Prague, April 7 (CTK) – The Czech Republic needs no more foreign investments, but domestic capital, economist Pavel Kohout writes on a recent visit by Chinese President Xi Jinping in weekly Reflex out on Thursday and takes a sceptical view of the glorified agreements signed.
According to the planned contracts, China should invest 95 billion crowns in the Czech Republic this year and the investments by 2020 may total 232 billion.
Kohout writes that for instance, the nominal value of 2.1 billion euros (an equivalent of about 54 billion crowns) of the memorandum between the Chinese company SAIC Motor Co. Ltd. and the German company Skoda Auto may in reality be different.
But what is more significant is that it is a contract between a Chinese and a German company, while the Czechs should only supply a cheap workforce, of which there is a shortage in this branch in the country, Kohout writes.
That is why Skoda Auto is looking into whether it should import workers from Ukraine, Romania or another country, Kohout writes.
He writes that Ukraine looks best from the point of view of demography and qualification, while Romania’s prospects are worse. Syrians or other similar nations are not considered in Skoda Auto, Kohout writes with some irony in an allusion to migration.
Kohout writes that the seemingly impressive list of business contracts will essentially shrink if “framework agreements” and agreements between the Chinese on the one hand and Germans (Skoda Auto), Russians (sale of 20 planes L-410 made by former Czech Let Kunovice firm a majority stake of which is now owned by a Russian businessman), and other nations are subtracted.
Did President Milos Zeman have to humiliate himself and the whole country for the sake of introducing a Prague-Shanghai air connection or an agreement making Pavel Nedved ambassador of the Chinese Football Super League for 2016-18? Kohout asks.
The Presidential Office’s list of agreements says nothing about that financier Petr Kellner’s Home Credit firm has the biggest advantage of the development of Czech-Chinese relations, Kohout writes.
He writes that the Chinese government does not like to let foreign entities in the financial sphere. The fact that Home Credit has gained a licence for operating on the whole territory of China is noteworthy, Kohout writes.
He asks what Zeman and his allies expect from China. Is it an influx of investments that will save the ailing Czech economy, help solve unemployment and impressively raise living standards? Kohout asks.
Wealth is always where dividends are reaped. These always end up in the accounts of individuals, whether they are large businesspeople, or “people’s capitalists” who invest through funds, Kohout writes.
The assertion that “capital has no nationality” is the biggest stupidity which was implanted in the Czechs’ minds after the fall of the communist regime in 1989, Kohout writes.
He writes that the capitalists naturally have a nationality, but all of them have one thing in common: they never invest because of charity, which is also true of Skoda Auto and other companies.
Foreign investments were a logical and necessary step in the development of the Czech economy in the 1990s, when it was necessary to temporarily span the period where there was a lack of domestic capital, Kohout writes.
Unfortunately, the necessity has turned into a virtue, and when the words “investments” or “capital” are pronounced, they are comprehended as foreign investments or capital as if the Czechs were to be doomed for ever to the role of employees, or sub-suppliers in the best case, Kohout writes.
A common media consumer is supplied with news about a rising GDP, which is to make the impression that “we are better and better off,” Kohout writes.
However, GDP also includes the gains of foreign investors, or money which does not belong to the Czechs, which will not stay in the Czech Republic, and if so, then only to make further money which the Czech citizen will not be able to touch, Kohout writes.
He writes that the realistic rate of prosperity is not GDP, but Gross National Disposable Income, of which the media do not write because most journalists have never heard about it, Kohout writes.
Economists do not work much with it either because to look for statistical data on it is substantially less comfortable than in the case of GDP, Kohout writes.
He writes that Drahomira Dubska, from the Czech Statistical Office (CSU), said in an analysis that the Czech Republic is now in the third stage of direct foreign investments when the outflow of yields surpasses the gains destined for reinvestment in the country.
Dubska writes that this stage essentially reduces the growth potential which foreign investments brought to the country mainly in 1995-2003, when the massive influx of direct investments concentrated to a great extent on the sales of state stakes in the biggest firms and banks.
Kohout writes in reply to Dubska’s question of where to seek a a new growth potential for the Czech economy now: to at last stop putting obstacles in domestic capital’s way, and adds that the Chinese will not definitely save the Czechs.
