China’s Dream in Belarus: One Belt, One Road

Belarussian President Alexander Lukashenko.

While the Belarusian economy is in the midst of a seemingly manageable recession, the situation on the ground is more worrisome. High inflation and negative growth have led to a 21% fall in GDP valueaccording to Deutsche Welle when compared against a strengthening US dollar.

Lukashenko’s government has recently placed increasing emphasis on improving external relations with the EU, while also maintaining its long term partnership with Russia in order to generate future economic expansion. However, China has recently become the key source of financing for some of the country’s most ambitious developments.

For instance, the Great Stone Industrial Park, a 25 year project outside of Minsk, seeks to create a high-tech manufacturing zone with an emphasis on logistics, machine building, electronics, and chemistry. The park will potentially provide 120,000 jobs when completed. According to Deutsche Welle, five hundred Chinese nationals were brought on to assist with its construction.

When completed, the Park’s bill will range from €1.5 to 5 billion, depending on the end scale. The Belarusian government is providing a number of incentives for firms to move in, such as a 10-year 50% tax cut, increased guarantees surrounding property rights, and other benefits for residing within the free trade zone.

Although still in the early stages, the park has managed to attract a few high profile foreign tenants, most notably several Chinese firms. The most well known include telecom equipment manufacturers Huawei and ZTE, China Merchants Group, and Sinomach (China National Machinery Industry Corporation).

The heavy density of Chinese investment, construction planning, and tenants in this park serves as a tell-tale sign of the potential future importance of Belarus as a component within President Xi Jinping’s ‘One Belt, One Road’ initiative, which aims to connect China (and its excess industrial capacity) to foreign markets more concretely.

Belarus is strategically positioned on the doorstep of Western Europe with access to the Baltics while still residing inside the recently formed Eurasian Economic Union. The country has been aggressively pursuing infrastructure projects in the region, including investments in a Lithuanian deep sea port and a joint venture agreement with the Lithuanian state railroad for cargo service through Belarus and Kazakhstan.