters down its adherents to the rules based order which
Speaker 1: America founded. I think the conditions for a Chinese invasion
Speaker 1: of Taiwan change, right, and I think she is now
Speaker 1: facing a different set of conditions that he was facing
Speaker 1: five years ago. And then more favorable people we spoke
Speaker 1: to within the Taiwanese government were actually pretty bullish, and
Speaker 1: they said, you know, for them, this showed two things. One,
Speaker 1: it showed that you know, Trump isn't taco. Trump doesn't
Speaker 1: always chicking out he is willing to sort of use
Speaker 1: the military when he thinks this is something that needs
Speaker 1: to be done, which is core to sort of US
Speaker 1: security interests, and they see that as a good thing
Speaker 1: for Taiwan. And two they also noted that, you know,
Speaker 1: Venezuela buys most of its weapons from China and Russia
Speaker 1: and that the US military just you know, made very
Speaker 1: quick work of that. There's no evidence that sort of
Speaker 1: Chinese equipment failed during this operation, because Trump also said,
Speaker 1: you know, they had a lot of security assets in
Speaker 1: Venezuela who could have disabled some of these defense systems.
Speaker 1: But the Taiwanese just said they found this as evidence
Speaker 1: that the US military equipment is just far superior. US
Speaker 1: military equipment is what they have, So for them, they
Speaker 1: actually looked at it and thought this was pretty good
Speaker 1: for them.
Speaker 2: Jenny says China's potential invasion of Taiwan and the US
Speaker 2: intervention in Venezuela play out two very different scenarios with
Speaker 2: a lot of deterrence. For a China attack on the island, there's.
Speaker 1: No other major military power around Venezuela, and Venezuela's own
Speaker 1: military isn't very strong. If China was to go into Taipei.
Speaker 1: You know, Chaibwe Foresight has its own military which is
Speaker 1: stocked with US weapons, and then it's surrounded by US allies,
Speaker 1: so Japan, South Korea, and you know, Prime Minister san
Speaker 1: Aitakichi only last year was saying, you know, if there
Speaker 1: was an attack on Taiwan and the US became involved,
Speaker 1: then you know, so could Japan. So China would be
Speaker 1: facing a lot more sort of military heft to contend with.
Speaker 1: And then as well, you know, part of what Trump
Speaker 1: did there was the blockade on venezud and oil, while
Speaker 1: China's the main, nearly only buyer of that, Whereas if
Speaker 1: the Chinese were to a blockade of at Taiwan's chips,
Speaker 1: the entire world relies on that right for sort of
Speaker 1: modern manufacturing. So I just think the consequences they're very different.
Speaker 2: Now stepping back that Trump administration's attack on Venezuela follows
Speaker 2: a military strike on Iran and June, another country that
Speaker 2: China has a close relationship with, and that also comes
Speaker 2: on the heels of a new US arms package for
Speaker 2: Taipei that, if approved, would be the biggest ever you know,
Speaker 2: record arms package to Taipei. What kind of messaging does
Speaker 2: that send to She and whether this might further stoke
Speaker 2: tensions between the US and China.
Speaker 1: What Trump said at the end of last year that
Speaker 1: him and She are now in the G two. So
Speaker 1: I think Trump knows there's sort of two big players
Speaker 1: on the world stage and it's him and it's huge
Speaker 1: and pain. I think militarily, Trump is proving that America
Speaker 1: still has a huge edge. You know, like if it
Speaker 1: comes to sort of who has the power of the guy,
Speaker 1: and you know it's America. You can't sort of compare
Speaker 1: the American military to the PLA right now. I think
Speaker 1: that probably is sort of the takeaway from all of this,
Speaker 1: Like Trump is, he's made strikes in Nigeria, Yemen, Iran,
Speaker 1: and Venezuela. He's protecting America's power, I think in a
Speaker 1: way that we haven't seen in quite a while.
Speaker 2: I mean, that can't sit well in Beijing.
Speaker 1: I think for She it will only increase the urgency.
Speaker 1: He was already trying to modernize China's military because they
Speaker 1: want to be able to match US power, not because
Speaker 1: they want to invade other countries necessarily, but just because
Speaker 1: they don't want to be bullied and pushed around, and
Speaker 1: I think the trade war show the only way you
Speaker 1: can stop that is if you are a true equal,
Speaker 1: and so I think for she then it's just going
Speaker 1: to expediate the need to sort of make China's military
Speaker 1: as strong as it can.
Speaker 2: Now, what could happen in Taiwan is, you know, theoretical
Speaker 2: at this point, whereas Latin America is looking down the
Speaker 2: barrel of concrete implications very soon. And I wonder, in
Speaker 2: light of that, what are you watching most closely?
Speaker 1: I'm watching how far Trump goes, you know, testing China
Speaker 1: in South America. It's easy to sort of publish a
Speaker 1: security strategy and to make sort of big claims, but
Speaker 1: we've seen in Panama that, you know, it's not that
Speaker 1: easy in reality. And I think it's a test of
Speaker 1: how much Trump wants to keep Palsa sheet, you know.
Speaker 1: I think he's in such mixed signals about China. Sometimes
Speaker 1: I think that maybe is because those around him are
Speaker 1: more hawkish than he is. But how far is he
Speaker 1: willing to go? And I guess it boils down to
Speaker 1: you is he happy to be in the G two
Speaker 1: or does he really want to be the G one?
Speaker 2: You know?
Speaker 1: And I think We haven't got the answer to that yet,
Speaker 1: but this is going to be a very interesting year
Speaker 1: to see.
Speaker 2: Yeah, the start of a crazy year.
Speaker 1: Yeah. You always think the next year is going to
Speaker 1: be quiet, and it's always busier.
Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha.
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