**4. China-Belarus industrial park 'Great Stone' and its role to avoid the "debt trap"**

#### **4.1 Overview of the role models**

The idea of the China-Belarus industrial park was put forward following the visit of Xi Jinping, in his capacity as Vice-President of the People's Republic of China, to Belarus in March 2010. In September 2011, the Government of the Republic of Belarus and the Government of the People's Republic of China signed an agreement on the development of the China-Belarus industrial park.

The 'Great Stone' industrial park was originally established in Belarus within the framework of China's general policy of setting up its industrial parks in foreign countries. Since 2006, China has launched active efforts to establish industrial parks in Angola, Pakistan, Thailand, Venezuela, Vietnam, Cambodia, South Korea, Egypt, Zambia, Nigeria, Mauritius, and Ethiopia. Following the establishment of the ASEAN-China Free Trade Area in 2010, the plans for the construction of joint industrial parks in every ASEAN member state were made public. Despite the general policy, there was no uniform mechanism for the establishment of those parks. They varied in size, investment arrangements, specialization, and level and type of government support. And yet, during his state visit to Belarus in May 2015, President of China Xi Jinping called the China-Belarus industrial park "the Pearl on the Silk Road", thereby singling it out from the field of China's industrial parks and linking it to a different overseas strategy of China. Furthermore, it is remarkable that, as noted above, the idea of establishing the Industrial Park emerged in 2010, while the "Belt and Road" initiative followed in 2013. The 'Great Stone' industrial park has become a major project of Belarus-China cooperation and was presented at the international forum "Belt & Road" held in Beijing in May 2017.

Initially, the case of the China-Singapore industrial park in Suzhou was used as a model by the China-Belarus industrial park. The former was started in China in 1992 as a follow-up to the meeting of Deng Xiaoping with Lee Kuan Yew. The leader of Singapore stressed that it had been very difficult for the Chinese officials to adopt the best Singaporean practices during their regular business trips abroad. In this regard, Singapore, together with China, would establish an industrial park, and transfer its managerial skills in the process of its development and operation. The intergovernmental agreement on the establishment of the China-Singapore Industrial Park was signed in 1994. This park has gone through challenging establishment and development stages, including overcoming the distrust of the population, the creation of parallel parks, negative earnings, and all the rest of it. For instance, the losses faced by the joint venture managing the China-Singapore industrial park in its early years led to a situation where the Singapore side started selling its shares and exiting the project. Today this industrial park is one of the most successful in China. Its membership includes nearly a hundred Fortune-500 international corporations. The secret of its success is the application of the 'onestop shop' principle (quick resident registration), tax incentives for producers of innovative products, manufacturers of integrated circuits and software, and small businesses. The experience of the Suzhou industrial park in the sphere of tax incentives provided an example for the 'Great Stone'. The tax benefits have been significantly expanded to the '10 + 10' format: 10 years tax-free, and half the tax

#### *Belarus-China: Avoiding the "Debt Trap" DOI: http://dx.doi.org/10.5772/intechopen.96858*

rate for the next 10 years. In addition, the Decree of 2017 covered the 'one-stop shop' principle by analogy with the China-Singapore industrial park.

Since the beginning of the Park's active development, from 2013 to 2019, there has been an understanding that the 'Great Stone' is more of an experiment to improve Belarus' investment climate in several areas:


The fundamental issue for the success of the 'Great Stone' is who acts as the main contributor of managerial skills, technologies, and international values, that are to be fostered in the Belarusian staff of the industrial park. At this point, certain difficulties were experienced. Initially, the major shareholder (60%) of the administration company representing the Chinese side was CAMCE, sponsored by its parent corporation, SINOMACH. However, CAMCE is an engineering company and has a vested interest in Belarus, in the form of a contracting project at Svetlogorskiy Pulp and Paper Integrated Works, and no expertise in setting up industrial parks. In 2014, the shareholding structure of the Chinese side was changed following the visit of the Vice-Prime Minister of China, Zhang Gaoli, to Belarus. The share of CAMCE was reduced to 45.7%, and one new shareholder, China Merchants Group, entered the venture with a 20% share. The aim of changing shareholders was to boost technology inflow and direct investments into the 'Great Stone' industrial park.
