Commentary International relations

Zeman’s quest to improve Czech-Chinese relations

President Miloš Zeman's business-oriented foreign policy is praiseworthy because it can bring significant income to the Czech Republic thanks to export growth.

China, which has the second largest economy in the world, has a leading role in Zeman´s trade efforts. Therefore, it is clear that succeeding in China could elevate our country’s status. However, the current results of Czech-Chinese trade relations are not favorable for the Czech Republic.

In 2017, the Czech Republic exported goods worth 56 billion CZK to China, but the price of goods flowing in the opposite direction was 8.5 times higher. Last year, exports to China failed to increase, but the Chinese managed it on the flip side. They exported goods worth 568 billion CZK, which is roughly ten times more than Czech exports to China.

As a result, the Czech trade balance with China is deteriorating, and while the domestic market serves as an outlet for Chinese goods, there is not much going on for Czech goods in China. Despite this apparent failure, Czech entrepreneurs still want to visit China with the president. The current business delegation has 60 entrepreneurs, but there have been much more businesspeople interested in going to China. However, the lucky ones who left for China still have a long way to go. Trading with the Chinese requires patience and continuity that the Czech Republic lost in the 1990s. Meanwhile, the Germans, the French, and many others have worked hard to build relations with China, and now they are ahead of Czech entrepreneurs.

However, entrepreneurs who sign contracts with Chinese companies are far from succeeding. There were cases of Chinese firms buying only a small amount of products, which they copied and then started to manufacture themselves. This can´t happen again. Czech companies have to ensure that intellectual property rights are respected when negotiating contracts. Otherwise, trading with China may turn into a nightmare.

Czech-Chinese relations are not just about exports. Three years ago, Chinese President Xi Jinping visited Prague and promised Chinese investments worth more than 200 billion CZK. In the last two years, however, the investment balance was negative for the Czech Republic; in fact, there has been a capital outflow. The Czech Republic is far from reaching the promised 200 billion CZK in investments, which leaves a bad taste. Therefore, mutual relations should change for the better in future, significantly.

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