The Republic of Belarus established diplomatic relations with the People’s Republic of China in January 1992, barely a month after gaining independence from the Soviet Union. Yet, relations with China received more attention in the country’s foreign policy only from the mid 2000s, when tensions with Russia, the European Union, and the United States saw the Belarusian regime search for new cooperation opportunities and partners, especially in investment and trade.
Since 2005, following a mutual declaration of intention to cooperate more intensively, China has been referred to as a strategic partner by Belarusian President Alexander Lukashenko and his officials. A comprehensive strategic partnership was officially declared in 2013, before the launch of China’s Silk Road Economic Belt (SREB), the land component of the Belt and Road Initiative (BRI). This was followed by a 10-year treaty of friendship and cooperation signed in 2015 during a state visit by Chinese President Xi Jinping to Minsk. The same year, China–Belarus relations attracted wider international attention when Belarus demonstrated its new long-range multiple-launch rocket system developed in cooperation with China.
In the 2010s, Belarus and China expanded cooperation in different fields, from loan finance and education to cross-regional ties. Still, bilateral high-level political interaction prevailed, setting the tone for other spheres. The partnership with China—perpetually emphasised by Belarusian authorities—was updated with new labels over the years. In 2020, before the dramatic Belarusian presidential elections, bilateral relations were referred to by President Xi as an ‘iron brotherhood’. Yet, the ensuing political crisis and massive crackdown on civil society in Belarus led to EU and US sanctions against the regime, to which Alexander Lukashenko responded with threats to block rail freight traffic transiting between Germany and China.
These developments have certainly tarnished the image of the country as a stable and predictable partner for China. Nevertheless, in September 2022, Belarus and China declared their relationship was an ‘all-weather comprehensive strategic partnership’. This was, however, a less emphatic description than those announced earlier by Belarusian officials (‘iron brotherhood, exemplary all-round strategic cooperation and all-weather partnership’)—once again demonstrating the discrepancy between the desired and the real in a shifting international context.
Belarusian authorities demonstrated great enthusiasm for China’s SREB/BRI after its launch in 2013, embracing it as a chance to obtain strategic, material, and reputational benefits. The Chinese side, when outlining the advantages of advancing the initiative via Eastern Europe, took an interest in Belarus due to its location, relatively developed transport infrastructure, and the keenness of its long-lasting regime to maintain cordial relations with China. Moreover, since 2014, turbulence in neighbouring Ukraine made Belarus a relatively more attractive and stable partner. Additionally, as a member of the Eurasian Economic Union (EAEU) since 2015, Belarus could potentially have facilitated the development of the China–EAEU free-trade zone by implementing Chinese–Belarusian industrial projects and actively supporting integration between the EAEU and the BRI.
In 2015, during a visit by President Xi, both heads of state agreed to jointly promote the BRI and expand cooperation in a wide variety of relevant areas, from trade and investment to information technology and cultural exchanges. They also declared an intention to revive the idea of a China–Belarus industrial park—and that dated back to 2010–11 but had floundered due to administrative clumsiness and limited attractiveness to Chinese investors and companies—declaring it an important joint BRI undertaking. Thereafter, the joint industrial park’s ‘Great Stone’, not far from the Belarusian capital, came to be regarded by both sides as a model BRI project.
Other BRI-related items have been added to the bilateral agenda. During the first BRI forum in 2017, both countries’ governments agreed to cooperate on the development of infrastructure, international freight transport, and warehouse logistics. The growth in China–European Union rail freight services worked for the image of Belarus as a transit country along the BRI, as most China–European Union rail connections passed through its territory. Additionally, since 2018, China and Belarus have adopted a mutual visa-free policy.
The Belarusian regime’s support for China’s BRI has been steadfast over the years, running like a thread through presidential directives on the development of bilateral relations with China from 2015 to today. This has been demonstrated on multiple occasions by officials and state media. Belarusian authorities have tended to overemphasise their strategic cooperation with China and the country’s role in the BRI, indicating high expectations of support from China. As for the Chinese side, the partnership has been a functional foundation for cooperation in the spheres of its interests, ranging from trade and economic links with the EAEU via Belarus to medical aid cooperation during the Covid-19 pandemic as part of China’s Health Silk Road initiative.
Current Economic Relations
Trade: China is the second-largest source of imports for Belarus after Russia and, largely because of this, is its third-largest trading partner, after Russia and Ukraine. Since the mid 2000s, Belarus has had a strongly negative trade balance with China. In 2021, the value of imports from China reached 2.73 billion USD, while Belarusian exports to China amounted to 1.09 billion USD. Chinese imports consist mainly of industrial goods (equipment, machinery and accessories, and consumer goods), while Belarus exports potash fertilisers and wood (sawn timber, pulp), and, in recent years, has made a strenuous effort to export its agricultural products (mainly frozen beef, poultry, and condensed and dried milk) to China.
In 2022, due to its involvement in Russia’s invasion of Ukraine, Belarus was sanctioned politically and economically by the European Union, the United Kingdom, and the United States. Seeking export and import alternatives, the regime pinned its hopes on China, which took over Ukraine’s position as Belarus’s second-largest trading partner. From January to August 2022, Belarusian exports to China reportedly more than doubled, exceeding the total for the previous year. Yet, China’s exports to Belarus have been slowing, with a 1.4% decrease from January to August 2022 compared with a 29% annual increase in 2021 and a 17.5% annual increase in 2020.
Investment: Chinese investment in Belarus has not been very impressive, totalling 2.6 billion USD, with 1.1 billion USD of that in foreign direct investment (FDI), since 1992. Most of this investment came in the 2010s, with a marked increase between 2014 and 2018. In these four years, China rose to sixth or seventh position among the top-10 investors in Belarus, later dropping back to ninth and tenth place. The increase occurred after the launch of the BRI and the initial impetus given to the joint industrial park.
The extent to which conditions in Belarus are favourable for China’s investors matters a lot. For instance, Chinese experts and diplomats repeatedly call attention to the shortcomings of the Belarusian economy and hence the risks for Chinese investors and enterprises.
Chinese investment has been directed mainly towards industry and construction, as well as transport and logistics infrastructure. More than 50 investment projects were under implementation in 2021, with most concentrated in the joint industrial park.
Aid: China’s aid to Belarus has been provided mainly in the form of non-refundable technical and economic assistance (more than 500 million USD in total by 2022). This began in 2007, but most came after the two countries reached an intergovernmental agreement in 2014 and President Xi’s visit to Belarus the following year. The assistance was granted to Chinese contractors to develop infrastructure at the joint industrial park (such as elements of the electrification system and a fixed riverbed) and construct public utilities (for example, social housing and a hospital building). In 2020, the construction of a large stadium and a swimming pool (estimated to be worth 235 million USD) financed by China commenced in Minsk.
Other Finance: Belarus’s external debt amounted to 18.4 billion USD in mid 2022. According to the most recent statistical data on the country’s public debt from the Belarusian Ministry of Finance, Belarus’s external debt to China as of 1 November 2021 represented 1.4% of the total amount borrowed that year. For the second consecutive year, China was Belarus’s fourth-largest creditor (with a 4% share). China had previously been among the top-three creditors, becoming the third largest in 2018 (22%) and rising to second position (39%) behind Russia in 2019. By the end of the 2010s, Belarus had received Chinese loans to implement more than 30 projects in transportation, energy, and industry.
An increase in Chinese lending to Belarus followed a 3-billion-USD concessional loan and 4 billion USD in commercial credit lines agreed to during Xi’s visit in 2015. Since 2005, Chinese loans tied to specific projects, or loans covering 85–100% of the contract with a minimum 35–60% mandatory participation of Chinese contractors and suppliers, have made China one of the top lenders to Belarus. In 2019, when the debt guaranteed by the state to China increased again (to a share of 39%, compared with 22% in 2018), Belarus managed to secure the first untied Chinese loan (3.5 billion RMB, or about 500 million USD), which was referred to in official reports on public debt as a remarkable achievement for Belarus. According to Belarusian state media, this loan was intended for government debt servicing (debt repayment and interest on outstanding loans) and to support bilateral trade. Chinese official media, on the other hand, reported that the loan would be used for investing in renminbi-denominated assets and trade support.
In 2020 and 2021, more than 5% of Belarus’s external debt was in Chinese renminbi. In September 2022, Belarus announced a switch to Chinese renminbi to pay out Chinese loans originally denominated in US dollars.
Alongside the official narrative of a fruitful bilateral partnership, there have also been controversies related to the practical implementation of cooperation.
Transiting Freight Transportation: The transit of freight transportation between China and the European Union is one of the factors making Belarus attractive for China’s BRI. The volume of freight along the northern route of the China–Europe Railway Express was increasing in both directions before the 2020s. According to official statistics, in 2020–21, transport services dominated Belarusian exports of services to China. Yet, the threat to block this rail freight in the summer of 2021, as well as the weaponisation of the instability created by a migrant crisis on the Belarus–European Union border in late 2021, had the potential to create obstacles for Chinese partners, motivating them to launch alternative routes, such as a multimodal route from Xi’an bypassing Belarus via the ports of Saint Petersburg (Russia) and Mukran (Germany). This route was launched in January 2022 by China Railway to ‘avoid the unstable operation of the China–Europe train caused by congestion at some traditional stations’ in Eastern Europe.
After Russia’s invasion of Ukraine in February 2022, the decrease in rail freight transiting through Russia and Belarus (of at least 35% by October 2022, as reported by Russian Railways), especially eastwards, increased uncertainty about the scale of operations along the main rail route. Even though a September 2022 declaration by China and Belarus mentioned their intention to ensure the ‘safe and smooth running of China–Europe–China trains’, the changing international context of Russia’s war in Ukraine continues to generate uncertainty.
Joint Industrial Park: Since 2015, thejoint industrial park has been seen in Belarus and China as a model BRI project, but there have been controversies with its development, such as initial discrepancies in the expectations of the park’s functions and decreasing attractiveness to investors.
Belarusian authorities initially envisioned the park as a key project for the development of advanced and green technologies, biomedicine, and logistical services, with a view to promoting closer logistical links with Chinese partners within the ‘16+1’ initiative in Central and Eastern Europe. In response, Chinese experts and practitioners pointed to China’s experience in the gradual development of special economic zones from much less technologically advanced projects. In the view of Chinese experts, the park should evolve according to market demand, producing products that comply with China’s technical standards and focusing on the markets of the EAEU. Furthermore, EAEU regulations requiring a high level of production localisation for automotive industry products to circulate freely on the EAEU market undermined some of China’s expectations.
To make things worse, after the start of the political crisis and economic meltdown in Belarus, attempts to consolidate the budget included raising income tax for the park’s employees in 2021. All this reconfirmed to Chinese partners the risks of a changing legislative framework and the poor investment climate. Despite an order from Alexander Lukashenko later the same year to improve the legal regime of the park and enlarge its scope of activity, the damage to the park’s image could not be entirely undone.
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Cover Photo: The House of Government at Independence square, Minsk. Credit (CC): Marco Fieber, Flickr.com