China Eximbank provides $170 million preferential buyer’s credit for Great Stone Industrial Park Construction Project (Linked to Project ID#66959 and #96419)

On January 17, 2013, China Development Bank signed a financing agreement with a China-Belarus joint venture and project company called CJSC “Industrial Park Development Company” (中白工业园区开发股份有限 or China-Belarus Industrial Park Development Company or CBIPDC or Компания по развитию индустриального парка) for the Great Stone Industrial Park Construction Project. The face value of the loan that CDB subsequently approved is $110 million. Then, on May 10, 2015, China Eximbank and the Government of Belarus signed a $170 million preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK № РВС (2015) 9 (351)] for the Great Stone Industrial Park Construction Project. The PBC originally carried a maturity of 15 years and a grace period of 6 years. Its interest rate is unknown. Joint Stock Company "Savings Bank" Belarusbank (JSC JSSB Belarusbank) is the agent bank responsible for servicing the PBC. The proceeds of the CDB loan (captured via Project ID#66959) and the China Eximbank PBC (captured via Project ID#66961) were to be used by the borrower to finance a commercial contract with China CAMC Engineering Co., Ltd. (CAMCE). The purpose of the project was to construct the infrastructure of the Great Stone Industrial Park (also known as the China-Belarus Industrial Park or Індустрыяльны парк «Вялікі камень» or Индустриальный парк «Великий камень»), which is located in the Smolevichi district between the Petrovichi reservoir and Minsk National Airport (25 km to the east of the capital city of Minsk). It involved the construction of 13 km of two-way, six lane roads inside the park; the installation of water supply, drainage, power supply, gas supply, communications systems; the construction of office buildings, warehouses, and factories; and the construction of a 110 kV transformer substation, six 10 kV distributions, 90 km power supply lines, one water supply plant, one rainwater treatment plant, one water intake station, and one secondary lift pump station. The park was designed to attract global high-tech enterprises with a focus on electronics, biomedicine, and engineering. CAMCE — a subsidiary of Sinomach — was the contractor responsible for project implementation. Its work was overseen by CJSC “Industrial Park Development Company”. The construction of the park, which was modeled on the China-Singapore Suzhou Industrial Park, began on June 19, 2014. Then, on May 12, 2015, Chinese President Xi Jinping and his wife Peng Liyuan inspected the project site in the company of H.E. Belarusian President Lukashenko. Construction, which was originally scheduled for completion in 2018, was completed on or around October 16, 2017. CJSC “Industrial Park Development Company” was founded on August 27, 2012 and it is jointly owned by Sinomach (32%), CAMCE (13.71%), China Merchants Group (20%), Harbin Investment Group (2.29%), and the Government of Belarus (32%). Its creation followed the signing of an intergovernmental agreement on the China-Belarus Industrial Park on September 18, 2011 and the subsequent ratification of the agreement by both countries on January 30, 2012. Then, on June 5, 2012, a special legal, regulatory, customs and tax regime was granted to businesses operating within the China-Belarus Industrial Park, providing favorable terms for resident businesses and investors. By the end of 2014, only two companies — affiliates of HUAWEI and ZTE — were operating in the industrial park. However, by May 2017, 13 companies were operating in the park and 10 additional companies — from China, Belarus, Russia, Austria, the USA and Lithuania — began operating in the park by the end of 2017. Then, in May 2017, the first stage of the China‑Belarus Commerce & Logistics Park was commissioned. About $120 million was invested in the construction of this logistics subpark with a total area of 100,000 m2. During the first quarter of 2018, Duisburger Hafen AG (duisport) acquired a 1% stake in CBIPDC, and as part of the transaction, a rail terminal (including a logistics area) was to be built, led by duisport, as well as China Merchants China‑Belarus, the Belarus state‑owned railway and Hupac Intermodal (Swiss), Europe’s leading intermodal (and green logistics) provider. As of August 2018, there were 36 companies were operating in the park (20 from China and 16 from Austria, Belarus, Germany, Israel, Lithuania, Russia, and the USA). By July 2019, there were 44 companies operating in park. There are some indications that the China Eximbank loan (PBC) for the Great Stone Industrial Park Construction Project financially underperformed vis-a-vis the original expectations of the lender. The lender extended the loan's grace period by an additional year in November 2020 (as captured via Project ID#96419). The Government of Belarus showed signs of financial distress before and after the grace period extension was offered. In 2019, the International Monetary Fund (IMF) reported that international reserves had fallen 'well below adequacy metrics', covering a mere 2 months of imports. On December 16, 2019, China Development Bank stepped into the breach and issued an RMB 3.5 billion ($500 million) emergency loan to Ministry of Finance of Belarus. It explicitly authorized the borrower to use the proceeds of the loan to repay existing debts and shore up the country's foreign exchange reserves. Then, on July 14, 2022, the Government of Belarus defaulted on its USD-denominated Eurobond payment. As of April 2023, it was attempting to meet its Eurobond payment obligations in local currency, in contravention of bond documentation that does not allow for settlement in alternative currencies. This local currency payment strategy was taken as Western sanctions against the Government of Belarus tightened due to its support for Russia’s invasion of Ukraine.

Additional details

1. This project is also known as the China-Belarus Industrial Park Infrastructure Construction Project and Phase 1 of the Great Stone Industrial Park Construction Project. The Russian project title is проекта Китайско-белорусского индустриального парка or проекта «Строительство инженерной и транспортной инфраструктуры стартовой зоны северной площадки территории первоочередного освоения Китайско-Белорусского индустриального парка «под ключ». The Chinese project title is 中白工业园建设经 or 中白工业园. 2. It is unclear if the Government of Belarus on-lent the proceeds of the China Eximbank PBC to CJSC “Industrial Park Development Company” (中白工业园区开发股份有限). This issue merits further investigation. 3. The Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020 identifies a $3 billion “loan” in 2012 from CDB and China Eximbank for this project. However, this appears to be a reference to two separate $1.5 billion pledges that were made by China Eximbank and China Development Bank in 2012/2013 (see Project ID#42313 and Project ID#73246). According to multiple official sources, this project was ultimately supported by a $170 million PBC from China Eximbank (captured in Project ID#66961) that was finalized on May 10, 2015 and a $110 million loan from China Development Bank (captured in Project ID#66959) that was finalized in 2013.

Number of official sources

12

Number of total sources

22