The central banks of Venezuela and China signed a cooperation agreement in Caracas Friday that seeks to increase exchange of information on monetary policy and funding mechanisms.
Zhou Xiaochuan, Director of the People's Bank of China, said the agreement marks an important step in strengthening economic relations.
Zhou's Venezuelan counterpart, Nelson Merentes, described the deal as "historic," saying it would promote bilateral collaboration.
Since 2008, Venezuela has borrowed over US$40 billion from China in order to finance 226 social and economic infrastructure projects. In exchange, Venezuela pays the debt with oil, the amount of which fluctuates depending on the price of crude oil. The quantity of oil that China imports from Venezuela has rapidly increased, nearly doubling since 2011 and now accounting for approximately 10% of China's oil imports.
The Chinese-Venezuelan economic cooperation deal was announced leading up to an official visit by Chinese President, Xi Jinping whom is expected to arrive on Monday, as part of his the third stop on his ongoing four-nation Latin America trip.
During his visit, he is expected hold talks with his Venezuelan Counterpart Nicolas Maduro in which they will discuss a wide variety of issues including finance, energy and commercial agreements.
Before traveling to Venezuela, President Xi met with leaders from the CELAC countries in which he proposed the creation of $35 billion development fund to finance infrastructure and development projects. The proposal was widely interpreted as consistent with the cooperation agenda formulated in June 2012 by former Chinese Premier Wen Jiabao.
China has become an increasingly important provider of external capital to South American countries which has provided the region with increased political autonomy.