Hungary's Strategic Dance with China: Is Xi Building China's Foothold in the EU?

Despite ruling a country that has been a member of the European Union for 20 years, Hungarian Prime Minister Viktor Orbán identifies more closely with Xi than with his colleagues in the bloc, often resenting European bureaucracy

by Sededin Dedovic
Hungary's Strategic Dance with China: Is Xi Building China's Foothold in the EU?
© Pool / Getty Images

In an open letter to Hungary, which in some parts resembles more a love letter than an official government message, Chinese President Xi Jinping reflected on the friendship "as gentle and rich as Tokai wine." As sweet as Hungarian wine may be, its partnership with China is far more profitable, both politically and economically – positioning Hungary as a dominant player in the transition to electric vehicles, writes Politico, reflecting on the visit of the Chinese president to Budapest.

Despite governing a state that has been a member of the European Union for 20 years, Hungarian Prime Minister Viktor Orban identifies closer with Xi than with his counterparts in the bloc, often expressing frustration with European bureaucracy, rejecting its immigration and social policies, and condemning Brussels' frequent criticisms of his government's setbacks in terms of the rule of law.

"We see each other as priority cooperation partners," wrote Xi. "Together, we have gone through difficulties and together resisted power politics amid unstable international situations." Political alignment also brings economic benefits as China showers Hungary with investments, especially in electric vehicles and batteries.

The close bond between Xi and Orban was fully displayed during the Chinese leader's visit to Hungary, which sharply contrasts with the beginning of his trip to Paris, overshadowed by tense meetings with Emmanuel Macron on trade and the war in Ukraine.

Viktor Orbán, Prime Minister of Hungary, arrives on Day 2 of The National Conservatism Conference at the Claridge on April 17, © Omar Havana / Getty Images

Chinese companies have invested €16 billion in Hungary, making China the number one investor, said Peter Szijjarto, Hungarian Minister of Foreign Affairs.

"We see our cooperation with China as a huge opportunity," he said. China sees Hungary as an ally at a time when many other EU countries are increasingly wary of Beijing and as a manufacturing hub that will enable its automakers to bypass potential EU tariffs.

The European Commission is expected to announce the results of its investigation into subsidies for Chinese electric vehicles and impose new tariffs on vehicles as early as this summer. "They currently have very high margins in Europe, so a very high tariff of 30 percent would reduce profit, but it is not enough to completely eliminate it," said Camille Boulnois, assistant director for China at the research firm Rhodium Group.

"Hungary's strategy is to become a global production center for electric batteries," said Agnes Szunomar, a researcher at the China Observers company for Central and Eastern Europe. Hungary is experiencing a flood of investments along the electric vehicle production chain.

CATL, the world's largest battery manufacturer, has invested over €7 billion in a 100-gigawatt battery factory in Debrecen. New factories are a political and economic victory for Orban in his courting of Xi, writes Politico, but he faces some domestic resistance over concerns that factories could pollute water supplies and cause other environmental issues.

Hungary and China have signed a series of new agreements to deepen economic and cultural cooperation during Chinese President Xi Jinping's visit to the Central European country. Beijing has invested billions in Hungary and sees the country, a member of the European Union, as an important stronghold within the Union.

Hungary announced in December that one of the world's largest electric vehicle manufacturers, Chinese BYD, will open its first European electric vehicle production plant in the south of the country, potentially threatening the competitiveness of the automotive industry in Europe.

Hungary also hosts several Chinese EV battery factories and hopes to become a global center for lithium-ion battery production, and it has taken on a railway project as part of the Chinese "Belt and Road" initiative. It aims to connect the country to the Port of Piraeus.

Greece is supposed to be the entry point for Chinese goods into Central and Eastern Europe. Hungarian and Chinese officials have concluded a strategic partnership agreement and signed 18 more agreements and memoranda of understanding, but no major investments were announced at the press conference.

However, Hungarian Foreign Minister Peter Szijjarto later said in a Facebook video that they had begun initial talks with China on building a railway bypass around Budapest and a railway connection between the capital and the Ferihegy Budapest Airport.

Orban told reporters that three-quarters of investments in Hungary last year came from China, speaking about Beijing's role in the world's shifting balance of power. "Looking back at the world economy and trade from 20 years ago, it doesn't resemble what we live in today at all.

Back then, we lived in a polar world, and now we live in a multipolar world order, and one of the main pillars of this new world order is China," Orban said, adding that Hungary will seek to expand economic cooperation with China into the field of nuclear energy.

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