Lukashenka's Chinese dream

On July17 the Belarusan President completed his visit to China. The meetings were full of pomposity, but the results seem modest, writes Ryhor Astapenia.

Although Belarus has signed a Joint Declaration on the establishment of the relations of comprehensive strategic partnership, a number of contracts and agreements, the authorities have not achieved the main goal - to attract direct investments.

Lukashenka's regime has been repeating the mantra of a strategic partnership with the Middle Kingdom for years, but Belarus so far failed to receive significant benefits from the cooperation. China sets strict conditions for lending to Belarusan and in no hurry to invest. Some Chinese projects in Belarus slip because of the poor quality of Chinese equipment and services.

The future economic relations remain uncertain for Belarus. As a result of low level of Belarus's public administration, non-modernised economy and the lack of sinologists the relationship will develop according to the Chinese scenario. Belarus will play a passive role.

Lukashenka in the Middle Kingdom 

Lukashenka had many reasons to visit China. First, Belarus wants direct investments, and does not get any. Secondly, Lukashenka wants to soften Chinese strict demands in joint projects. It is unusual for Lukashenka that someone dictates him what to do, even Russia has no such powers. In addition, the Belarusan authorities keep trying to sell stuck stocks of agricultural machinery. 

Also, the China lobby inside the Belarusan authorities has strengthened. Former employee of the embassy in China Kiryl Rudy recently became an economic advisor to Lukashenka.

In China, Belarusan ruler had several important meetings. He held talks with head of the PRC Xi Jinping, Premier of the State Council Li Keqiang and Chairman of the National Committee of the People's Political Consultative Conference Yu Cheng-sheng. On 16 July, Lukashenka and Xi Jinping inked a Joint Declaration on the establishment of the relations of comprehensive strategic partnership.

The sides traditionally mentioned that no one could interfere into the internal affairs of a country using human rights issues. Belarus reaffirmed their commitment to the principle of "One China" and China has pledged to support protection of Belarusan sovereignty.

During the visit, the countries signed 36 documents for $1.5 bn worth of projects. However, most of these contracts relate to China's exports to Belarus. Moreover, Belarus will pay for Chinese goods or services with the Chinese soft loans. As Belarusan economist Siarhei Chaly noted, "the Chinese credit Belarus to expand own export."

Belarus lose in relations with China

Lukashenka likes to hyperbolise the benefits of the relations with China. The results of the cooperation remain rather poor.

Although the official Minsk does have credit lines for $16 bn, these credits remain restricted – they lead to increase of the Chinese export, usually of low quality, and to the expansion of the foreign debt. China hardly made any direct investments in Belarus and cannot grant the Belarusan workers the conditions that the Western investors could have granted.

In addition, the Chinese demand from the Lukashenka's regime more than any other country. Political activist Mikhail Pashkevich said that now the Chinese authorities demand enlargement of the area for the Belarusan-Chinese industrial park by 1,000 acres, the construction of the internal communication and logging Park for Belarusan money, as well as the right to use subsoil.

However, as Belarus cannot get cheap credits in any other place, the authorities continue to borrow money from China. 30-50 % of credits get back to China in the form of goods or services. The Chinese credits have a big plus – payments start after 3-5 years, and the percentage rate is about 3-4 %.

The actions of the Chinese manufacturers caused a blast at Minsk Thermal Power Plant and introduction of new capacities at cement factories was postponed for two years, which led to a $0.5 bn loss for Belarus.

According to the National Statistic Agency, Belarus' export to China remains five times less than that of imports, and a negative balance of trade is $2bn. Potash fertilizers make half of the Belarusan export.

Can Belarus win?

According to the Economist, the Chinese economy may leave the American one behind by 2019. The fact that China’s becoming the biggest world economy in six years and has a lot of money to invest prompted the Belarusan authorities to strengthen their relationship with China.

The Belarusan authorities know what they want, but have no idea how to get it. Belarus lacks enough sinologists with proper knowledge of the Chinese industry. This is the first reason why Belarus loses in the relations with the Middle Kingdom.

China's domestic market is growing at an incredible pace, but Belarus remains unable to capitalize on it. To gain a foothold in the Chinese market Belarus should conduct a real modernisation of the economy and create a number of strong brands with a touch of top luxury. For example, the Belarusan vodka or underwear could become significant brands in China.

Other causes of poor results in the relations with the Middle Kingdom remain standard. Belarusan officials need lectures of English and generally improve the functioning of public administration. According to leaked US diplomatic cables, former Ambassador of China to Belarus Wu Hong Bin privately admitted to an American ambassador that "even the Tajiks are more open and less bureaucratic." 

Until Belarus becomes capable of improving its public administration and understanding of China, getting the benefits from the bilateral relationship will remain just a dream of the authorities.

BelarusDigest