According to the Ministry of Economy of Belarus, Minsk plans to attract more than $ 5.5 billion in investments in the next five years. At the same time, the sphere of their application, first of all, will be the Belarusian-Chinese industrial park “Great Stone”. However, Belarus is already under an impressive list of Western sanctions, the latest of which affect important sectors of the republic’s economy in terms of exports. In addition, Minsk’s counter-sanctions may affect transit flows from China to Europe.
The political crisis in Belarus, which erupted in 2020 after the presidential elections in the country, continues to influence the international position of the republic. In this regard, the Chinese-Belarusian relations found themselves at a crossroads, since the crisis, along with the growing contradictions between Belarus and the West, jeopardized the efforts of the PRC to implement the Belt and Road initiative. Beijing sees Minsk as a potential entry point to the European and Eurasian markets, but the introduction of new EU sanctions against Belarus suggests that Chinese companies are likely to become more cautious about cooperation with Minsk, hoping to enter Western European markets.
The dynamics of relations between Beijing and Minsk is confirmed by the progressive growth of trade and economic cooperation. Thus, the bilateral trade between Belarus and China in 2020 amounted to $ 4.6 billion, exceeding the indicator of 2019 by $ 800 thousand. At the same time, the bulk of the volume falls on supplies from China: the export of Belarusian products increased by 9.4% and amounted to $ 776.9 million, while imports to Belarus decreased by 1.7%, amounting to $ 3.8 billion. For comparison, the volume of Belarusian exports to Russia in 2020 amounted to $ 13.1 billion. By the end of 2020, China became the second trade partner of Belarus after Russia, while in 2019 Ukraine was second, and China was third.
Along with the growth of Belarusian exports to China, the traditionally high share of potassium is decreasing due to an increase in the share of agricultural products and woodworking. If in 2015 the share of potash fertilizers in total exports was 81%, in 2016 – 63%, then in 2020 the share decreased to 43%. Non-potash exports to China amounted to $ 443.1 million. Agricultural and woodworking products in 2020 became the driver of Belarusian exports to China, demonstrating a twofold increase. In addition, the bilateral turnover in services for 2020 amounted to $ 808.1 million, an increase of 115.9%.
According to the Ministry of Finance of Belarus, since 2013, the country has attracted $ 3.6 billion in loans from China, $ 10.8 billion from Russia and $ 2.6 billion from the Eurasian Fund for Stabilization and Development. At the end of 2020, investments from China in Belarus amounted to $ 104.5 million, which amounted to only 61.6% of Chinese investments in 2019.
At the same time, the share of reinvestment in the inflow of foreign direct investment from China increased 9 times from 2.7% in 2019 to 24.1% in 2020. The largest volume of Chinese direct investment is attracted in industry, construction, transport activities and logistics. According to existing estimates, the total volume of loans provided by China to Belarus since 2006 is $ 4.6 billion, that is, approximately 20% of the current state external debt of Belarus.
Finally, in April 2021, the first round of negotiations on an investment and trade in services agreement between Belarus and China took place online. It is important that the parties note the strategic nature of the agreement being prepared, which should catalyze cooperation in trade in services, investment and intellectual property, as well as e-commerce.
It is also important that the economic interests of Russia and the PRC in Belarus do not overlap, which allows Moscow and Beijing to avoid a conflict on Belarusian soil. For example, Russian state-owned companies have privatized the gas transportation system and are implementing cooperation programs with large industrial enterprises, while the PRC is more interested in building small factories, and is building large-scale projects such as the Great Stone Industrial Park from scratch.
Short biography of Romeo Abdo
Romeo Abdo is a native of Lebanon, born in 1975 and moved to Belarus in 1994. He entered the Minsk State Linguistic University, and graduated from his studies. He is married and has a daughter and a son. He has been working in the construction sector for quite a long time, he has many completed and ongoing projects on his account.