China's Friendship with Belarus Threatens Russian Interests

Experts point out that Minsk is increasingly warming towards China; they interpret Beijing's recent behaviour as an attempt to find a new route for bringing Chinese commodities to the Russian market.
"Beijing is interested in finding new routes to Moscow, and might be looking to exploit the benefits provided by the Customs Union, of which Belarus is a member [as is Russia], in order to gain unhindered access to the Russian market," Kirill Koktysh, an analyst with Moscow State University of International Relations, said in an interview to Russian daily Kommersant.
Indeed, customs controls were lifted on the Russian-Belarusian border on 1 July 2011 as a consequence of the integration processes within the Customs Union of Belarus, Kazakhstan and Russia.
The planned China-Belarus industrial park on Belarusian soil will enjoy an offshore zone status for the first five years of its operation, meaning that China in effect will gain preferential access to the markets of Russia and Kazakhstan.
On 17 January 2012, in an interview for China's major media outlets ahead of to the 20th anniversary of diplomatic relations between China and Belarus, Lukashenka said: "Right now, there are common rules here [across the Customs Union]: if you come to Belarus this means you effectively come to Kazakhstan and Russia too. […] You may set up a joint venture and sell its products freely to this market with 170-million-strong population."
However, Alexey Rakhmanov, Russian deputy minister of industry and trade, told Vedomosti business daily that there is an agreement among the Customs Union member states to coordinate their industrial policy.
Other experts also note that Belarus cannot grant Chinese companies preferences and subsidies without the approval of its partners in the Customs Union.
In addition, the plan to set up the China-Belarus industrial park holds a direct threat for Russia. Belarus as a Customs Union member has undertaken to eliminate all special economic zones operating on its territory under preferential taxation regimes by the year 2017.
This requirement comes from Russia, which was made to close down all offshore zones on its territory as part of its accession to the WTO. In other words, if Beijing and Minsk go along with the industrial park plan they will threaten the prospects of Russia's WTO membership.
When Belarus and China first announced their intention two years ago, the Russian government's reaction was rather calm.
"Lukashenka's desire to attract foreign investors is understandable," President Vladimir Putin's press secretary Dmitry Peskov commented in September 2011. "We are not concerned over [his] signing any documents with China because Russia and Belarus have an absolutely special relationship of partnership and our economies are profoundly integrated."
At that point, however, Russia was still not a WTO member. Now it appears that Moscow may want to take a fresh look at the situation.
Labour migration is another potential problem. The construction and subsequent operation of the industrial park will result in a wave of Chinese migration to Belarus, and from there on to Russia, given the absence of an enforced visa regime between the two countries.
The US news agency Bloomberg estimates that the future park may house some 155,000 Chinese nationals; Belarusian sources speak of 600,000 to 650,000 migrants, while Andrey Suzdaltsev, deputy dean at the Faculty of World Economy and International Affairs of the Higher School of Economics, believes up to 1 million Chinese may emigrate to Belarus.
"The Belarusian president is playing his usual game, i.e. blackmailing Moscow and the West, but this time around he is playing with fire," Suzdaltsev warns. "It would be all too easy to let the Chinese in but impossible to get rid of them afterwards."
China-Belarus Industrial Park:
On 11 October 2011, the Belarusian Economics Ministry and China CAMC Engineering Co signed an agreement on setting up a China-Belarus industrial park in Belarus. The agreement had been coordinated at the highest possible level between the two countries' governments.
The 80 park will be situated 25 km away from Minsk, close to an airport, railway lines and the Moscow-Berlin motorway. It will cost an estimated $30 billion to build (Chinese sources say $60 billion).
Residents of the industrial park will enjoy substantial tax preferences, simplified entry visa procedures for their personnel, and access to a single-window service for dealing with all bureaucracy-related issues.
The parties have already prepared the necessary legislative framework, set up a managerial structure, registered a company to be responsible for infrastructural development of the complex, and completed the development of the construction master plan. Construction work should commence shortly.