Why China takes interest in Belarus

By Oleg CHERKOVETS, Ph.D. in Economics, Minsk - Moscow

One of The Day's recent issues (No. 51 of September, 28, 2010) carried an article which adduced numerous convincing arguments to the effect that the Russian economy, despite all the "modernization" hype, is getting bogged down deeper and deeper, becoming a raw materials appendage to the world's most advanced nations. This was recently confirmed by the signing of a major loan treaty with China, about a huge credit from China for developing deposits in the Russian east. It looks like there is nothing else in present-day Russia to make it interesting for China.

Our neighbor, Belarus, is a different case. We have witnessed, over the past months, the Kremlin's unprecedented measures against the policies of the sovereign Belarusian state and its President Aleksandr Lukashenka. Moreover, many of the attacks from the top Russian administration have exceeded all imaginable and unimaginable bounds of decency.

Among such humiliating attacks were the disparaging remarks about Belarus' allegedly ineffective economy, which is supposedly kept afloat at the expense of Russia, and so on, and so forth. Meanwhile, facts show something totally different. One of those facts is China's attitude towards this little country's economy. Indeed, if China, the world's second economy, imports electronic integrated chips and circuits from Belarus (not just the renowned large capacity Belaz trucks), isn't it a more than convincing proof of Belarus' highly developed science and technology?

However, China will not confine itself to conventional trade relations. It is interested in deeper technical and technological cooperation with Belarus, in particular, in the form of joint ventures. Thus, in 2009, several joint ventures were created in Belarus, on the basis of such giants of Belarusian industry as the Minsk Tractor Works, Gomselmash, and BelAZ. At the same time, in China, two other companies arose - LLC AVIK-BelAZ Quarry Trucks, and Harbin Duntszin Gomel Agricultural Machine-Building Enterprise. More recently, in 2010, another China-Belarus joint venture was registered in Harbin, which assembles the power-hungry Belarusian tractors. Just like Russia, Belarus also receives huge credits from China, but this is where the similarities end. As our readers know, loans for Russia are tied to the use of industrial and road machinery and equipment made exclusively in China, for the development of, say, Russian coal fields. Conversely, the disbursement of Chinese loans in Belarus is going via the construction of new state-of-the-art cement plants, or the modernization or thermal power plants, with the active involvement of Belarus-made equipment and materials. Again, this is a sign of China's vivid interest in using Belarus' industrial potential.

Here is one of the most conspicuous examples. In 2007, after President Lukashenka's visit to China, a decision was passed to create in Minsk, on the basis of the well-known Horizont television factory, of a new joint venture which would produce up-to-date appliances. The Chinese party was represented by the Midea Holding Company, a renowned industrial giant. In that very year, without any red tape or massive bribery (so typical of present-day Rus-sian officials), the new joint venture was officially registered on the territory of the Minsk special economic zone. It was immediately equipped with state-of-the-art Chinese equipment, with an extensive involvement of Belarusian scienti-fic and technological products and of Belarus-made equipment.

The following year, in 2008, reconstruction was completed, and in 2009 the factory issued its first product, microwave ovens. This very product, after an exhaustive analysis of market conditions, was handpicked as the first mass production item for this new enterprise.

The production volume for the Belarus-China joint venture Midea-Horizont is one million microwave ovens per annum, as of today, and this is far from the upper limit. There have been some new investments to expand production, and as soon as in 2012, the partners expect to reach an annual production of three million units. Moreover, they are developing plans to produce up-to-date electric heaters, vacuum cleaners, and other advanced household appliances.

Their major target consumers are East European countries, such as Russia and Ukraine. For instance, there is an agreement to open Midea-Horizont's trade mission in Kyiv, which will immediately begin promoting the Minsk-based joint venture's products on the Ukrai-nian market, to the benefit of both Belarusians and Ukrainians.

What is more interesting for the great China, both economically and strategically: the immense Russia, which produces nothing but raw materials, or little Belarus, with its considerable scientific, technical, and industrial achievements?


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