Hlavní práce69462_yanl05.pdf, 1.5 MB Stáhnout

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Prague University of Economics and Business

International Business – Central European Business Realities

Trade and investment relationship between the Czech Republic and China: Contenders for Czech’s favor

Author: Lu Yang

Thesis instructor: doc. Ing. Ludmila Štěrbová, CSc.

Scholar year: 2019/2020

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Declaration:

I hereby declare that I am the sole author of the thesis entitled “Trade and investment relationship between the Czech Republic and China: Contenders for Czech's favor”. I duly marked out all quotations. The used literature and sources are stated in the attached list of references.

In Prague on 03.12.2020 Signature

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Acknowledgment

I hereby wish to express my appreciation and gratitude firstly to the supervisor of my thesis, doc.

Ing. Ludmila Štěrbová, CSc for her helpful approaches, prompt guidances, and the time she devoted to me in writing the thesis; Secondly, I want to give special thanks to Mrs. Ivana Krejci, for her helpful counseling and kind supporting throughout the whole study process; Thirdly, I sincerely thank my husband for his unconditional contributions to support me to continue my study.

I really value the opportunity to study at VŠE and want to express gratitude to every outstanding professor taught me.

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IV Abstract

With the implementation of the One Belt and Road Initiative (OBOR) and the 17+1 mechanism, China has increasingly based its investment goals on the potential market of the countries of Central and Eastern Europe, in particular the Czech Republic, which has several advantages, such as location and skilled labor. Within Europe, most of China's foreign direct investment (FDI) has been received by Western European countries, but as Central and Eastern European (CEE) countries have become a significant strategic region for China's One Belt One Road Initiative, more and more Chinese companies are choosing to invest in the Czech Republic, and the Czech Republic has become a major transport hub for China's e-commerce industry. China and the Czech Republic have contributed to remarkable changes in trade and investment ties, but they face different challenges as well. Trade and investment levels between the two sides have increased significantly, although the trade deficit has also risen sharply. Moreover, economic ties between the two sides have also been impacted by the instability in political relations and the global Covid- 19 outbreak. The thesis will also illustrate the advantages that the Czech Republic benefits from.

Keywords: OBOR initiative, 17+1 mechanism, FDI, CEE, trade imbalance, challenges, benefits for CZ

Abstract in Czech:

S příchodem iniciativy Belt and Road a mechanismu 17 + 1 se Čína stále více zaměřuje na investiční cíle na potenciální trh zemí střední a východní Evropy, zejména na Českou republiku, která má různé výhody, jako je umístění a kvalifikovaná pracovní síla. V rámci Evropy získaly západoevropské země většinu čínských přímých zahraničních investic (PZI), ale protože se země střední a východní Evropy staly důležitou strategickou oblastí pro čínskou iniciativu One Belt One Road, stále více čínských společností se rozhodlo investovat v České republice a Česká republika se stala důležitým dopravním uzlem pro čínské e-commerce společnosti. Čína a Česká republika zahájily nebývalý rozvoj obchodních a investičních vztahů, čelí však také různým výzvám. Objem obchodu a investic mezi oběma stranami prudce vzrostl, mezitím se také prudce zvýšila obchodní nerovnováha. Turbulence v politických vztazích a celosvětové vypuknutí Covid-19 také ovlivnily

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hospodářské vztahy mezi oběma stranami. Práce rovněž uvede výhody, které Česká republika získává ze svých ekonomických vztahů s Čínou při relativně malé velikosti trhu.

Klíčová slova: iniciativa OBOR, mechanismus 17+1, PZI, CEE, obchodní nerovnováha, výzvy, benefity pro ČR

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The Czech Republic seats at the heart of Continental Europe, where is an important transit hub for EU (European Union) member states. The Czech Republic has advantages in high quality and relatively preferential workforce cost and stable political, economic, and social-cultural environment. The Czech Republic owns a stable credit rating in Moody, Fitch and Standard &

Poor, these credit ratings and transparent investment incentive policies provide a viable guarantee for the Czech Republic to be one of the most attractive foreign investment countries in Central and Eastern Europe. Czech Republic was ranked 41^st out of 190 countries as the ease of doing business, while China was ranked the 31^st in terms of opening a business, getting a location, accessing finance, daily operations and securing business environment (Doing business, 2020). The advantageous industries in the Czech Republic are automotive, aviation, engineering, environment, medical, electrical and electronic engineering, chemical and manufacturing, information and communication technology industry, etc. (Traditional Czech Export Sectors, 2016).

Chinese economy experienced unprecedented growth since the launch of the economic policy of Reform and Opening in 1978, particularly after China joined the World Trade Organization in 2001, its economy has integrated into the global trading system, from decades it has become the world’s manufacturing hub and the second-largest economy in the share of nominal GDP(GDP by Country-Worldometer, 2019). The economic growth mainly depends on massive manufacturing, larger-scale investment, robust export. Since 1993, it has shown an uninterrupted trade surplus. In 2013, China surpassed the United States becoming the largest trading country(China Economy Overview, n.d.).

China is the Czech Republic's second most important trade partner after the European Union, however, the Czech Republic represents a relatively small market for China. There exists a huge trade deficit for the Czech Republic. There have been official visits from presidential, prime ministerial and other ministerial visits between the two countries, which encourages both companies to invest in the other country. China and the Czech Republic have also opened four

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direct airlines. Each year, about 300,000 Chinese tourists visit the Czech Republic. Just as the political and economic relations between the two countries have grown closer, it has been said that, in recent years, Chinese investment in the Czech Republic has not fulfilled its commitments in the media. The latest coronavirus outbreak in 2020 will place the world economy in a state of crisis. In the midst of the visit to Taiwan by the Municipality of Prague and the head of the Czech Parliament, the friendship between the two countries plummeted to the bottom, with Beijing and Prague dissolving their sister city ties.

The goal of the paper is to analyze the existing trade and investment links between the Czech Republic and China in the context of the One Belt One Road initiative and the 17+1 process, to explore how the political trends concerning the Sino-Czech relationship are related to the mutual trade and investment aspects, and to gain insight into the prevailing economic performance of the two countries. In order to provide comprehensive answers to the research topics listed above a significant number of macro-economic analyzes, policy and current affairs will be published.

The paper is divided into 3 parts, in the first chapter, the author presents the history review of the Sino-Czech trade and investment relationship, analyzes the proposal, development and disputes of the Belt and Road Initiative and the 17+1 mechanism respectively. As a key cooperation country under the 17+1 mechanism, the Czech Republic has established strong ties with China in the logistics and other trade fields in the context of the New Asia-Europe Continental Bridge Economic Corridor. The interview with Huawei Consumer Business Department manager in Prague, Czech Republic is added , which is used to observe the development of specific Chinese companies in the Czech Republic and reflect the satisfaction of Chinese entrepreneurs in operating their business, work and life in the Czech Republic.

In the second chapter, Dunning's conventional FDI theory is used from a macroeconomic point of view to examine the driving force of China's strategic expansion into the EU and Central and Eastern European (CEE) regions. China's main foreign direct investments are in Asian countries, although most of its European investments are also concentrated in Western European countries, but in recent years, with the trend of economic ties between China and Central and Eastern Europe,

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China is also increasingly concentrating its investments on Central and Eastern European countries. This chapter also lists the major European countries in which China has direct foreign investment, the comparison of Chinese FDIs in countries of Western Europe and Central and Eastern Europe, and the structure of the reciprocal export of goods between China and the Czech Republic.

Chapter 3 primarily cites the survey conducted by the China-CEE Institute on the awareness of Czech people about the OBOR initiative and 17+1 and their attitude towards the Sino-Czech economic relationship, and then extends to the attitude of the Czech government and media towards Chinese investment. In order to confirm whether Chinese investment is beneficial to the Czech Republic, the author cites examples. Finally, to prove whether the One Belt One Road Initiative and the 17+1 system have an effect on the economic relationship between Sino-Czech countries.

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Chapter 1: Trade and Investment relationship between the Czech Republic and China

This chapter aims to review the historical relationship of trading and investment between the Czech Republic and China. The ups and downs of international political relations have profoundly affected the economic relations between the two countries, from the honeymoon period in the 1950s to the estrangement of relations in the 1980s and 1990s, to the political relations of the Czech Republic as an important strategic partner of China's 17+1 mechanism and the One Belt One Road policy in recent years. Despite the political turmoils, the two countries have mutually benefited by increasing mutual economic and trade exchanges.

1.1 Literature review of Sino-Czech relationship in trading and investment

Prior to the 1920s, commerce between China and Czechoslovakia was performed largely by British and Austrian third-party firms. Along with the continuous development of the Sino-Czech trade, China’s share of Czechoslovakia’s foreign trade rose from 0.04% in 1920 to 2% in 1928, the main import from Czechoslovakia to China were military supplies. A bilateral trade deal was officially signed by the former Nanjing National Government of China and Czechoslovakia in 1930, which became a milestone in China and Czechoslovakia's trade history.

During the communist era from 1948, until the Velvet Revolution happened in the Czech Republic in 1968, the Sino-Czech economic relationship was partially driven through the political closeness and deterioration between the Soviet Union and China. After the founding of the People’s Republic of China (PRC) on October 1, 1949, Czechoslovakia was one of the first western countries China, Czechoslovakia formally established diplomatic ties with PRC in October 4, 1949. The first bilateral trade agreement, the Trade Agreement between the Central Communist Parliament of the People's Republic of China and the Government of the Czechoslovak Republic, was signed in June 1950, but it was only valid for 6 months. In the following two years, two bilateral trade contracts with a validity of one year were signed. Bilateral trade developed rapidly, and the trade volume increased from 23.2 million crowns in 1950 to 82.4 million crowns in 1951. In May 1952, the People's Republic of China and Czechoslovakia also signed a scientific and technological cooperation agreement，which is China's first inter-governmental agreement on scientific and

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technological cooperation with foreign countries. A long-term trade agreement from 1958 to 1962 was signed in July 1956. Throughout the 1950s, Sino-Czech trade was growing, trade volume increased sharply in the 1960s, reaching 8 times as much as in the 1950s, the number of participating producers increased and, the variety of commodities expanded too, at the same time, the import and export trade remained basically balanced. In the 1950s, the Communist Party of Czechoslovakia provided production technology to China, in the 1960s, China had received various forms of technical support from it too. China's foreign trade volume in Czechoslovakia ranks third only after the Soviet Union and the German Democratic Republic (The economic and trade cooperation between the Czech Republic and China, n.d.).

The first successful economic stage between Czechoslovakia and China ended. With the deterioration of Sino-Soviet relations in the 1960s, the Eastern European bloc countries including Czechoslovakia sided with the Soviet Union in the Sino-Soviet conflict, and their relations with China were almost deadlocked, which gradually alienated the relations between China and Czechoslovakia. After the Prague Spring broke out in 1968, China strongly condemned the Soviet invasion of Czechoslovakia.

On 16 June 1970, the Deal between the Government of the Socialist Republic of Czechoslovakia and the Government of the People's Republic of China on the Exchange and Payment of Commodities, concluded in Beijing, had a major effect on the terms of trade between Czechoslovakia and China. Use the existing development data of Czechoslovakia's total exports (calculated at current prices and constant prices) and take into account other factors-mainly the similarities and differences of Czechoslovakia's total exports to China and the development of the export product structure, the actual export volume of Czechoslovakia to China in 1970 was about one-quarter of the actual export volume in 1960 and nearly two thirds in 1979（Skrivan, A., Jr.

2011). In the 1970s, 60% of Czechoslovakia's exports to China were machinery and means of transport. Machine tools and trucks were still the most important items that Czechoslovakia supplied to China. Czechoslovakia's exports to China have not experienced any significant prosperity in the past ten years. Food is the most common commodity in China's exports to Czechoslovakia, accounting for 50-60% of China's total exports to Czechoslovakia. Despite

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frequent fluctuations, China's share in Czechoslovakia's exports did increase slightly. Nixon's visit to China in 1972 marked the official reconciliation of Sino-US relations. At the same time, with the breakdown of the relationship between the Soviet Union and the Communist Party of China, China realized that the technology provided by the Western world was much more advanced than that provided by the Soviet bloc. The international political environment and China's internal development have also greatly influenced the trade relations between China and Czechoslovakia.

The increasingly fierce competition from developed democratic countries is an increasingly severe challenge for Czechoslovak companies in China. The depression of trade relations between China and Czechoslovakia in the 1970s was in sharp contrast to the close political stimulation of economic cooperation between the two countries in 1950.

After China's Reform and Opening up, China-Czech economic and trade development has reached a new level. In July 1984, the two countries established the Economic, Technical, Trade, and Scientific and Technological Cooperation Committee and signed a ten-year economic and technological cooperation agreement. Despite the great historical changes that occurred in Czechoslovakia in 1989, the trade volume between China and the Czech Republic reached 910 million U.S. dollars. China's exports to Czechoslovakia have shifted from raw materials and food to consumer goods. Before 1991, China and Czech Republic adopted the intergovernmental bookkeeping trade method, changed to the spot trading mode after 1991. At this time, Czechoslovakia exports already had to compete with exports from Western countries in the Chinese importing market. And due to complex political reasons, the new political leadership in Czechoslovakia was moved closer to Western countries, which directly affects the economic domain. Moreover, the Chinese market cannot offer enough access, as a result, the exports from Czech to China dropped dramatically after 1993 with the official split of Czech and Slovakia, the mutual economic relationship didn’t recover until the end of the decade. However, following the fall in the early 1990s, the Chinese imports were resuscitated rapidly, at this stage, the volume of Chinese exports skyrocketed. The trade deficit between the Czech Republic and China continues to grow with the background of liberal customs policy adopted during the Czech economic transformation.

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The Sino-Czech Customs Cooperation Deal was introduced in February 1993. The Economic and Trade Agreement between the Government of the People's Republic of China and the Government of the Czech Republic was concluded in November of the same year. China and the Czech Republic treat each other the most favored countries, and the signing of the Economic and Trade Agreement has provided a strong base for the growth of bilateral economic and trade ties.

Since the late 1990s, the Czech Republic has founded the state-sponsored institutions of CzechInvest, CzechTrade, and CzechTourist, of which CzechInvest owns its Shanghai branch, CzechTrade owns its divisions in Shanghai, Chengdu, and Beijing(Čína - CzechTrade, n.d.). With the introduction of these state-sponsored agents, entrepreneurs will find more contacts to set up a company with, in particular, small and medium-sized enterprises (SMEs) and with the efforts of economic and commercial institutions on both sides, a good economic and trade partnership has formed and the amount of two-way trade has started to increase. In 2002 and 2003, the overall amount of bilateral exchange grew steadily at a rate of more than 50% each year. In April 2004, bilateral trade volumes rose to 1.8 billion US dollars (The economic and trade cooperation between the Czech Republic and China, n.d.).

In recent years, bilateral economic and commercial ties between China and the Czech Republic have made great strides in the context of tortuous globalization and in-depth progress towards a robust strategic relationship between China and the EU. China was described as a key new market for growth in the Czech Government's "2012-2020 Export Strategy" Czech exports to China have risen exponentially, rising by 25% from 2013 to 2016. The Sino-Czech trade relationship has been robustly established, with exports from the Czech Republic to China rising by 14.1% annually from US$ 134 million to US$ 2.77 billion between 1995 and 2018. At the same time, Chinese exports to the Czech Republic rose by 21,6 per cent annually, from 211 million US dollars in 1995 to 19 billion US dollars in 2018 (Czechia (CZE) and China (CHN) Trade, n.d.).

Major mutual export products include automobiles, electrical equipment, pump products, measurement, and control equipment, numerical control machine tools, textile machinery, and other manufacturing products. Figure 1 of the UN Comtrade data (2018) reveals that since 1993,

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the trade relationship between China and the Czech Republic has developed steadily over the last two decades. Before 1999, China's imports and exports to the Czech Republic were in a reasonably balanced condition, particularly after 2001 when China joined the World Trade Organization when the two countries acquired the most-favored-nation status, Czech Republic's exports from China increased significantly faster than imports. Compared to 1999, Czech exports to China grew 42.3 times, while imports from China increased 26.6 times in 2018.

Figure 1.China trade in goods with Czech Rep.since 1993

Resource: UN Comtrade data, 2018

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1.2 The establishment of the One Belt One Road construction and the 17+1 Mechanism in Central and Eastern European Countries

1.2.1 The One Belt One Road

1.2.1.1 Introduction of the One Belt One Road Initiative

In 2013, Chinese President Xi Jinping put forward the " One Belt and Road initiative" （Yi Dai Yi Lu） for the first time and described it as one of the important policies of political and economic development. The “One Belt and Road Initiative", also known as "New Silk Road", corresponds to the ancient Silk Road which began in the 2nd century BC. Broadly speaking, the ancient silk road can be divided into the Silk Road on the road and the Maritime Silk Road. Silk Road began in the Western Han Dynasty (202 BC-8 AD), Emperor Wu of the Han Dynasty sent Zhang Qian as an envoy to the Western Regions, passing through Gansu, Xinjiang, and reaching Central Asia and West Asia. German geographer Richthofen named China's silk trade which connected Central Asia, China, and India from 114 BC to 127 AD through on this western traffic artery as "Silk Road" (Richthofen, F von 1877-1912). The ancient Chinese Maritime Silk Road, an extension of the Silk Road, is a so-called ceramic road that began in the Qin and Han Dynasties. It has made important contributions to trade exchanges and cultural mutual understanding between countries, from Southeast Asia to South India, into the Persian Gulf, to the Arabian Peninsula, and all parts of East Africa (Silk Road, 2019).

The modern Silk Road (One Belt and One Road) refers to the land corridors that run through China (North China, South China, and West China), Central Asia and extends to Eastern Europe. The

"One Belt" is consists of six main economic corridors. "One Road" does not refer to land route, however refers to the Maritime Silk Road starting from the East coast of China, passing through Singapore, extending to the Mediterranean Sea, connecting ports in China, Southeast Asia, Africa, and the Middle East. The "Belt and Road Initiative" route runs through 69 countries, covering 62%

of the global population, 31% of global GDP, and 33% of global trade. The One Belt One Road

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plan covers large-scale cross-border investment, infrastructure construction, coordination of bilateral relations and cultural exchanges, and many other fields.

The modern Silk Road corridors are listed as below:

1) The China-Mongolia-Russia Economic Corridor

The economic corridor is aimed at improving trade along with China, Mongolia, and Russia by building goods transportation, energy transmission, and telecommunication operations.

2) The New Eurasia Land Bridge Economic Corridor

This economic corridor links China, Kazakhstan, Russia, and Belarus, eventually arrives in the Netherlands. It is improving the development of railway construction among the countries. In 2014, Kazakhstan, Russia, and Belarus are members of the Eurasian Economic Commission, EAEUNION, are expected to achieve the free circulation of goods, services, capital, and labor within the alliance by 2025. The author will introduce this economic corridor which extends to the Czech Republic in more detail later.

3) The China-Central Asia-West Asia Economic Corridor

It generally follows the ancient Silk Road, which starts from China’s Xinjiang province, connecting through 5 countries in Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan), to the regions from West Asia (Turkey and Iran). The range can reach the Persian Gulf, the Mediterranean coast, and the Arabian Peninsula. This covers energy and infrastructure.

4) The China-Pakistan Economic Corridor

It consists of building railways, highways, optical fiber networks from Xin Jiang to the port Gwadar in Pakistan, including building an airport in Gwadar special economic zone. The

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establishment of the Gwadar port can shorten the journey of China’s imports of Persian Gulf oil by 85%.

5) Bangladesh, China, India, Myanmar Economic Corridor

This corridor aims to connect Kunming in China to Dhaka of Bangladesh via Mandalay in Myanmar to building transportation, however, the economic corridor cannot move westward, because India has not joined the initiative yet. Kyaukphyu Port is an important port in Myanmar.

It links the Bay of Bengal and the southern end of the China-Burma Railway. It is China’s important port for transporting oil and gas imported from Africa and the Middle East. It saves the original transportation cost through the Strait of Malacca and reduces China's Dependence on the Strait of Malacca greatly.

6) The China-Indochina Peninsula Economic Corridor

This economic corridor extends from Pearl River Delta in China westward to the Greater Mekong subregion. The corridor is strengthening trade bonds between China and ASEAN (Association of Southeast Asian Nations), members by developing motorways, railways, and airlines (One Belt, n.d.).

Maritime Silk Road

There are 6 important ports directly managed and operated by China. They are Hambantota Port in southern Sri Lanka, Gwadar Port in Pakistan, Kyaukpyu Port in Myanmar, Suez Port in Egypt, Djibouti Port, and Piraeus Port in Greece. These ports together support China’s security of energy and trade transportation, and they are also key ports on the Maritime Silk Road. In the past, a huge part of China’s oil imports had to pass through the Strait of Malacca, which was a long distance away, and freight transmission was affected by the international situation. These major ports are important hubs linking Asia, Europe, and Africa, and surround the Indian Ocean, effectively protecting China's maritime trade, and reduce the cost of transportation.

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Figure 2, One Belt One Road Routes

Resource: OECD research from multiple sources, including HKTDC, MERICS, Belt and Road Center, Foreign Policy, The Diplomat, Silk Routes, State Council Information Office of the People's Republic of China, WWF Hong Kong (China).

The above is the basic overview of the Modern Road (One Belt) and Maritime (One Road) Silk Road, they jointly link the trade partnership between China and other countries.

In 2013, Chinese President Xi Jinping initiated the creation of the Asian Infrastructure Investment Fund, an intergovernmental multilateral finance organization in Asia (AIIB). One of its goals and objectives is to foster Asian infrastructure through investment in infrastructure and other productive sectors, boost connectivity and build wealth among the cooperating countries; the second goal is to promote regional cooperation with other multilateral and bilateral development agencies. The headquarter is based in Beijing. In the course of achieving the above goals and objectives, it may also improve the internationalization of the Renminbi, help to realize the large- scale funding of the Silk Road Plan and ensure the output of surplus capacity in the construction

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of Chinese infrastructure. There are 45 regional members, including Australia, India, Kazakhstan, etc., 36 non-regional members, such as Austria, Belgium, etc. To date, the Czech Republic is not a part of the AIIB. Any member or institution, or any entity or enterprise operating in the territory of a member, may be financed by the bank (Members and Prospective Members of the Bank ,2020).

1.2.1.2 Main Construction Projects of New Asia-Europe Continental Bridge Economic Corridor

The Czech Republic belongs to The New Eurasia Land Bridge Economic Corridor, which includes Albania, Azerbaijan, Estonia, Belarus, Bulgaria, Bosnia and Herzegovina, Poland, Georgia, Kazakhstan, Montenegro, Czech Republic, Slovakia Latvia, Lithuania, Romania, Macedonia, Moldova, Serbia, Slovenia, Ukraine, Hungary, and Armenia. This chapter will explore the main construction projects of the New Asia-Europe Continental Bridge Economic Corridor.

China Railway Express

China Railway Express, first launched in 2011, is an international intermodal railway express running between China and countries along the “Belt and Road” route to the European countries.

It operates according to a fixed number of routes, timetables at full-time operation. China Railway Express connects 71 cities in China and 67 cities in the other 19 countries. Until July 2020, China Railway Express has 70 dedicated lines, below the performance of China Railway Express from the year 2014 to 2019.

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Table 1, Performance of China Railway Express

2014 2015 2016 2017 2018 2019

No. of Trains

Containers No. of Trains

Containers

From China

280 2.39 550 4.7 1130 9.7 2399 21.2 3696 31.9 4525 40.2

To China

28 0.23 265 2.2 572 4.3 1274 10.6 2667 22.3 3700 32.3

Sum 308 2.62 815 6.9 1702 14 3673 31.8 6363 54.2 8225 72.5 Note: Containers Unit, 10,000 TEU

Resource: CTCT index

Chinese National Development and Reform Commission, in 2016, has drawn a five-year plan of developing China Railway Express, to bring out a more conducive trading relationship on the Eurasian landmass. As the China Railway Express Routes Map below, there are 3 routes (Eastern, Middle, and Western routes), 43 transit hubs on the cross-border are under development to improve the infrastructure and cooperation efficiency among border countries.

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Figure 3, China Railway Express Routes Map

Resource: Chinese National Development and Reform Commission, 2019

There are currently two China Railway Express routes linking China and the Czech Republic, one is from Yiwu, China to Prague, Czech Republic and the other one is from Wuhan, China to Pardubice, Czech Republic. It only takes half a month, which is a huge time saving compared to 50 or 60 days by maritime transportation. In 2018, Zhejiang Huajie Investment Development Co., Ltd. and Czech Railway Freight Co., Ltd. signed a memorandum of cooperation, that Czech Lovosice was officially launched as a “One Belt and One Road” project. Czech Lovosice Station provides docking, loading and unloading, warehousing, customs clearance, transit, and other services. At the same time, the railway combining with maritime transportation is to be used to transfer cargo from European ports to Lovosice Station (Weng, X., 2018). The Czech Republic is China Railway Express's multimodal transportation hub and two-way commodity distribution center in Europe, which has also promoted the continuous growth of Sino-Czech trade and investment (International Combined Transport - China Railway Container, n.d.).

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Panattoni Europe is an e-commerce hub near Václav Havel Airport Prague, D6 highway in the Czech Republic. It covers 25,000 square meters and serves as overseas warehouses and distribution center for Chinese cross-border e-commerce companies. Europe Huajie Development is the operator of this project, who promoted the cooperation between Chinese logistic companies such as YTO, JD, Cainiao, and Zhongtong, with Czech BeeFirst, Zongteng Network and other enterprises in Czech Republic. Panattoni Europe e-coomerce hub combines China Railway Express greatly help Chinese and Czech companies provide one-stop import and export services (A New Facility in the Panattoni Park Prague Airport II, 2018).

1.2.1.3 Controversy over the One Belt and Road Initiative

Chinese claim that OBOR (one belt one road initiative) is a form of economic-based "win-win cooperation between countries, although many Western critics are skeptical of the intent of Chinese implementations claiming that they are "debt traps" instruments. The "debt trap diplomacy" said by critics is untenable because the most fundamental justification for China's creation of the Belt and Road Initiative is to absorb overcapacity in China rather than loot the capital of other countries and sink the countries involved in a debt crisis. But it cannot be ignored that encouraging economically backward countries to develop infrastructure is advantageous for Chinese foreign influence power as the return advantage is to allow more countries in the international conflict and problems appear to vote for China (Kratz, A., Feng, A., & Wright, L., 2019).

From China's point of view, as the rate of domestic economic growth is slowing, China's production of steel, cement and machinery exceeds domestic demand, the OBOR and 17+1 system allows state-owned firms find new markets, absorb excess export capacity, and realize the internationalization of the Chinese RMB to allow China to retain sustainable economic growth without reforms.

The OBOR helps these nations boost transportation, electricity supply and commerce, and most of the countries along the OBOR are developing countries. For example, the Nehru Tim Jielu Mu Hydropower Station in Pakistan was constructed by a joint engineering team of China Gezhouba

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Group Co., LTD (CGGC) and China Machinery Engineering Corporation (CMEC) in 2014.

Around $4.3 billion has been invested in this initiative, with the objective of building a dam on the Nehru River and providing electricity through hydroelectric power. So far this hydropower station is Pakistan's largest hydropower plant, with a capacity of 5.15 billion kilowatt-hours. This project helped Pakistan build a subsistence infrastructure that for its nationals and future generations is currently totally out of its own hands. The OBOR drastically cuts trade costs and ultimately lets some countries escape poverty, supplying local people with ease (How One Belt One Road Benefits Developing Countries, 2019).

The OBOR promotes resources relocate reasonably among countries, to create mutual advantages between countries, for example, Kazakhstan is a landlocked country, with very cold winters, there is always lack of fruits and vegetables. Lianyungang City Government and Kazakhstan State- owned Railway Co., Ltd. signed an agreement on Sino-Kazakhstan International Logistics Cooperation Project. This project became the Silk Road Economic Belt and Maritime Silk Road.

The first physical platform built along the way. The total investment of the project is more than 3 billion yuan, of which the first phase of the project plans to build 220,000 square meters of container yards and 23,000 square meters of demolition and storage warehouses; 3.8 kilometers of railways dedicated to the yards, with an average daily loading and unloading capacity of 10.2 rows, and an annual maximum loading and unloading capacity 410,000 TEUs, mainly engaged in international multimodal transport, unpacking and consignment, warehousing and other international cargo transportation services. This project will bring a lot necessary food to the local people. In May 2014, the first phase of the China-Kazakhstan (Lianyungang) Logistics Cooperation Base Project was formally put into operation in the Miaoling Operation Area of Lianyungang Port. As of December 2016, the second phase of the project is progressing steadily.

Grain berths and silos will be expanded to provide supporting services such as port loading and unloading and storage for the export of agricultural products such as Kazakhstan.

But there are also some failed projects built by China in the attempt for building the OBOR, for example, the Polish A2 highway project failed because of the not enough fund, China is also actively learning lessons.

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As for some criticism pointing that China is using "debt trap diplomacy" in the form of loans to conquer developing countries. A report issued by the American consulting firm Rhodium Group in April 2019 made investigations to the phenomenon of China's "debt trap diplomacy." The authors of the report analyzed 40 cases of negotiating the cases of Chinese debt, it was discovered that only the case of Hambantota Port in Sri Lanka explicitly involved asset deductions. Analysis shows that China has a mild attitude towards most debtors. Over the past decade, China has renegotiated $ 50 billion in debt with borrowers. The most common results China took are debt relief and delayed loan repayments (Karásková, I, 2020).

There is no conclusive evidence that China intends to seek to drive countries into debt problems to control their assets. But instead, the Belt and Road Initiative is intended to be a form of “win- win cooperation” between countries based on economics, the Belt and Road Initiative will solve China's overcapacity problem, and help countries along the way to create infrastructure, drive local economic development, rationally allocate resources, and not increase debt pressure on countries along the way.

1.2.2 The 17+1 Mechanism (formerly 16+1) 1.2.2.1 The development of the 17+1 Mechanism

China-EU partnership (Central and Eastern Europe) was formally initiated on April 26, 2012, and the first China-EU Leaders' Meeting was held in Warsaw, Poland. The conference was attended by delegates from China and 17 countries from Central and Eastern Europe, including Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Hungary, Czech Republic, Estonia, Latvia, Lithuania, Montenegro, North Macedonia, Poland, Romania, Serbia, Slovakia and Slovenia. First of all, State Council Prime Minister Wen Jiabao has suggested twelve steps to aggressively foster cooperation with Central and Eastern European countries. The Chinese Government founded the Secretariat for Cooperation of Central and Eastern European Countries in the Ministry of Foreign Affairs in September 2012 as a coordinating agency to facilitate cooperation. The Secretariat's Chinese member units comprise more than 20 central ministries and associated departments.

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Positive answers were also provided by the Central and Eastern European countries in order to designate national coordinators to work with the Chinese Secretariat.

The 2nd China-Central and Eastern European Leaders' Conference was held in Bucharest, Romania on November 26, 2013. The "Bucharest China-Europe Cooperation Program" was unveiled by the new Premier of China, Li Keqiang, and the representatives of 16 countries in Central and Eastern Europe. The meeting decision announced that an annual conference of China's and Central and Eastern European countries' representatives will be hosted by China. In addition, twice a year, national coordinator meetings are held. “Win-Win Partnership and Common Growth”

is the focus of the meeting. The China-EU strategic cooperation system containing the “three principles” of mutual benefit, win-win, and common growth, was suggested by Li Keqiang. In each of the six key areas, China-EU cooperation and shared development have seen growth.

Cooperation is aimed at speeding up interconnections, aggressively enhancing green cooperation, actively expanding funding networks, deepening local cooperation capacity, and enriching cultural exchanges.

In December 2014, in Belgrade, Serbia, the Third China-Central and Eastern Europe Summit was held under the theme “New Strength, New Forum, New Engine.” “The Five Latest” was put out by Premier Li Keqiang, including the development of new highlights in cooperation between China and Central and Eastern Europe, the creation of new interconnection corridors under the One Belt One Road initiative, the expansion of new areas for industrial cooperation, the creation of a new system for investment and cooperation funding, and the expansion of n The “China-EU Partnership Belgrade Overview” was released by Premier Li Keqiang and the leaders of 16 countries in Central and Eastern Europe and 49 steps were proposed.

In April 2015, the "Special Representative for China-EU Cooperation Affairs of the Ministry of Foreign Affairs" was created. In November 2015, in Suzhou, China, the 4th China-Central and Eastern European Leaders' Conference was held. "New Starting Point, New Field, New Vision" is the theme of the meeting. The “1 + 6” partnership system, which is a target and six goals, was suggested by Premier Li Keqiang. One aim is to establish a plan for collaboration for the next five

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years. Its key goals include the adoption of the Partnership Roadmap, the convergence between Central and Eastern European countries of the OBOR initiative and development strategies, the development of infrastructure building, the emergence of new models of capability cooperation, and the continuous creativity of investment and financing cooperation, not least with the goal of fostering both trade and trade growth. President Xi Jinping arranged a joint meeting in Beijing on November 26 with representatives of 16 nations. The China-EU Leaders' Conference has been held in Riga, Latvia since then, in November 2016. The 'China-EU Partnership Riga Outline' was jointly issued by Premier Li Keqiang and the leaders of 16 countries in Central and Eastern Europe and 64 cooperation initiatives were suggested. And the Riga Declaration on the establishment of cooperation on facilities and equipment in the Three Seas Port Region was jointly issued. The 6th China-Central and Eastern Europe Summit on 'Deepening Diplomatic, Trade and Financial Cooperation and Fostering Mutual Benefits' was held in Budapest, Hungary, in November 2017.

The 7th China-EU Leaders' Meeting was held in Sofia, Bulgaria on July 7, 2018. “Deepening pragmatic collaboration and fostering mutual stability and growth” is the theme of the meeting.

Five proposals for the blueprint for the potential growth of China-EU cooperation were put forward by Premier Li Keqiang: first to jointly safeguard economic globalization and free trade. Second, deepening the scope for collaboration in park design and creativity. Third, the widening of the networks for financial cooperation progresses, and fourth, the increase of the extent of local cooperation. The fifth is to reinforce cultural exchanges constantly. A "Sofia China-EU Cooperation Outline" and a "List of Results of the Seventh China-EU Leaders' Meeting" were released at the summit. Leaders of 16 countries in China and Central and Eastern Europe have witnessed the signing of more than 19 cooperation agreements in the fields of "One Belt One Road", transportation and energy infrastructure construction, industrial parks, finance, education, culture, and quality inspection.

On April 12, 2019, the 8th China-Central and Eastern Europe Summit were held in Dubrovnik, Croatia. "Building a Bridge for Openness, Innovation, and Partnership" is the focus of the meeting.

The recommendations made by Premier Li Keqiang on the next creation of cooperation between China and the EU should first jointly safeguard the multilateral trading mechanism. The meeting

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released the "Dubrovnik China-EU Cooperation Program" and welcomed Greece to formally join China-EU cooperation, with the addition of new members, the "16+1 mechanism" officially became the "17+1 mechanism". The leaders of China and Central and Eastern European countries have witnessed the signing of 17 cooperation agreements (Cooperation between China and Central and Eastern European Countries, 2020).

1.2.2.2 Cooperation brought by the 17+1 mechanism to the Czech Republic amidst doubts The 17+1 meeting, initially scheduled to be held in Beijing in April 2020, has been postponed indefinitely due to the global coronavirus pandemic crisis. The Chinese government had announced prior to the postponement that it would lift the summit from the level of the prime minister to the level of the head of state to make the partnership process more relevant, signaling that China is making the 17+1 mechanism its primary international economic policy.

At the same moment, a voice of skepticism has also been added by the 17 + 1 mechanism, which is considered China's instrument for splitting and conquering Europe. The 17 + 1 mechanism is considered by critics to be a “empty shell”, whose view is that there is a lack of meaningful material in cooperation between Central and Eastern Europe (CEE) and China. The author would then investigate and discover realistic examples on this subject that in recent years, if the 17 + 1 process brings new prospects for trade and investment cooperation between the Czechs.

The American scholar John Ruggie put forward a classic definition of multilateralism. He believed that the core of multilateralism is to coordinate the relationship between three or more countries following a certain principle. The multilateralism system has three characteristics: indivisibility, universal code of conduct, and proliferation reciprocity. The core of multilateralism is international rules and international institutions (Ruggie, J. G.,1993). The 17+1 mechanism, thus, cannot be regarded as multilateralism, but regionalism, which is similar to the center and branch system of the relationship, China is the center in the middle, realize their own interests through increased cooperation between each other. After the 2015 Suzhou Summit, the parties jointly invited the EU to participate as an observer at the highest level of leadership meetings under the 17+1 system, the claim that China separates Europe is baseless.

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In addition to providing a political forum, the 17+1 system also provides a framework for commercial, cultural, sporting, wellness, and media cooperation. The 17+1 process would increase the influence of China and extend the reach of knowledge on collaboration between China and the countries of Central and Eastern Europe through the use of a multilateral environment. The 17+1 process would also offer more alternatives for Central and Eastern European countries in the external context of the European debt crisis and the unequal growth of European countries, as well as to increase and deepen cross-regional cooperation focused on the similarity and complementarity of economic development between China and the countries of Central and Eastern Europe. As a connection, China's economic and trade cooperation with the countries of Central and Eastern Europe aims to foster similar economic levels of growth, and if the economic divide between Eastern and Western Europe can be reduced, it would foster the EU integration process. Within the grand work structure of the One Belt One Road, directed at the area of CEE countries, the 17+1 process is undertaken to accomplish the docking of the "One Belt and Road"

project with the growth strategies of different countries.

Below is the interview with Huawei Consumer Business Department manager in Prague, Czech Republic, at 6pm, October 31, 2020 (At the request of the interviewee, the pseudonym is John) . In the international community, not only is China frequently criticized, but China's top corporations are also subject to numerous types of public pressure. The aim of this interview is to gain insight into the excellent Chinese high-technology company's true vision of doing business in the Czech Republic, in the face of public policy pressure, how is their crisis-solving attitudes.

Question 1: In 2005, Huawei started to open a branch in the Czech Republic. Why do you think Huawei chose to open up the market in the Czech Republic, which has a population of only 10 million? Will it be profitable?

Mr.John: Huawei is a global enterprise, which is why Huawei surpasses other domestic companies in China. As long as there is a little profit margin in foreign markets, Huawei will go to open up the business, and at the same, The unique geographical location of the Czech Republic makes him the business center of Huawei, through it, our business can radiate to other countries in Central

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and Eastern Europe. Facing the differentiated customer needs in various regions of the world, we have also formed unique competitiveness in this process.

Question 2: At the end of 2018, the Czech network regulator warned network operators not to use software and hardware produced by Chinese telecommunications equipment suppliers Huawei and ZTE, saying it would pose security threats. Since May 2019, the US Department of Commerce has included Huawei and 70 related companies in the "Entity List." This means that in the future without the approval of the US government, Huawei will not be able to purchase components from US companies. Do these changes in the international situation affect Huawei's business in the Czech Republic and other countries in Central and Eastern Europe?

Mr. John: So far it didn't affect much of consumer products' sales in the Czech Republic and other CEE countries, But the problem of the chip will affect our production later because the raw material silicon of the chip is mainly imported from the United States. But Huawei will also actively communicate with the United States.

Question 3: The market share of Huawei mobile devices in the Czech Republic, in September 2020, is 21.42%, which ranks second after Samsung 26.02%, how do you comment on the performance of Huawei in the Czech Republic?

Mr. John: Yes, in the Czech Republic, our consumer products marketing share is always the second, We have excellent international competitors. In many countries, Huawei usually ranks second in market share, but it also ranks first in some countries.

Question 4: What benefits does the business of Huawei bring to the Czech Republic?

Mr.John: There are many win-win benefits from our business to the Czech Republic, for our local market here, firstly, we created over 1000 opportunities for local employees, their income would also stimulate local consumption. Secondly, taxation will contribute to the Czech local economy.

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Thirdly, our cooperation with our supplier, agency of marketing, customer, can be an incentive to the local market.

Question 5: How do you like the way of conducting business in the Czech Republic? From the perspective of easiness to cooperate with local customers and employees?

Mr. John: In this way, I really like to work in the Czech Republic for living and working. I have been working in Huawei overseas for 8 years, I worked in middle east countries for the first 6 years, then 2 years until now in the Czech Republic. My colleagues and I had been thrown the contract in the face and were driven out of the office. But in Europe, we don’t have any problems like it, people here are polite and strict, easy to negotiate with.

Question 6: The last question is personal, you mentioned you have been sent by Huawei to work abroad for 8 years, how do you cope with it, and your family supports it?

Mr. John: Huawei sends young and outstanding talents out for training to overcome difficulties and localize business development. For me, it is a choice I can make now, and my family also supports me. At the same time, Huawei is trying its best to help our expatriates solve their worries and provide us with various benefits such as local housing and Chinese food, Return ticket, etc.

As one of the first Chinese companies to invest in the Czech Republic by establish a subsidiary, Huawei has gradually become a successful communications company with a large Czech market share, where its mobile phones and other consumer electronic products have always occupied the top three market shares in the Czech Republic. Its development can greatly reflect Chinese investment process to the Czech Republic, by building greenfield investment in telecommunications business sector to enter the market in the beginning of the millennium. It has been trying to adjust its strategy, adapting measures to local conditions, and more adapting to EU laws and regulations. It builds its global brand and distribution channels by expand markets in CEE countries.

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Chapter 2: Comparison of trade and investment balance between the Czech Republic and China

China joined the World Trade Organization (WTO) in 2001 and since then, China's economy has been completely absorbed into the trend of economic globalization. In order to stimulate the growth of export trade and to accelerate the adjustment of the industrial system, the Chinese Government has adopted the "importing in and going out" opening strategy. This chapter focuses on the study of the intent, determinants, features and patterns of the direct investment of China in the Czech Republic. Between the CEE countries and China, the trading relationship between the Czech Republic and China has a relevant underlying element. It is important to concentrate on the characteristics of China's investment in Europe and Central and Eastern European countries in order to research this topic. In order to investigate the intentions of Chinese investment, the author will use Dunning's conventional FDI theory and then analyze Chinese investment characteristics in the EU and CEE. The partnership between these two countries in the global economic environment and the data as a framework for the debate would examine the features of the asymmetrical trading ties between the Czech Republic and China. To investigate the similarity and completeness of both economies, the Revealed Comparative Advantage (RCA) approach is used.

At 1.44 billion, China is the world's most populous country, so it is an implicitly big trade market, while the Czech market size is very limited (GDP by Country, n.d.).

2.1 Pattern of China’s FDI

2.1.1 Traditional FDI Theory from Dunning

Foreign direct investment can be described by the Balance of Payment Manual of the IMF as a category of international investment representing the purpose of a resident in one economy (a direct investor) acquiring a permanent interest in a resident enterprise in another economy (a direct investment enterprise) for a direct investment, an investor acquiring at least 10% of equity ownership (BPM5,1993). FDI develops long-term interests that enable the home economy to take advantage of its competitive gains in order to engage in foreign markets.

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John Dunning stated the Eclectic Paradigm of International Production in his book Trade Location of Economic Activities and Multinational Corporations: Finding and Compromising Methods published in 1977. The purpose of this theory is to explain the motives of enterprises' foreign direct investment by using international economic activities and empirical analysis, to explain the structure of post-war multinational corporations, and to establish a unified comprehensive theory of international production. The core of the theory is that, firstly ownership-specific advantage, in other words, monopoly advantage, refers to the unique advantages of a company, such as the monopoly advantage in tangible or intangible asset and the advantage of transaction costs. The second core is the advantage of internalization, that internal transactions can save transaction costs more than non-equity transactions, especially for technical and knowledge products whose value is difficult to determine. Internal transactions can make the allocation of resources more stable.

The third core is location-specific advantage, that is, a foreign market has a more favorable production and operation environment, such as market size, infrastructure, labor, cost, foreign investment policies and so on, compared with the market of the country where the enterprise is located. Under the necessary premise that enterprises have specific advantages of ownership and internalization, and under the sufficient conditions that a host country has specific advantages of location, foreign investment becomes the best choice for the enterprise.

If a corporation only has the value of ownership, it will grow the company by trading. If a business has only ownership advantages and internalization advantages, but not location advantages, it means that there is a shortage of favorable overseas investment areas, so firms can only take advantage of appropriate advantages at home and then focus on commodity exports to supply and grow overseas markets. In order to participate in desirable overseas direct investment practices, the key conclusion of the eclectic or OLI model can be summarized as that companies must have all the advantages of ownership, internalization and location advantages.

Dunning stated that when firms possess specific advantages they will venture abroad, and he listed four types of foreign direct investment motivations: resource seeking, market seeking and efficiency seeking in 1988, and the strategic asset-seeking motives in 1994.

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Table 2, Conditions of Eclectic or OLI paradigm

Ownership- Specific Advantage

Internalization Advantage

location-specific Advantage

Trade Yes

Contract Investment

Yes Yes

Direct Investment

Yes Yes Yes

Resource: Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach, 1977

Dunning explained the goal of strategic asset acquisition investment is to obtain key assets such as technology through globalization strategies, thereby enhance the international competitiveness of multinational companies in Location and the Multinational Enterprise: A Neglected Factor?

He proposed in 1995 in Reappraising the Eclectic Paradigm in an Age of Alliance Capitalism, that the purpose of enterprises engaging in multinational alliances and foreign direct investment is to use existing competitive advantages to obtain foreign technology and marketing shares. Dunning (1998), pointed out that the most significant change in the motivation of foreign direct investment for multinational corporations in the past 10 years is the growth of creative asset-seeking FDI, which multinational corporations expanded their markets through acquisitions and mergers of new assets or establishing partnerships with foreign companies. This creative asset-seeking FDI is similar to the early natural resource-seeking FDI, but they are quite different in industry dimension selection.

In the past 15 years, China's FDI has sustained continuous growth, despite the reduction in FDI outflows since 2017, China still ranks as the third largest foreign investor in the world after the

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United States and Japan. In fact, the “Go Global" strategy proposed by the Chinese government in 2000 encourages Chinese firms to invest internationally so that they can distribute money on a global scale, circumvent foreign trade barriers, improve the flexibility of capital, widen the international market, conform with efficiency-seeking and market-seeking motives (Textor, C.

,2020). According to particular countries or territories, the Chinese government released a series of overseas investment recommendations to help Chinese businesses better understand the local investment climate and legal regulations, but at the same time, they have improve overseas investment regulation by such companies to deter illicit outflows of capital and money laundering (Wang, S., & Xing, H.,2019).

Investment and mergers and acquisitions are important means of investing in Europe for China, which is also in line with the strategic asset-seeking motive of Dunning. However, with the full entry into force of the "EU Foreign Investment Screening Mechanism" in 2020 (approved by the European Parliament and the Council of the European Union in February and March 2019).

Critical infrastructure, the provision of key technologies and inputs, and the acquisition of sensitive information are included in the scope of the regulations, etc. The threshold for investment in China and mergers and acquisitions in Europe will be further raised in the future (European Commission, 2020).

The United Nations (2007) defines FDI net outflows as the value of outward direct investment made to external economies by the residents of the reporting economy, including reinvested earnings and intra-company loans, net of capital repatriation receipts and repayment of loans. The value of inward direct investment made by non-resident investors in the reporting economy, including reinvested earnings and intra-company loans, net capital repatriation and repayment of loans, is the FDI net inflows (Foreign Direct Investment, 2017).

As can be seen from the figure below, which shows the trend of FDI outflow in the past ten years.

China's annual FDI outflow has been growing from 2009 to 2016 where since 2016, the Chinese government has strengthened controls on capital circulation and the host countries increased the review procedures for foreign investment are increasing, and FDI outflow has begun to decline.

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Trade protectionism and Sino-U.S. trade disputes have led to a decline in China's and global foreign direct investment.

Figure 4, China's Annual FDI Outflow from 2009 to 2019

Resource: MOFCOM China, Jan 2020 2.1.2 Analysis of China’ FDI in EU and CEE

Foreign direct investment (FDI) stocks (or positions) measure the total value of direct investment at a given point in time (Foreign direct investment – stocks, 2019). FDI stocks are the revalued accumulation of flow in the past, which consist of reinvestment of earnings and equity transactions are combined into one category and should be valued at market price. Whereas FDI flows record the value of cross-border direct investment transactions during a given time period, usually a quarter or a year (Foreign direct investment (FDI) -FDI flows - OECD Data, n.d.) In order to measure the more reliable performance of FDI from China to host countries, due to the reason of China publishes only approved FDI projects every year, the author will refer to FDI stock outflow from China in the following analysis. According to the 2018 Statistical Bulletin of China’s Foreign Direct Investment by the Ministry of Commerce of China (Ministry of Commerce. PRC, 2019),

0.

50.

100.

150.

200.

250.

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

China's Annual FDI Outflow from 2009 to 2019, in billion UD dollars

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Asia is the region that absorbed the largest foreign portion direct investment from China, accounting for 73.8% of China’s foreign investment, Latin America absorbed 10.2%, North America 6.1%, Europe 4.6%, Africa 3.8%, and Oceania 1.5%. The tertiary industry accounts for 78% of China’s foreign direct investment stock, for example, finance, wholesale and retail, software and information technology services, and real estate, production, transportation, storage and other fields. The secondary industry accounts for 21.4% of China’s foreign direct investment stock, of which manufacturing accounts for 43% of the secondary industry; mining industry accounts for 39.3%. The primary industry (agriculture/ forestry/ animal husbandry) accounts for 0.6% of China's foreign direct investment stock.

China's foreign investment has generally been invested in developing countries, but the proportion of investment in developed EU countries is also increasing year by year. According to the data from China’s FDI Statistic Bulletin 2018 (Ministry of Commerce. PRC, 2019), China’s overall direct investment in Europe is on the rise, except for slight fluctuations in recent years. In 2018, the stock of direct investment from China to the European Union was estimated be 90.7 billion US dollars, increased 5.5% compared with 2017. Since Chinese government ‘s “Go Global” policy in 2004, Chinese outward FDI for the EU region was targeted in manufacturing aera, for example as LCD and other domestic electrics devices. In recent years, China has increasingly merged and acquired European companies under the motive of searching for strategic assets. The benefits of this are direct access to management and technical experience, brand effects, logistics and sales channels.

Hlavní práce69462_yanl05.pdf, 1.5 MB Stáhnout

Prague University of Economics and Business

International Business – Central European Business Realities

Trade and investment relationship between the Czech Republic and China: Contenders for Czech’s favor

Acknowledgment

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