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UPDATE 1-U.S. Treasury accuses China of aiding Maduro in murky deals

(New throughout, adds comments from China foreign ministry)

WASHINGTON, Feb 2 (Reuters) - The U.S. Treasury's top economic diplomat, David Malpass, on Friday accused China of enabling poor governance in Venezuela by propping up the socialist government of President Nicolas Maduro through murky oil-for-loan investments.

In a speech at the Center for Strategic and International Studies, Malpass said China's focus on commodities and opaque financing deals had hurt, not helped, countries in the region.

His attack on China's role in aiding the Venezuelan government came a day after U.S. Secretary of State Rex Tillerson, ahead of a five-day tour of Latin America, raised the prospect of a Venezuelan military coup.

The Trump administration has imposed individual and economic sanctions on Venezuelas government for rights abuses and corruption. Maduro has accused Washington of seeking to oust him to improve access to the OPEC nation's oil wealth.

Malpass, Treasury's under secretary for international affairs, said Venezuela's economic crisis and lack of democratic rule were among the "biggest disappointments and disasters" of the region. Washington and the opposition blame Maduro's policies.

"Most of the blame for Venezuela's economic collapse and humanitarian disaster falls squarely on Venezuela's rulers, but China has been by far Venezuela's largest lender supporting poor governance," Malpass said.

He said the international community and Venezuela's people would ultimately be left with rebuilding the country once democracy was restored.

"China denominated many of its loans to Venezuela in barrels of oil," said Malpass. "This has the effects of masking the exact amount of payments that China made to Venezuelan officials and that Venezuelans are expected to make to China in the future," he added.

Cooperation between China and the region was based on common interests and mutual needs, the Xhinhua state news agency said quoting the Chinese foreign ministry, and investments are in line with local laws.

"China is a major international buyer of Latin American bulk commodities, and imports more and more agricultural and high value-added products from the region," Xhinhua reported, quoting spokesperson Hua Chunying.

China has said it is confident in Venezuela's ability to properly handle its debts. Venezuela has borrowed billions of dollars from Russia and China, primarily through oil-for-loan deals that have crimped the country's hard currency revenue by requiring oil shipments to be used to service those loans.

Since 2007 China has loaned more than $50 billion to Venezuela through an oil-for-loans arrangement that helped Caracas reduce reliance on U.S. energy markets. But the flow of funds from Beijing has slowed since 2014, when abundant crude oil led to a crash in oil markets and made China less interested in maintaining its alliance with Venezuela.

Malpass also expressed concern at a decision by the Washington-based Inter-American Development Bank, the biggest lender to the region, to hold its 2019 annual meeting in China, saying the gathering should be held in the Americas.

"The Bank's 60th anniversary is an important milestone to celebrate the Bank's accomplishments ... and it would be fitting to hold the meeting in the hemisphere among major donors and borrowers," Malpass said.

The IADB did not immediately respond to a request for comment on Malpass criticism. (Reporting by Lesley Wroughton; Editing by Andrew Hay and David Gregorio)