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HN: China’s Czech acquisitions must be followed by new jobs

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Prague, March 31 (CTK) – Chinese investments in the Czech economy are part of the Chinese economy’s emancipation and its expansion, but their benefit will depend on whether acquisitions will be also followed by new investments in production capacities, David Marek writes in Hospodarske noviny (HN) yesterday.
A change in ownership alone will not create new jobs, Marek, Deloitte’s chief economist, writes.
Marek writes that what has been written in this country during a few past months and days could make the impression as if the Czech Republic became a favourite of Chinese investors.
The truth is, however, that Chinese investments expand everywhere to such levels that the investments in the Czech Republic are a mere drop in the ocean, Marek writes.
The overall volume of foreign assets owned by Chinese firms or the government exceeds 6 trillion dollars, of which investments in the Czech Republic amount to 0.004 percent.
The volume of Chinese investments is negligibly low in proportion to the total volume of direct foreign investments in the Czech Republic, Marek writes.
He writes that as from the end of last year, the Chinese investments in the Czech Republic amounted to 0.22 percent of the overall volume of foreign investments in the country and were on the level of Finnish investments.
If the announced or expected Chinese investments in the Czech Republic this year were made, the overall volume would rise to 100 billion crowns and the share in the overall volume of foreign investments to 3.5 percent. This would be comparable with those from Belgium or Cyprus, Marek writes.
On principle, it is all the same if the investments in the Czech economy come from Germany or China, but on the condition that China and the others were competing based on the same rules, Marek writes.
The problem is that Chinese firms often receive subsidies from the government and have access to cheap financing. When attracting Chinese investors, the Czech Republic should realise that it is inviting players who can push out other players by means of doping, Marek writes.
It is also true that foreign firms must cope with many official as well as informal discriminatory measures in doing business in China, Marek writes.
First, the world was silently watching the universal expansion of Chinese exports doped with an undervalued currency. Now, there is the threat that a wave of Chinese capital will be pushing out other investors, including the domestic ones, and the play need not be fair this time either, Marek writes.
($1=23.896 crowns)

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