Czech Republic

Czech Republic

Although China is not a significant economic player in the Czech Republic, bilateral relations remain very contentious. Some Czech leaders have pushed for the country to become one of China’s closest partners in Europe, while others have publicly raised concerns regarding China’s human rights record and its stance vis-à-vis Taiwan, which has made bilateral relations highly volatile.

Czech Republic

Written by Richard Turcsanyi.

Historical Background

In the 1950s, communist Czechoslovakia was one of China’s closest allies and its second most important trading partner (on par with Eastern Germany), right behind the Soviet Union. This ‘golden era’ came to a sudden end in the early 1960s, when the Sino-Soviet split led the two communist powers to become estranged, a situation that would remain unchanged for most of the Cold War.

The relationship began to improve in the second half of the 1980s, when Mikhail Gorbachev was in power in the Soviet Union, yet the Velvet Revolution of 1989 in Czechoslovakia terminated this thawing abruptly. The change of regime in Czechoslovakia left the new democratic and anti-communist government with very different strategic priorities than developing relations with China. Václav Havel—the last president of Czechoslovakia and, after the country’s breakup in 1993, the first president of the Czech Republic—played a major role in setting the Czech approach towards China, with reverberations that last to this day. As an anti-communist dissident and revolutionary, he made a name for himself, and his country, as the proponent of a ‘moral’ foreign policy supporting human rights and democracy around the world. Advocacy for Tibet and Taiwan, and opposition to China’s communist government, have become some of the most visible symbols of this approach.Since 2013, President Miloš Zeman has been attempting to change this by adopting a friendly approach to China as one his flagship policies, supposedly to attract Chinese investment in the Czech Republic and support Czech exports to China. As a response, Zeman’s political opponents, and much of the civil society, have doubled-down on their opposition to China, paving the way for an unprecedented official visit to Taiwan by the Senate President in 2020 which led to threats of retaliation from the Chinese side.

BRI Status

The Czech Republic signed the Memorandum of Understanding (MoU) on the Belt and Road Initiative (BRI) in 2015, during a summit of China and 16 Central and Eastern European countries in Suzhou, China. Under President Zeman (in office since 2013) and the government led by Bohuslav Sobotka of the Social Democratic Party (in power from 2014 to 2017), the Czech Republic became one of the most active countries within Central and Eastern Europe within the 16+1 platform and the BRI.

This activism manifested in high-level exchanges and the signature of various deals. On the diplomatic front, President Zeman was the only Western head of state present in Beijing for the military parade celebrating the end of the Second World War in 2015, and one of the few who attended the two Belt and Road Forums in 2017 and 2019. In 2016, Chinese President Xi Jinping paid an official visit to Prague, in what became the highest point of the bilateral relations. At the conclusion of the visit, a list of deals was announced totalling up to 10 billion EUR over the course of three years.

Still, as of February 2021, no infrastructure or otherwise clear BRI-related project has been realised in the Czech Republic, most likely due to the fact that China’s infrastructure building is not consistent with the rules and approaches of the European Union, which require that public money is spent transparently and economically through an open tender—a requirement thatgoes against China’s preferred mode of state-to-state lending and subsequent hiring of a Chinese contractor. Besides, the Czech Republic has access to the EU structural funds, which makes Chinese loans ultimately not competitive in the EU context. The proposed project of a water canal connecting the Danube, Labe, and Odra rivers is emblematic of the ambiguousness of the Czech Republic’s participation in the BRI. Although the project has been touted by President Zeman for a long time and a preliminary agreement to cooperate on a feasibility study of the project was signed during President Xi’s 2016 visit to Prague, whether it will ever materialise and whether Chinese companies will participate in it remain highly doubtful.

Current Economic Relations

Trade: As most European countries, the Czech Republic has a significant trade deficit with China. In 2019, imports from China accounted for 11.7% of the total imports, making China the second largest source of imports in the Czech Republic after Germany (which accounted for 27%). On the other hand, only 1.3% of all Czech exports went to China, a number that still made it the country’s largest Asian export partner. Most imports were in machines and electronics, while most exports were in the automotive sector. In terms of tourism, in 2019 there were more than 600,000 Chinese tourists visiting the Czech Republic, making China the fourth largest source of foreign tourists after Germany, Slovakia, and Poland. This is a significant increase compared to only about 160,000 in 2013.

Source: UN Comtrade.

Investment: Different sources give vastly different numbers regarding Chinese investment in the country due to different methodologies. According to the Chinese Ministry of Commerce, Chinese foreign direct investment (FDI) stock in the Czech Republic in 2019 was worth 287.49 million USD. German think tank MERICS put the number at one billion EUR, close to the American Enterprise Institute’s estimate of 960 million USD. These discrepancies notwithstanding, it is obvious that China is not a major investor in the Czech Republic, accounting for less than 1% of the overall FDI stock in the country regardless of which methodology is employed.

Source: Chinese Ministry of Commerce.

The lack of reliable and comparable statistics makes it complicated to judge the share of Chinese FDI flow as compared to overall incoming FDI into the Czech Republic. To get a sense of what this proportion might look like, in 2018  the government agency Czech Investlisted four Chinese-invested projects for a total value of 174 million USD, which directly created 960 jobs. In the same year, the same agency listed a total of 82 investments projects valued at 1.7 billion USD and creating more than six thousand jobs.

Key Controversies

Since President Zeman has adopted a friendlier approach towards China in 2013, a significant number of controversies surrounding the bilateral relations have erupted on the public scene. Due to space limitations, only a few representative examples will be discussed.

Although commitments of 10 billion EUR in Chinese business deals were announced in 2016 in concomitance with President Xi’s visit to Prague, so far the actual number has fallen far short of that. Most of the Chinese investment that has actually materialised has come from the CEFC China Company Limited, one of China’s largest private companies at the time of the announcement. Their investment in the Czech Republic included the acquisition of almost 10% of the shares of the J&T Financial Group (one of the leading Czech and Slovak financial groups), the Slavia Praha football club, the Lobkowicz brewery, a travel agency, as well as assorted real estate in Prague and shares in a local media group. However, in 2018, CEFC got into financial and political troubles. Its assets were temporarily taken over by its local creditor, and eventually by CITIC, a major Chinese state-owned investment company. The company’s chairman Ye Jianming was arrested in China on charges of bribery and, in March 2020, the company was declared bankrupt.

As these events were still unfolding, in November 2018 the new city government of Prague led by Mayor Zdeněk Hřib announced that they would scrutinise previously agreed sister city links with Beijing and Shanghai as the new administration did not approve the inclusion of the ‘one China clause’ in the agreements concluded under the previous city leadership. Eventually, Mayor Hřib announced that Prague would cancel its ties with Beijing, but Beijing—and later Shanghai—moved faster and cancelled the ties first.

Another incident occurred in December 2018, after the Czech National Cyber Security Centre issued a warning against Huawei and ZTE products, claiming that the legal and political conditions that require these firms to cooperate with intelligence services in China in certain scenarios would present a threat to Czech national security. After subsequent exchanges, Czech Prime Minister Andrej Babiš (in power since the end of 2017) accused the Chinese Ambassador, Zhang Jianmin, of ‘lying’ regarding how he had characterised their communications over the security warning. Following other tensions between the Ambassador and the Czech authorities, there were even calls for the Chinese government to replace its ambassador but they did not go anywhere.Another controversy erupted after it was revealed in February 2020 that Chinese officials had made threats in relation to the trip of Czech Senate President Miloš Vystrčil to Taiwan. Before the trip, it was discovered that the Chinese Embassy had prepared a document listing possible retaliation measures. After the trip actually took place in August 2020, Chinese Minister of Foreign Affairs Wang Yi threatened retaliation in harsh terms. However, there is no evidence of any actual retaliation taking place, with the only issue publicly discussed after the visit being the postponement of the sales of Czech piano maker Petroff. A few weeks later, however, it was reported that the company was continuing with its normal business in China.

Key Sources

English-language Media:

Radio Prague International and Prague Monitor offer news coverage on the Czech Republic in English.Kafkadesk and Visegrad Insight provide good coverage on the Central European region.

Institutions:

Czech universities, research institutes, and think tanks are very active in China studies. There are three departments of Asian studies teaching Chinese language and Sinology—at Charles University in Prague, Palacky University in Olomouc, and Masaryk University in Brno. Although these departments take mostly a ‘classical’ approach focussing on the language, history, and culture, they have been also active in terms of contemporary Chinese politics and international affairs.

Palacky University Olomouc has a history of hosting large-scale EU-funded research projects, in the past ‘Chinet’, and since 2018 ‘Sinophone Borderlands–Interaction at the Edges’. Employing about 40 researchers studying interactions between China and foreign countries and peoples, it is currently the largest research centre with such a focus in the country.

Sinologists affiliated with the Charles University have established the project Sinopsis, which has made a name for itself for exposing instances of ‘Chinese influence’ in the Czech Republic and beyond.

Czech Academy of Sciences hosts an Oriental Institute. Besides its more classical research focus, it has recently engaged in a research project ‘Power and Strategies of Social and Political Order’. The Institute also keeps a separate centre in Taipei at the Academia Sinica.

There is also a department of Asian studies at the Metropolitan University Prague focusing on international affairs of the Asian regions. 

Prague’s University of Economics and Business has its own Centre of Asian Studies, one of the few centres in the country studying China’s and other Asian economies.

Among the think tanks, the Association for International Affairs Prague (AMO) has a number of researchers and projects. Most importantly, it hosts the project China Observers of Central and Eastern Europe (CHOICE), which serves as a regional network of China-watchers. AMO also hosts a research project titled MapInfluence (previously known as ChinfluenCE), studying Chinese influence in Central Europe. 

The Institute of International Relations Prague, a research institute affiliated with the Ministry of Foreign Affairs, includes a Centre for EU-Asia Relations. The Institute is also a member of European Think Tank Network on China, focusing on the study of contemporary China and the EU-China relations.

The Central European Institute of Asian Studies (CEIAS), originally a Slovak independent think tank, has been active also in the Czech Republic and since 2019 has been affiliated also with the Palacky University Olomouc.

Reports and Scholarly Articles:

  • Fürst, Rudolf and Gabriela Pleschová. 2010. ‘Czech and Slovak Relations with China: Contenders for China’s Favour.’ Europe-Asia Studies 62, no. 8: 1363–81. 
  • Bajerová, Alžběta and Richard Turcsanyi. 2019. ‘Between Defender of Values and Faithful Ally: Czech Approaches to China in the Prism of Role Theory Approach.’ Studia Orientalia Slovaca 2. Link
  • Garlick, Jeremy. 2019. ‘China’s Principal–Agent Problem in the Czech Republic: The Curious Case of CEFC.’ Asia Europe Journal 17, no. 4: 437–51.
  • Turcsányi, Richard Q., Renáta Sedláková, Matej Šimalčík, and Kristína Kironská. 2020. ‘Czech Public Opinion on China in the Age of COVID-19: A Divided Nation.’ Link
  • Zelenka, Jakub. ‘Česko-čínské objímání [Czech-Chinese Hugging].’ Deník N. Link

See also the relevant policy papers articles in Sinopsis, MapInfluence, and the European Think-Tank Network on China.

Cover Photo: Praga, by @anarey (CC).

Updated on 14 March 2021.


Richard Turcsanyi is a Key Researcher at Palacky University Olomouc, Assistant Professor at Mendel University in Brno, and Programme Director at the Central European Institute of Asian Studies (CEIAS). He holds a PhD in International Relations and further degrees in economy and political science. He is the author of Chinese Assertiveness in the South China Sea (2017) and has published a number of academic articles and opinion pieces on Chinese foreign policy and relations between China and Central and Eastern Europe. He is a member of various networks focusing on contemporary China and EU-China relations.