Saturday, March 27, 2010

China Flashes The Cash In Belarus

The economic juggernaut that is China is rolling into eastern Europe.  Belarus, Europe's great dictatorial backwater under President Alexander Lukashenko, is the unlikely target of the latest Chinese largesse.   The amounts are filled with lots of zeros.  A billion dollar loan, on favorable terms.  Ten billion in potential projects, spanning several industrial sectors, including cars, electricity and sugar.  It's the latest proof China is sniffing out economic opportunities in other former Soviet republics after conquering with its bulging checkpoint Central Asia.    

Chinese Vice-President Xi Jinping -- widely seen as China's next leader --travelled to Belarus with bold plans on March 24th, and 25th.   

First came the $1 billion loan during talks with Lukashenko. 
That is a huge financial lifeline for Minsk, facing a budget deficit of up to 2.7 trillion roubles, or $899 million, this year. 

Then came news of $10 billion worth of projects. 

That translates into 89 projects, including construction of an automobile plant and a sugar refinery and the reconstruction of several electricity plants.

There's even a plan to create a Chinatown in Minsk!

"This is a political decision -- and I want to emphasize this -- as part of the developing relations between Belarus and China," said Xi, seen as the front-runner to succeed President Hu Jintao in 2013.

Belarus government spokesman, Alexander Timoshenko talked boldly of growing bilateral trade ties. 

Timoshenko said the total amount of Chinese investment into the Belarussian economy could reach $15.7 billion, including a $5.7 billion credit line from China's Eximbank that was agreed in December.

Obviously, both countries are seeking what the other can offer. 

Lukashenko is looking to pull his country out of Moscow's orbit.

He has offered China greater access to a $50 billion economy built mainly on machine-building, chemicals, electronics and oil refining.

Trade between the two was down last year by $800 to $1.2 billion.

Experts put that down to the global credit crunch. 

China is flush with cash and seeking investment opportunities, especially in the energy field, wherever they be. Plus, Beijing doesn't bring the baggage of demanding that potential trading partners first prove their democratic bona fides.

Belarus is the latest and perhaps boldest foray into eastern Europe by China, but it's not the first. 

China is using its burgeoning car industry as a battering ram to crack the tough European market. 

But it is Central Asia, where energy-starved China, is signing deal after deal.

Most noteworthy was the opening in December in 2009 of a pipeline linking a massive gas field in Turkmenistan -- Central Asia's biggest gas producer -- with its Xinjiang region.

The 1,833-km pipeline, starting near a Chinese-developed gas field in eastern Turkmenistan, is expected to reach full annual capacity of 40 billion cubic metres by 2012-13.

With the United States sinking in debt, much of it funded by Beijing, it is the Chinese who are doing business while Washington does war.

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