Imminent reshuffle in the hierarchy of leading partners
Following the visit of China’s President, Xi Jinping, to Minsk, Belarusian-Chinese relations are likely to be long to the fore.
Following the visit of China’s President, Xi Jinping, to Minsk, Belarusian-Chinese relations are likely to be long to the fore. The recent meeting has resulted in dozens of beneficial contracts being signed, including for the finance of various projects.
Economy Minister Vladimir Zinovsky tells us that China is allocating over $7bn of credit to Belarus, with around $3bn offered on privileged loan terms (extremely beneficial interest rates) and another $4bn as commercial loans to our banks, to finance business projects. Mr. Jinping also brought news of a major grant for Belarus (800m Yuans over three years), primarily targeting social projects, including housing construction.
The Government is delighted that Belarus has concluded over $1bn of credit agreements with China’s Eximbank. Meanwhile, the Chinese-Belarusian Industrial Park is becoming established in Belarus, with seven enterprises registered and another 14 applying. Not long ago, China’s Commerce Ministry announced that initial direct investments by Park participants should reach around $2bn.
During the visit, a change to the Park’s shareholders was discussed. China Merchants Group is eager to join, as the second largest shareholder after Sinomach. The corporation’s arrival would be beneficial for Belarus, which boasts great experience in industrial park management and logistical project development. Jointly with Sinomach, they would become a catalyst for the attraction of other Chinese businesses, placing the Park as a key platform for the Silk Road Economic Belt initiative.
The Chinese-Belarusian Industrial Park may attract sub-parks from various Chinese provinces, with some already expressing readiness to build mini-parks: the city of Harbin, the provinces of Sichuan, Guangdong and Zhejiang, and СРС International.
Various agreements and memorandums on co-operation should bring significant financial benefits to both sides, raising China from its current position as Belarus’ fifth major trading partner beyond the CIS (and seventh regarding investments).
Regarding long-term credit agreements reached during Mr. Jinping’s visit to Belarus, the Finance Ministry notes the total volume as around $3.5bn (repayable over 15 years). The Finance Ministry has signed two credit agreements on privileged terms for around $330m (to be repaid over 12-15 years) with China’s Eximbank: directed towards engineering and transport infrastructure within the Chinese-Belarusian Industrial Park and assembly of passenger cars until 2030 (BelGee JSC). Under government guarantee, two 15-year credit lines have been agreed, to realise $1bn of projects in the spheres of transport, energy, industry and infrastructure, involving small and medium-sized businesses. In addition, under government guarantees, Belarusian Railways JSC has signed three credit agreements (worth $175m) with Eximbank, to develop the rail network.
In realising the Silk Road Economic Belt initiative, Belarusian Railways has concluded a long-term co-operative agreement with Eximbank to extend the rail network, attracting up to $500m of Chinese loans. Meanwhile, the Finance Ministry, China’s State Bank of Development, Belarusbank JSC and Slavkaliy JSC have signed a memorandum on mutual understanding, planning to use a government-guaranteed loan of $1.4bn to construct a new mining complex at Nezhinsky field of the Starobin potassium salt deposit.
By Alexander Pimenov
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