How Chinese Corrosive Capital Influences Politics In Slovakia and Czechia

The Cen­tral Euro­pean Insti­tute for Asian Stud­ies (CEIAS), a pan-Euro­pean think tank, is report­ing that Chi­nese cor­ro­sive cap­i­tal is used to gain access to crit­i­cal assets,  facil­i­tate elite cap­ture, and dis­tort local dis­course on Chi­na in Slo­va­kia and Czechia. The CEIAS report describes Cor­ro­sive cap­i­tal as follows:

The notion of cor­ro­sive cap­i­tal refers here to financ­ing, whether state or pri­vate, that lacks trans­paren­cy, account­abil­i­ty, and mar­ket ori­en­ta­tion. It typ­i­cal­ly orig­i­nates from author­i­tar­i­an regimes (i.e., Chi­na, Rus­sia), and exploits gov­er­nance gaps to influ­ence pol­i­cy­mak­ing in recip­i­ent countries.

The CEIAS report argues that invest­ments made by the Chi­nese con­glom­er­ate CEFC are a major avenue through which Chi­nese cor­ro­sive cap­i­tal is being inject­ed into Czechia and Slovakia:

• These invest­ments large­ly tar­get­ed (either direct­ly or via local inter­me­di­aries) var­i­ous crit­i­cal assets in the media, bank­ing, and telecom­mu­ni­ca­tion sec­tors. In Slo­va­kia, one of the most strik­ing exam­ples of Chi­nese cor­ro­sive cap­i­tal is  CEFC’s indi­rect stake in the SWAN com­pa­ny, which is charged with oper­at­ing the Slo­vak government’s com­mu­ni­ca­tion net­works GovNet.

• Chi­nese financ­ing can have a detri­men­tal impact on the inde­pen­dence of media. An invest­ment made by CEFC into Czech media result­ed in them pub­lish­ing only sto­ries that por­trayed Chi­na positively.

• In the Czech Repub­lic, Chi­nese invest­ments were uti­lized as the main vehi­cle for fos­ter­ing rela­tions with local polit­i­cal elites. Due to inef­fec­tive revolv­ing door reg­u­la­tions, sev­er­al for­mer politi­cians and diplo­mats were hired by Chi­nese com­pa­nies and their local prox­ies to lob­by on their behalf. Since then, some of these politi­cians (includ­ing the cur­rent Min­is­ter of For­eign Affairs), have returned to gov­ern­ment posi­tions. Chi­nese cor­ro­sive cap­i­tal is also used to influ­ence expert dis­course in both Slo­va­kia and Czechia. This is done either by direct pay­ments from the Chi­nese embassy to local aca­d­e­mics or via Con­fu­cius Insti­tutes. Chi­nese enti­ties have also been attempt­ing to influ­ence expert dis­course and gain access to local elites via pro­vid­ing finance for pres­ti­gious conferences.

Read the full report here.

In August, we pub­lished an inves­ti­ga­tion into how Chi­na has increased its resources devot­ed to cre­at­ing lob­by groups, friend­ship asso­ci­a­tions, aca­d­e­m­ic ini­tia­tives, and busi­ness coun­cils in France, Britain, and Ger­many in order to fos­ter elites sym­pa­thet­ic to Chi­na. Oth­er recent GIOR cov­er­age on China’s elite cap­ture in Europe has included:

• In August, we report­ed that China’s strate­gic influ­ence objec­tives in Ger­many are aimed at deliv­er­ing con­crete ben­e­fits to China’s indus­try and infra­struc­ture and sway polit­i­cal and eco­nom­ic deci­sion-mak­ers in its favor.

• In August, we rec­om­mend­ed a report exam­in­ing the Chi­nese Com­mu­nist Party’s rela­tions with polit­i­cal elites in Estonia.