Belarus, China mull $500mn investment fund, closer cooperation

Belarus, China mull $500mn investment fund, closer cooperation
The Great Stone industrial park is the flagship Belarus-China oint venture
By bne IntelliNews August 3, 2017

Relations between China and Belarus continue to develop as Beijing uses the small Eastern European state as a bridgehead into Europe.

The two governments are considering setting up a $500mn investment fund to attract residents to their flagship joint venture, the Great Stone logistics and manufacturing park just outside the capital of Minsk.

The project is due to cost some $1bn in total and will act as a transport and production node for goods flowing from east to west as part of China’s massive One Belt, One Road (OBOR) project. The first phases are already complete and include warehouses and logistics firms. In the next phase the operators are hoping to attract more manufacturers. A total of 15 companies have already made the park their home.

The latest addition to the family is Ruchtech, which will begin construction of a $30mn plant to develop and manufacture automated laser systems for macro- and micro-processing of metal items, alloys, and composite materials will start this year.

As of today, there are 11 resident companies in the park with Chinese capital, one with Austrian, one with American, and two with Belarusian participation.

Plans for the fund were discussed during the meeting between Belarus President Alexander Lukashenko and Xiao Yaqing, chairman of the State-owned Assets Supervision and Administration Commission at China's State Council, in Minsk on 1 August, BelTA reported. The governments will initially seed the fund with $585mn, but it could be increased to $1bn or more, if need be.

Chinese companies are increasingly eyeing Belarus as a low cost bridgehead to produce and export to the rest of Europe. The meeting was attended by representatives of a number of major Chinese corporations.

“The companies represented in our delegation are among the world’s top 500 largest and strongest enterprises,” Xiao said during the meeting.

One deal that has already been struck is a commitment by China’s YTO Group Corporation to cooperate with Belarusian companies in the production of spare parts for agricultural machinery, Chairman of the Board of YTO Group Zhao Yanshui told the media during a visit of the Chinese delegation to agricultural concern BelAZ on 1 August.

“The main line of business of our company is the production of agricultural equipment and spare parts for it. We opened our office in the China-Belarus industrial park Great Stone today. It is planned that we will be working in close cooperation with the Minsk Tractor Plant, Amkodor, Saleo and jointly produce spare parts for agricultural equipment on the territory of the industrial park. Every company will use its advantages. In the future we plan to sell our products to the CIS, Eastern Europe, Central Asia, including China,” said Zhao, cited by BelTA.

BelAZ already has some cooperation deals with Chinese companies, such as the AVIK-BelAZ Mine Trucks joint venture in China in cooperation with CATIC Supply. BelAZ also takes part in a joint venture to produce cars in Belarus, the construction of the BelGee factory to make the Chinese brand Geely cars.

Belarus and China also plan to construct energy facilities in third countries together, Belarusian Energy Minister Vladimir Potupchik said.

“We have used over $2bn to build facilities of the Belarusian national power grid together with Chinese partners. We understand each other very well. We are now conducting negotiations to branch out into third countries together and build energy facilities throughout the world,” the minister said.

Amongst the mooted projects is a 330kV substation that will allow power exports from Belarus to Lithuania, which is one of 23 projects under discussion. As much as 95% of the cost is covered by a preferential loan from the Export-Import Bank of China.