China is building an entire city in the forests near the Belarusian capital of Minsk to create a manufacturing springboard between the European Union and Russia.

Belarusian President Aleksandr Lukashenko has allotted an area 40% larger than Manhattan around Minsk’s international airport for the $5bn development, which will include enough housing to accommodate 155,000 people, according to Chinese and Belarusian officials.

Lukashenko, who has led the former Soviet state with a population of 9.5m for two decades, is turning to China to help revive its $60bn economy that has needed $6.5bn in bailouts from the International Monetary Fund (IMF) and Russia since 2009.

When built, the new hub will put Chinese exporters within 170 miles of EU members Poland and Lithuania and give them tax-free entry into Russia and Kazakhstan, which share a customs union. It will also let them draw from a workforce that is 99.6% literate and makes $560 a month on average, which is half the Polish wage.

The city will be built around the M1 highway that links Moscow and Berlin via Belarus and Poland. A speed-rail network will tie the airport to the centre of the city, which will be powered by a $10bn nuclear plant, Belarus’s first, which Russia has agreed to finance and build by 2018. The first stage of the park is scheduled to be completed by 2020, with the second stage taking another 10 years.