China seeks influence in European business deals

PRAGUE — When Xi Jinping became the first top Chinese leader to visit the Czech Republic, he was accompanied by a mysterious Chinese tycoon with big political ambitions, money to burn and strong ties to the Czech president.

Ye Jianming was the sole businessman among the group of Chinese and Czech government officials who gathered two years ago outside the presidential summer residence where Mr. Xi and Milos Zeman, his Czech counterpart, planted ginkgo trees. For Mr. Ye, it was recognition of his role as a major power broker in Prague, having bought landmark properties, a local brewery and a much beloved soccer team.

The meeting — and the presence of Mr. Ye — cemented China’s newfound influence on politics and business in Mr. Zeman’s Czech Republic and signaled its broader ambitions in Europe.

In just two years Mr. Ye’s company, CEFC China Energy, had spent more than $1 billion on deals in the Czech Republic. He hired former Czech officials, including a onetime defense minister. Mr. Ye was even named a special economic adviser to Mr. Zeman.

Mr. Zeman, in turn, became a big backer of Beijing, tamping down domestic opposition to Chinese influence and taking up Chinese causes. He publicly supported China’s claims over Taiwan, the democratic island that Beijing claims as its territory. When Mr. Xi visited, police tried to keep protesters out of sight; some later accused the police of using violence to suppress them. The family of a prominent Holocaust survivor said Mr. Zeman withdrew a proposed medal for the man after his nephew met with the Dalai Lama, an exiled spiritual leader whom China considers a rebel.

Supporters of Mr. Xi demonstrated during his visit in Prague in 2016.CreditFilip Singer/EPA, via Shutterstock

For China, the Czech courtship was an unqualified victory: It had won a sure friend in Europe, an American military ally and a country once seen as a bulwark for liberal democracy in a strategically important region. As Mr. Zeman declared, the Czech Republic hoped to become “an unsinkable aircraft carrier of Chinese investment expansion” in Europe.

Then, Mr. Ye was detained in China this year, exposing the Czech Republic to the perils of this new relationship and forcing the president to defend his quick embrace of the Chinese deal maker. While the reason for Mr. Ye’s detention was never made public, critics of the Czech president saw Mr. Ye’s disappearance as proof that the country shouldn’t have tied its future and its fortune to the Chinese.

An emboldened, globally ambitious China is using money, business deals and other incentives to extend its power abroad. The pitch can hold great appeal in a world shaken by Washington’s growing disengagement and Europe’s struggles.

But tighter ties to China mean greater susceptibility to an opaque political system where decisions are made behind the scenes. Investments can be driven by politics rather than economics, resulting in costly white elephants.

In the Czech Republic, Mr. Ye’s sudden disappearance took the country’s leaders by surprise. They couldn’t discern why that would happen to someone who seemed to have the government’s blessing. They had not pressed him on where he was getting his money to make big flashy deals in the Czech Republic and elsewhere. Officials also had difficulty answering questions about criminal allegations in the United States that a senior business associate of CEFC had tried to bribe his way into new business opportunities in Africa.

Mr. Zeman dispatched a team of officials to determine what the tycoon’s problems meant for the Czech Republic. He soon found out.

Prague was about to become even more enmeshed with the Chinese government. A state-owned company stepped in to take control of Mr. Ye’s empire, fueling suspicions that the company was politically important to the Chinese leadership.

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