China to invest $20bn in struggling Venezuela

China has agreed to invest more than $20bn in economic, social, and oil-related projects in Venezuela, as the country struggles from a financial crisis brought on from falling oil prices.

President Nicolas Maduro said on Wednesday he was seeking to strengthen ties with Chinese banks after meeting Chinese President Xi Jinping in Beijing, a week after Caracas announced it was in a recession.

“We have wrapped up over $20bn in investments during the course of this day’s work,” Maduro told Venezuela’s official AVN news agency.

The sweeping investment deal covers a wide range of areas including technology, housing and urban planning, AVN said.

Maduro, however, did not say whether the latest investments include new loans for the cash-strapped OPEC member, or if the investments were part of an existing oil-for-loans deal between Venezuela and China.

Beijing has extended $42bn in long-term loans to Venezuela, $24bn of which has been paid out so far, according to Venezuelan officials.

Xi said that China, the world’s second-biggest economy which has been bolstering its diplomatic and economic reach in South America – had agreed to “strengthened cooperation”.

The South American nation is desperate for hard currency as it suffers from the highest inflation in the Americas, at more than 60 percent, and plummeting global oil prices.

Oil accounts for 96 percent of Venezuela’s GDP, but has lost more than half its value since June 2014 owing to a glut in global supply and slowing growth.

A key ally of Venezuela since Maduro’s predecessor Hugo Chavez came to power in 1999, China is looking to strengthen its role in South America.

According to the Inter-American Dialogue, China has provided more than $100bn in loans to Latin American countries since 2005.

Earlier this week, China reached a deal to lend $7.5bn to Venezuela’s neighbour Ecuador, whose economy has also been hammered by falling oil prices.

That loan was reached by Ecuador’s President Rafael Correa, who, like Maduro, is attending a two-day forum in Beijing organised by the Community of Latin American and Caribbean States.