Illustration: Liu Rui/GT

Venezuelan President Nicolas Maduro declared a 60-day state of emergency last weekend, and extended the economic emergency first decreed in January. Some Chinese worry that this may strike a blow to China-Venezuela economic cooperation since Caracas is on the verge of defaulting on its debt.

It is true that Venezuela is facing serious, and even insurmountable economic difficulties, yet the nation is not on the brink of collapse as some observers say. The Venezuelan government cannot be regarded as a failure either in its overall governance or long-term public policy.

First of all, a thorough and clear-headed view of the crisis in Venezuela is needed as fundamentally it is caused by the plummeting international oil price. Heavily dependent on oil exports, Venezuela could earn $150 million each day on average when international oil prices were as high as $100 a barrel. But as currently the oil price stays at $40 a barrel, Venezuela has seen its oil revenue drop by more than half. Natural disasters are also to blame for the crisis. Venezuela has abundant hydroelectric resources, but unfortunately this year it is undergoing a severe drought unseen for many years.

At a deeper level, Venezuela's economic difficulties originate in fragile and unipolar economic structure. The nation generates more than 80 percent of its revenues from oil. The plummeting oil price accelerates the plunge of fiscal revenue. Other economic categories in Venezuela are underdeveloped and the nation's natural resources have not been fully tapped. For instance, Venezuela has a unique advantage in developing tropical fruit planting and other agricultural enterprises, but it has to import a large amount food due to its underdeveloped processing industry. Maduro's current economic emergency has to some extent guaranteed the supply of daily necessities, stabilized the currency and cracked down upon widespread hoarding and profiteering. However, it takes time and patience to overcome the economic difficulties.

The crisis will for sure exert negative effects on China-Venezuela economic cooperation in the short term. As the Venezuelan administration is focusing on people's livelihood recently, some infrastructure projects, which are not urgent tasks, may be slowed down or even suspended. However, although the oil price plunge resulted in reduction in fiscal revenues, Venezuela has not defaulted on its debt so far. The "loan-for-oil" deal is proceeding as planned.

Given Venezuela's abundant oil and mineral resources, we should be confident in its ability to pay its debts. Fluctuations in the international commodity market are unavoidable. But as long as the resources related to the commodities are not exhausted, the nation will still be able to repay its debt. In addition, China-Venezuela oil cooperation covers more than the "loan-for oil" deal. Chinese oil companies have several stakes in Venezuela to directly exploit oil there.

China and Venezuela are building a comprehensive strategic partnership for the 21st century and for joint development. The priority for China at present is to strengthen comprehensive cooperation with Venezuela on agricultural processing, hi-tech research and development and so forth. The two states are strongly complementary as Beijing has advanced production capacity and Caracas has an urgent need to change its undiversified economic structure. Actions that envision the long-term development can effectively lower the political risks in Beijing-Caracas economic cooperation.

Although it is a fundamental principle to strive to minimize risks in business activities, the ethics and profiteering should still be well balanced in foreign economic cooperation. China can surrender some profits to help its partners out of economic difficulties as long as it doesn't have a serious influence on China's national interests. This benefits bilateral cooperation in the long run.

The author is the former Chinese ambassador to Venezuela. opinion@globaltimes.com.cn