Zeman Faces Backlash Over Sale Of State Assets To China

Milos Zeman Ye Jianming Xi

Prague, May 2 (CTK) – Czech politicians have finally realised that China has been investing in the country with the aim to swap money for power and they are preparing a bill enabling to assess Chinese investment projects and protect Czech know-how, Julie Hrstkova writes in daily Hospodarske noviny (HN) today.

 

Officially opening Czech arms to Chinese investments in late 2016, President Milos Zeman said Prague’s approach to China differs from that taken by other EU countries, which is why the Czech Republic might become “an unsinkable aircraft carrier” of the Chinese investment expansion, Hrstkova writes.

 

At the same time, EC head Jean-Claude Juncker was pushing for a plan to check foreign investments and warning that Europe must strictly control what it is selling and to whom, no matter if the sales involve strategic transport projects such as the ports the Chinese own in Greece or hi-tech industrial firms the Chinese wanted to buy in Germany, where, however, they met with the government’s resistance, Hrstkova writes.

 

Finally, the Chinese expansion to Europe was restricted by Beijing, which sharply toughened its conditions for exporting capital, she writes.

 

In the past ten years, the Chinese invested over 300 billion dollars in Europe, according to the Bloomberg agency, Hrstkova continues. The investments were the largest in Germany, resulting in its tightening of the acquisition rules. The impulse for the step was the purchase of KUKA, a producer of industrial robots, by the Chinese Midea group, Hrstkova writes.

 

At present, Germany is checking about 30 applications for the purchase of German companies by Chinese investors, she writes.

 

France has chosen a similar strategy. On a January visit to China, French President Emmanuel Macron said he welcomed all investments but there were strategic areas which France has to protect. He confirmed that France turned down several planned Chinese acquisitions of hi-tech firms in the preceding months, Hrstkova writes.

 

In the Czech Republic, no one has barred the Chinese from anything so far. In spite of that, their investments, which Zeman anticipated to reach hundreds of billions of crowns, have in fact reached a few billion only and they are gradually fading away, Hrstkova writes.

 

China’s Czech acquisitions have been minimal. In fact they rest in the purchase of some real estate in the centre of Prague and a Czech football club, she writes.

 

After the head of the Chinese CEFC company, Ye Jianming, was arrested in China a couple of months ago, Czech politicians do not invoke Chinese investments any more. At least they do not invoke them as loudly as two years ago, when many expected the rich China, from which Zeman wanted to learn how to run business, to replace the declining and incapable European Union, Hrstkova writes.

 

Now a bill is being prepared in the Czech Chamber of Deputies, initiated by the Christian Democrats (KDU-CSL), which would enable to ban the sale of Czech companies to anyone, including the Chinese, if the deal “threatened the Czech strategic interests”. This shows that Zeman’s “unsinkable aircraft carrier” is taking a different course, Hrstkova writes.

 

The crucial thing is whether the bill will make it through. Its passing will definitely not be easy in a situation where Chinese representatives have been regularly meeting Zeman and his aides, Hrstkova adds.

 

An article elsewhere in HN says the bill would enable to stop a planned foreign acquisition project if a suspicion arises that the investor is buying a Czech company in order to gain its technology or know-how, which might be used in the armament industry and applied against Prague’s allies one day.

 

“It is necessary to protect national interests. These are strategic issues and the state should have a chance to ban such a sale of a firm,” HN quotes KDU-CSL MP Jan Bartosek as saying.

 

Bartosek is preparing the bill based on a similar law that is valid in Germany and that enables the government to assess an acquisition within three months following a foreign investor’s entry, if the investor buys more than 25 percent of the given company, HN writes.

 

Bartosek’s efforts have already been backed by deputies from the ANO movement, the Social Democrats (CSSD), the Civic Democrats (ODS) and the Pirates, all of whom speak about the need of an instrument that would prevent a foreign acquisition if it posed a security risk, the daily writes.