China Decode: The U.S. Attack on Venezuela is All About China

0:01Even although, you know, Venezuela is not Taiwan in terms of China's core interests, it is an important strategic foothold for China in Latin America. I mean, it was described as an all-weather strategic partnership back in 2023. That's sort of the second tier in terms of friendships that China has with the rest of the world. So this was a critical relationship that has, I think, been weakened with the Trump administration's move.

0:30Welcome to China Decode. I'm Alice Han. And I'm James King. In today's episode of China Decode, we're discussing how China will respond to Trump's takeover of Venezuela, a turning point in the electric vehicle race, and China's luxury food boom. That's all coming up, but first let's do a quick check-in with how the Chinese markets are starting the week. On Monday, the Shanghai A-Share Index rose 1.4 % on its first trading day of the year. The Hang Seng H-Share Index rose less than 0.1%, hovering near a seven-week high. Oil companies PetroChina and China National Offshore Oil Corporation both fell more than 3 % due to their ties to Venezuela, but more on this in just a bit.

1:14And Minimax, a Shanghai-based AI company backed by both Alibaba and Tencent, is expected to begin trading on the Hong Kong Stock Exchange within the week at an IPO valuation of$6.5 billion. All right, let's get right into it. China just watched the U.S. pull off a lightning strike and takeover in Venezuela, removing the leader, Nicolas Maduro, and threatening to take some control of the nation's oil industry. Now, this happened just hours after Beijing's top envoy was sitting with Maduro himself. Now, this timing could be accidental or it could be the opposite. But for China, Venezuela isn't just an ideological ally.

1:57It is a significant energy supplier, a major debtor, a strategic foothold in Latin America, and a test case for pushing against U.S. dominance in the Western Hemisphere. A day after the U.S. operation, the Chinese foreign ministry declared itself, quote-unquote, deeply shocked and strongly condemned the flagrant use of force by the United States against a sovereign state. So the real question now isn't so much whether China is angry, it's how it will respond. Will Beijing swallow the loss and play the long game? Or does Trump's move force China to harden its posture elsewhere from Latin America to Taiwan or even the South China Sea?

2:38What happens next could tell us a lot about the shape of US-China relations in 2026. James, I want to hear your takes before I dive into mine. What's your view on this? Well, Alice, I mean, you know, when it rains, it pours, hey? The new year starting off like this, there really couldn't be a bigger geopolitical question for China than how it reacts to this. And I think you framed it perfectly. Is it going to play the long game, or are we going to see some retaliation pretty much straight off, potentially even military retaliation? Now, I'm not going to duck the question. I'm going to go straight in there.

3:17Of course, we can't know the answer. Such things are among China's most closely guarded secrets. But I think that we will not see a military retaliation from China on Taiwan or in the South China Sea, at least not in the short term. I think that what you framed as China playing the long game is a much more likely scenario. And the reason I think that is because Taiwan considerations are in the background of China's reaction to this. Venezuela is a long way from China. It's a long way from Taiwan. But just let me try and sketch out why I think Taiwan and China's reaction to Taiwan is crucial in this geopolitical shadow play that we're watching.

4:07I think that the way in which the US framed its move on Venezuela as part of its attempts to shore up its backyard, to concentrate on what both Trump and Marco Rubio described as the Western Hemisphere, I think that that may give China a ray of hope or at least cause to wait and see whether the US is really serious about concentrating its geopolitical attention onto the Western hemisphere, which of course doesn't include Taiwan or China, and thereby move away or shift the focus of its geopolitical reach away from China's sphere of influence. And so I think if that does turn out to be the case, We may well see China taking a longer view on this.

5:04And although, yes, some of China's condemnations have been fairly strong, I also think that other statements by the Chinese so far give the sense that China is really waiting to see. The two pieces of reasoning that I advance to support my point of view is that the national security strategy, which the US released in December last year, identifies the Western hemisphere as the vital interest of the US. And it drops language from the Biden presidency that identified China as America's most consequential geopolitical challenge. It also doesn't even mention great power competition at all with China.

5:53And it also downgrades the status of Taiwan. In the past, under Biden, it used to say that the US was opposed to a shift in the status quo of Taiwan. But the new national security strategy unveiled in December last year in the US says that it, quote, does not support a change in the status quo of Taiwan. This is seen as a clear downgrading of the importance and sensitivity of the Taiwan question. So I think that China is hopefully waiting to see the US redefine its geopolitical focus to its own backyard, i.e. Latin America, and in this case, Venezuela in particular, and thereby shift away from Taiwan and those contentious areas, the South China Sea and China itself.

6:46And if that happens, it will give China breathing space to advance its biggest priority in terms of geopolitics. But this is really hard to call at the moment, Alice. I'm really interested in your take on it. So how do you see it? Well, very quickly on the geopolitical front, before I talk about some of the economic consequences, which are worth delving into as well. It's interesting that, you know, we talk a lot about the Trump's approaches, the Roosevelt corollary to the Monroe Doctrine. To borrow another Roosevelt analogy, I think China's approach to this after seeing what happened in Venezuela is going to be to speak softly and carry a big stick.

7:26And what I mean by that is, on one hand, it will continue, I think, to pursue some kind of trade detente to try to soften some of the edges, the rough edges in the relationship. I think that they were heartened by the national security strategy document that you referred to, James, not being a direct attack on China as it had been in previous administrations. But at the same time, massively increasing its investments and deployment of its military capabilities. We saw that in full display a couple months ago at the September parade. So I think we'll have a two-track approach to this relationship and towards China's geopolitical strategy.

8:04But it is worth mentioning, James, that even although Venezuela is not Taiwan in terms of China's core interests, it is an important strategic foothold for China in Latin America. I mean, it was described as an all-weather strategic partnership back in 2023. That's sort of the second tier in terms of friendships that China has with the rest of the world. So this was a critical relationship that has, I think, been weakened with the Trump administration's move. And if we think about the economic implications as well, it's not so much about oil, because only about 5 % of China's seaborne crude imports come from Venezuela.

8:40It's more about the debt that's outstanding. So we have still, by some estimates, around$10 billion, if not more, of debt outstanding that Venezuela owes to China. And a lot of that traditionally from Chavez onwards to Maduro was in the form of loan for oil deals. That, I think, is going to be subject to debate whether or not Chinese creditors are going to get a haircut or they're going to have to miss a lot of the debt that's owed. Because fundamentally, Venezuela, I think, is going to have to listen to the Americans, at least in the short term in terms of some of these debt restructuring and oil developments in the region.

9:17So I think from China's vantage point, this is a net loss, certainly. But I agree with you, James, if we broaden it out, I don't think this materially increases China's designs to invade or blockade Taiwan. I think if I'm in Beijing watching this, I would tread carefully because the Trump administration has shown that it has the military muscle to fight in areas that it deems to be in its national core interests, which in this administration is about the Western Hemisphere. So if I'm Xi Jinping sitting in Beijing, I'm going to sit tight a little bit and see what the Trump administration is going to do in its second half of a lame duck presidency.

9:57Because remember, we have the midterms coming up. a lot can change domestically, they can also transform and alter Trump's geopolitical strategy. Absolutely. I think one of the first indicators that we're going to get of the trajectory of China-US relations after this move in Venezuela is whether or not Trump's meeting with Xi Jinping, which is supposed to take place in April, actually goes ahead. If we start seeing that, that meeting is called off or people are talking about rescheduling a meeting, then I think it will be a sign that things are going badly wrong in the US-China relationship, perhaps partly because of these tensions and losses that China is going to suffer over Venezuela.

10:43But if China gets a sense that there is something to play for on its crucial priority of Taiwan, i.e. a softening of the US position on Taiwan, then I would expect China to be pushing full steam ahead for that meeting to go ahead. Yeah, I agree. I think that will be the next litmus test in April if the two presidents meet and whether or not Taiwan is on the table, so to speak. And I'm sure that the Chinese will be testing the Americans to see to what extent the Trump administration is willing to sacrifice blood and treasure for a Taiwan campaign, which at least to my mind, when I think about the Trump clan and the people around Trump, I mean, including, frankly, especially Rubio as Secretary of State.

11:25It doesn't seem to be a top priority. I think that the focus in this administration is very much on Latin America, on defending the Western Hemisphere, as opposed to being embroiled in conflicts overseas. But I wanted to talk a little bit about some of the economic implications for some of the players in China, because, you know, we've heard on Monday that the NFRA, the National Financial Regulatory Administration, is telling the banks that it needs to release its exposure to Venezuela. It's still unclear when I was digging into the data to the extent to which the policy banks and banks in China are exposed to Venezuelan debt.

12:01But when I look at the numbers since 2007, you have over$100 billion in loans that were lent to Venezuela to help with infrastructure, to help with oil. What's your take on this? Have you been following this, James? Yeah, I mean, I used to write a lot about China, Venezuela, because Venezuela was the poster child of the Belt and Road Initiative launched by China around 2012 in Latin America. It was the number one borrower among Latin American countries from China. And China was building all kinds of infrastructure in Venezuela. There were factories, railways, roads. it really was a showcase of what China could do.

12:46And China wanted to show the whole region. And I remember back in the days of former President Hugo Chavez in Venezuela, talking about the alliances between China and Venezuela as like a great wall of friendship that obviously we were supposed to read in would sort of keep the Americans out. And so, as you rightly say, Alice, Venezuela has been really crucial for China, but less so recently. And as you've already sketched out, I think if we boil it down to brass tacks, I think China stands to lose about 10 billion US dollars in loans that are not repaid if the deal doesn't go to its advantage.

13:30And also, there's a potential that it could lose around 2 billion in terms of investment that was intended by Chinese companies in the Venezuelan oil sector that may now not go ahead. Those are big numbers, but they're not catastrophic. China has lent more than two trillion US dollars as part of its Belt and Road Initiative, according to AidData, a US consultancy, over the last 10 or more years. So 10 billion, it's a large number, but it's not catastrophic in terms of the general reach of China's development lending around the world. Yeah, I mean, I agree with that. I think that the bigger implication is the geostrategic one for China in Latin America.

14:14And when we broaden that to China's allies or partners, you know, I feel very much that the axis of ill will has been weakened. Iran has been weakened substantially by Israel over the last few years. This is yet another, I think, ally and partner for China that has been weakened under of this administration. So we'll have to see what happens in 2026 with the rest of the players. Okay, we'll be back with more after a quick break and stay with us.

14:44For most of the history of television, if you missed a show, you just missed it. It was over. It was gone. But then this little company called TiVo came along and gave people superpowers. You could pause live television. You could rewind it. You could save it and watch it later. It was incredible, and the people who had it could not stop talking about it. This week on Version History, a new chat show about old technology, we talk about the history of TiVo and how it is that a company whose products actually no one ever really had or used became one of the most iconic stories in tech. All that on Version History, wherever you get podcasts.

15:25Welcome back. Tesla has just lost its crown. The company's sales fell 16 % at the end of 2025, hit hard by the rollback of US EV tax credits. And for the first time, China's BYD has overtaken Tesla as the world's top electric carmaker. It's a sharp turn for a company that once aimed to dominate global auto sales and is now betting its future on self-driving tech and robots. James, let's go right into it. I have a lot of opinions, but I want to get your take on why BYD has finally overtaken Elon Musk's Tesla. It's not been a good year for Elon Musk 2025, I have to say. Yeah, I mean, this is one of the great corporate rivalries of our time.

16:10I mean, it's rather like the Coca-Cola versus Pepsi, Apple versus Microsoft, McDonald's versus Burger King. But this time, it has an extra twist because this is an American high-tech champion versus a Chinese high-tech champion. And the bare facts are that Tesla has lost its global sales crown to BYD, the Chinese carmaker, after almost a decade as the world's best-selling EV brand. And this is because both BYD's numbers were up very sharply in 2025. They got a 28 % increase in global sales, and Tesla sales were down 8.6 % for the year. Of course, Tesla's sales are down partly because of tax changes in the US, which removed an incentive for American consumers to buy Tesla cars.

17:07But more generally, and this is where I think the main story is, BYD is steamrolling into markets all over the world. Here in Europe, in Southeast Asia, where you are, I think at the moment, Alice in Australia. And I've actually driven one of the BYD cars as it came off the first shipment to Australia. There was a massive ship transporter and about 5 ,000 BYD cars came off the ship. And I drove one in 2024 in Bremen. And I have to say, it took me a while to understand how to use it. There were so many kind of gadgets and dials. And the car was talking to me in German, which I speak very poorly.

17:54But after I got going, I have to say it was a very smooth ride. So it's a piece of high technology. But I think the crucial point is the BYD car that I was driving, which was the Dolphin Surf, cost about 23 ,000 euros. That's almost half the cost of the Tesla Model 3. And I have to say the cars are comparable in terms of their technology and their look. And I think that fact lies behind why BYD has managed to record a million sales of vehicles outside China last year. That's up an incredible 150 % from 2024. So I think, effectively, Tesla is being beaten by a cheaper car that looks kind of almost as good and is technologically either on a par with Tesla or even slightly better.

18:51What's your opinion, Alice? Well, at the risk of being contrarian, James, I'm going to take the other side of it and say that BYD may have peaked and some of these EV players may have peaked, at least domestically in China. You know, just to give people a sense of the numbers, BYD sold 2.26 million electric vehicles this year. Tesla sold 1.63 million. So that's quite a big delta between the two players. But a lot of it, James, I mean, to your point, still is a domestic driven story. I think the majority of EVs sold by BYD is still consumed by Chinese consumers. That trend that in the last few years has shifted.

19:30We're seeing more that are going out. But we can also discuss whether or not that is going to be an ongoing trajectory, given some of the trade barriers that countries like EU, for instance, are putting on China. But when I look at the domestic outlook, what's interesting to me is that the government just in the last week or so has announced that it's going to get rid of some of the tax waiver for the purchase tax on EVs. So originally, there should be a 10 % purchase tax. There was a full 100 % exemption of that for a couple of years. As of this year, it's going to be a 50 % exemption, so effectively a 5 % purchase tax on all EVs.

20:06That could have a material impact on whether or not you as a Chinese consumer are going to buy a new vehicle. But on the flip side, they've announced at the end of December that they're going to put in$8.9 billion ultra long special treasury bond issuance program to fund trade in of EVs and subsidies. So it could be that we could see after March at the NPC meeting that there is some more support for existing EV consumers trading in their old vehicles and buying new ones. But, you know, we're also seeing an economy that's still trapped in some kind of deflation. consumers are not spending as much as the government wants them to.

20:43So I'm still a little bit skeptical about the growth trajectory domestically in terms of demand for EVs. And then when we factor in some of the headwinds globally to Chinese EV providers, I'm a little bit worried. Yes, BYD has a superior product. I was just in a BYD vehicle a couple of days ago in Sydney, Australia. I'm seeing more of them on the streets for sure. But I worry a little bit about how this will be perceived by foreign governments as an influx of cheap Chinese EVs. So I'm a bit skeptical. I'm holding my breath to see if we're going to see major legislation from countries around the world to try to limit the amount of Chinese electric vehicles.

21:26Because remember, autos is a huge political issue, not just an economic issue for a lot of countries around the world. So I think this will be an interesting thing to track, obviously, when we think about the broader Chinese overcapacity issue and China's export engine. But one last thing that I wanted to add, which I thought was super interesting, again, tied to Elon Musk, is that he tweeted a couple of days ago that China's silver export controls are not good because silver is needed in many industrial processes. And I think people forget that given that silver is a precious metal, but it is used in cars, for instance, in electric vehicles, in solar panels, in AI data centers.

22:07And we've seen the creation of these export controls to restrict the global supply, more recently of rare earths. Silver has been added to that list. I think this is important and worth tracking because this also could have a material impact on Tesla, for instance, on other automakers, because silver is still an important input into some of these processes. And when I think about some of the levers that China will use in 2026 when it is unhappy with, say, the Venezuela policy with Trump's tariff policy, I think people should expect more of these precious metals, critical minerals, intermediary inputs being added to some kind of export control list and weaponized by China.

22:50I think that's really interesting, Alice. I just want to mention one thing. You raised the issue of protectionism. You know, countries here in Europe or elsewhere in the world may see these Chinese EVs steamrolling into their markets and displacing sales of, you know, valued domestic brands. And so I definitely think that protectionist pressures will rise. But I don't know whether, here in Europe anyway, the Europeans will actually get it together to have the unity to push forward, you know, greater tariffs or other forms of protectionism against the influx of these Chinese cars. And just one other really fascinating aspect that lies in the future, that is that BYD is planning on bringing its so-called flash charging batteries to Europe sometime this year.

23:46Now, these flash chargers can charge a car within five minutes. That means that they will significantly reduce the amount of time it takes to charge your EV. The one I drove, I almost missed my plane on the way back to the UK because the charger was so slow that, you know, we were standing there literally biting our nails, looking at the clock, wondering if we had the charge to get us to the airport. That will be a thing of the past when you can just draw up alongside a flash charger that will charge your car within five minutes. Now, Tesla does not have that technology. It is bringing out technology, but it will be slower than the five-minute charge.

24:31What I've been able to read online says that the next Tesla supercharger will charge a battery to within a range of 200 miles within 15 minutes. So China is ahead yet again in this crucial aspect of the whole EV market. Yeah, very interesting. All right, let's take one last quick break and stay with us.

24:58Welcome back. China is now exporting more than electronics and EVs. It is exporting luxury food. From caviar to foie gras, truffles to macadamia nuts, China has quietly become a global heavyweight in high-end agriculture, supplying its growing domestic appetite and increasingly reshaping markets overseas. Now, backed by provincial governments and years of investment, China now dominates global caviar production, a shift that's turning what were once niche European delicacies into another front in China's expanding trade power. I mean, this is a topic close to my heart, given that I do love food, James.

25:39Well, you're a tremendous cook as well, which is credentials that I definitely don't have. But I would just start by saying how wrong I have been in my thinking on this topic. I never imagined that China would leap to the global forefront of luxury food. I just thought that markets such as caviar, foie gras, macadamia nuts, black truffles, matcha tea would remain the domain largely of premium foreign brands in China. They have a kind of a cachet. Let's say the brand is French or Australian or Japanese or Russian or Iranian when it comes to caviar. But no, in this area too, it seems that China has risen to the forefront and is now dominating not only the market inside China, but globally too.

26:31I just never imagined that that would happen. The Financial Times has got a really good piece on this phenomenon. And it turns out that the caviar example goes right back to the late 1990s when some aquaculture scientists decided that you could use sturgeon to breed and it would take about seven to 10 years for a sturgeon to mature, produce eggs, and then you would take those eggs to a breeding center, and then the young sturgeon would grow. And that's how this market has developed. And so since that time, when China produced almost no sturgeon, to 2024, China produced 43 % of the global total.

27:19I just find that extraordinary. But tell me, Alice, how are you seeing this whole topic? Well, firstly, I have to preface this with the fact that I love European food. And I think there's something special about, you know, Parmesan coming from the region of Italy, Hamon and Birka coming from Spain. There's something that is unique about those flavors and the artisanal nature of how that developed. And when I mentioned this topic to a couple of European friends of mine, I think they were very upset by this because their immediate reaction was, well, it's never going to taste as good as what we produce here in Europe.

27:56But I think that that defeats the purpose. And I think that that is not seeing this for what it is, which is that China is trying to create more agricultural products. It is trying to develop more high technology and agricultural development aspects, I think, which will both appear in the five-year plan in March. And this is all part of Xi's broader strategy to have on the one hand agricultural self-sufficiency, but also develop agricultural critical technologies that can be developed domestically, but also potentially exported around the rest of the world. I'm thinking particularly of global South countries like Africa, where it would be particularly germane and of use.