Over some years, China has been increasing its economic and political presence in Eastern Europe, as well as in former Soviet republics in Central Asia. But in Belarus, despite rhetoric about great friendship, Beijing’s influence remains rather limited.
After the West imposed sanctions on Belarus in 2020 and 2021 following the crackdown on demonstrations and the arrest of prominent dissidents, the Eastern European nation became heavily dependent on Russia. Before the controversial 2020 presidential election, Belarusian President Alexander Lukashenko sought to expand his “multi-vector” foreign policy. He not only worked to improve relations with the European Union and the United States, but also aimed to attract Chinese investment. From China’s perspective, such circumstances were ideal for the implementation of its controversial Belt and Road Initiative. A new reality has, however, created more challenging environment for China’s plans in Belarus.
Although Beijing reportedly aims to increase its economic presence in Belarus, lack of structural reforms, as well as some sort of Soviet-style economy, seem to prevent greater influx of Chinese investment. In other words, China, as well as certain powerful Russian oligarchic structures, see the current economic model in Belarus as an obstacle to more advanced cooperation. Still, in 2015, Minsk was hoping to attract Chinese investments to a “smart city” project in the Belarusian capital, but in 2021 it became obvious that the United Arab Emirates-based Emaar Properties company, rather than Chinese corporations, would build a €4 billion complex.
In spite of that, China has so far financed at least 35 infrastructure projects in Belarus. The most significant one is The China-Belarus Industrial Park Great Stone. The China Exim Bank and the China Development Bank provided $3 billion in loans to develop mechanical engineering, electronics and telecommunications, biotechnologies, pharmaceutics, new materials, logistics, digital commerce, big data storage and processing in the Great Stone Park. However, out of 60 investors in the park, only 33 are from China, while 12 are Belarusian and the rest are companies from various other countries.
In September 2021, Belarus took another Chinese loan of $19.55 million for the reconstruction of the Stolbtsy-Baranovichi power transmission lines in Central Belarus. But Chinese loans and economic activities in the Eastern European nation still remain overshadowed by Russian actions on the ground. For comparison, at the end of March 2020, the volume of loans granted to Minsk by Moscow reached almost $8 billion, according to the prospectus of the issue of Belarusian Eurobonds, while Belarus’ outstanding debt to China is about $3 billion.
Until 2020, China was actively lending money to Minsk. In December 2019, Belarus got a $500 million loan from the People’s Republic and it was not tied to any particular project. Money could be spent on any goals, including paying off and servicing the state debt, keeping up Belarus’ gold and foreign exchange reserves, and assisting with the development of Belarus-China trade. But in December 2020, after Russia effectively helped Lukashenko to stay in power, Moscow approved $1 billion credit for its ally. As Russian President Vladimir Putin recently stressed, the total volume of Russia’s loans to Belarus, from September 2021 to the end of 2022, will be somewhere around $630 million. Thus, from a financial perspective, it is Russia rather than China that is buying social stability in Belarus.
Relations between China and Belarus, on the other hand, are primarily political, but to a certain extent they are also a source of balancing against Minsk’s growing dependence on Russia. The problem, however, is that Lukashenko’s room for political maneuvers has become very limited, which means that he is unlikely to be able to develop deeper economic and political ties with Beijing without approval from Moscow.
At this point, the economic interests of China and Russia in Belarus do not overlap. When it comes to energy, which is the major driver of Russia’s foreign policy, Chinese influence in the former Soviet Republic is minimal. Russia’s energy giant Gazprom, on the other hand, already owns the Belarusian section of the Yamal-Europe pipeline, and Putin and Lukashenko have reportedly agreed to deepen Belarus’ energy integration with the Russian Federation.
Finally, the very fact that a new land-sea cargo delivery service – from northwest China’s Shaanxi Province to Mannheim in Germany – bypasses Belarus clearly illustrates that the former Soviet republic is not on Beijing’s list of priorities in Eastern Europe. China will, however, aim to preserve good relations with Belarusian authorities, but in order to implement their economic agendas in Belarus, Chinese leaders will have to reach a deal not with Lukashenko, but with the Kremlin. After all, in a new Cold War reality, all roads to Minsk lead through Moscow.
Image credit: Steve Parker