By Li Hongmei
China will invest US$5 billion in building an industrial city on the outskirts of Minsk, capital of Belarus, according to a recent report from Bloomberg cited by Xinhuanet.
Since establishing diplomatic tiesd with Belarus in 1992, China has been developing an increasingly close economic relationship with the country, as evidenced by the signing of the US$3 billion currency swap agreement between the two nations in 2009.
According to Chinese and Belarusian officials, Alexander G. Lukashenko, president of Belarus, has earmarked a plot of land near Minsk International Airport, with a space 40% larger than Manhattan, for the industrial city project, which will accommodate 155,000 residents. "The project will enable Chinese goods to enter duty-free into the markets of Russia and Kazakhstan, thanks to the tariff alliance among Belarus and the two nations," says a Chinese official.
China Development Bank and the Export-Import Bank of China have reportedly agreed to finance the project. Following the approval of the project, Gong Jianwei, Chinese ambassador to Belarus, remarked that "This is a unique project, as the projected industrial park will be unrivaled in scale in Europe."
The Belarusian government has pledged to develop the industrial park into a springboard for international commerce. Apparently, Chinese enterprises will set up factories in the park.
The Belarus official overseeing the project said that China has agreed to provide low-interest loans for the project, on the condition that half of the funds must be used to procure Chinese raw materials, technology or labor. The China National Machinery Industry Corp will own a 60% stake in the project, with the remaining 40% belonging to the Belarusian government.
In addition to hardware, the projected industrial city also boasts a good environment for software. Minsk's labor force boasts a high performance/price ratio, as 99.6% of local laborers are literate and their average month pay reaches only US$560, half the level in Poland. In addition, enterprises investing US$5 million or more are entitled to tax exemption for the first 10 years and a 50% tax cut for the next 10 years.
The projected industrial city is near the M1 freeway, which connects Moscow, Poland, and Berlin and will be linked to the airport via railway. It will be powered by Belarus's first nuclear power plant, which is being constructed with Russian capital at US$10 billion and will be completed by 2018. The first-phase construction of the industrial park is scheduled for completion by 2020 and the second-phase construction by 2030.
Up to now, more than 10 enterprises have expressed strong interest in the project, including China National Pharmaceutical Group (Sinapharm), listed on the Hong Kong bourse.
