President Xi Jinping’s visit to Czech Republic signals new round of Chinese investment

As Chinese President Xi Jinping kicked off his first state visit to the Czech Republic on Monday, local officials and analysts were predicting that a second wave of Chinese investment that they hope will stimulate the economy and reduce unemployment is about to enter the country.

Xi’s three-day visit to the Czech Republic comes at a time when Chinese enterprises have been ratcheting up their investment in the Central European nation over the past few years. Counting among their number, CEFC Energy Co.Ltd, a private Chinese conglomerate, has been increasing its ties with the country.

Witnessed by the heads of state of both countries, CEFC signed a series of cooperation agreements with its Czech partners in 2014.With its European headquarters located at the former Živnostenská Banka Building, a classic Czech contemporary building built in 1890, CEFC raised its stake in the J&T Finance Group to 50 percent, becoming the first Chinese private shareholder of a European bank.

It also acquired the Slavia Prague Football Club, saving the veteran Czech club from bankruptcy. The company also became a shareholder of the Pivovary Lobkowicz Brewery Group and introduced the latter into the Chinese market.

Cooperation agreements were also established between CEFC and Travel Service, the Czech airline giant. CEFC is also a strategic partner of the Czech-based Medea Group.

CEFC Chairman Ye Jianming told the People’s Daily that the spirit of craftsmanship among European companies is one of the treasures of its economy. During a time when China is working to promote its Silk Road Economic Belt and the 21stCentury Maritime Silk Road, CEFC’s investment in Europe conforms to China’s overall development and the general trend towards increased Sino-European cooperation, Ye added.

“CEFC is very optimistic about Europe’s future as well as the future of the economic and trade cooperation between China and Europe,” he said.

Investment by Chinese companies has drawn the attention of the Czech media. Radio Prague welcomed Chinese investment by saying the country was “looking to finally get a bigger slice of the Chinese investment pie after long lagging behind neighbors such as Poland and Hungary.”

The Czech Republic’s Minister of Industry and Trade commented last year that the country was “experiencing a Chinese investment boom.”

Commenting on how Xi’s visit is expected to bring with it a second wave of Chinese investment, Jiří Ovčáček, press spokesperson for Czech President Zeman, mentioned that the amount could exceed 45 billion korunas ($1.8 billion).

Other types of connections are being established between the two countries.

The first direct flight between China and the Czech Republic was also inaugurated last September by Hainan Airlines, one of China’s airline giants. The Czech government hopes that the Beijing-Prague route will attract more Chinese tourists and become an air hub for China’s “One Belt, One Road” initiative.

Bedřich Kopecký, Czech ambassador to China, described the air route as a new chapter of a very romantic story.

According to Guo Kaihua, general manager of the Hainan Airlines Prague office, by March 18, more than 20,000 peoples had traveled the route over 122 flights. Additionally, an increasing amount of non-Chinese tourists are also heading to China from Prague. At present, 36 percent of passengers are non-Chinese nationals, with most of them coming from Central and Eastern European countries such as the Czech Republic, Slovakia, Hungary and Romania, said Guo.

Czech analyst Lukáš Kovanda said the increase in Chinese investment is a positive signal that demonstrates the stability and sound investment environment of the Czech economy.

“These investments will also boost Czech’s economic development and employment rate,” Kovanda explained.