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Hungary: Has China Found its Foothold in Europe?

China is gaining a foothold in Europe via an increasingly authoritarian Hungary. Beijing has wooed it with investment, and the affection seems to be mutual.

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The site in Budapest where Fudan University is slated to be built. The road that leads to the main entrance has been named Uyghur Martyrs Avenue. (© Sankei by Mina Mitsui)

The United States is pursuing a decoupling strategy from China, but the European Union cannot follow suit. This is what I clearly felt during my visit to Budapest, the capital city of Hungary.

Walking down the main street, I saw massive billboards for the Bank of China, China's state-owned commercial bank, and Huawei, the Chinese communications giant.

About a thirty-minute tram ride away, there is a construction site for a branch of the famed Shanghai-based Fudan University. The campus, located along the Danube river, will host roughly five thousand students. It will be a research base for artificial intelligence, among other subjects. These developments also represent the foreign policies of the Viktor Orbán administration, which is growing closer and closer to China.

Hungary is experiencing a surge in Chinese investment. An official of the Hungarian Investment Promotion Agency boasted, "The government has signed strategic cooperation agreements with nine Chinese firms, including Huawei Technologies and Bank of China. These businesses express their willingness to accomplish higher value-added production.”

Hungary seems unbothered by the fact that most European countries have strengthened their restrictions on the use of Huawei devices and technology for national security reasons.

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In this picture issued by the Hungarian Prime Minister's Press Office, Hungarian Prime Minister Viktor Orban, right, receives China's Director of the Office of the Central Foreign Affairs Commission Wang Yi during a private dinner at an undisclosed location in Hungary, Feb. 19, 2023. (Benko Vivien Cher/Hungarian PM'S Press Office/MTI via AP)

Penetrating the EV Industry

In the past, China used to pursue large-scale purchases of EU harbors and high-technology companies. Once the EU raised its alert, Chinese investments in the area decreased by 75% in five years. The European view of China grew even harsher when the Asian country defended Russia after it invaded Ukraine. Countries like the Baltic states, the Czech Republic, and Italy used to compete in building relationships with China but have since switched to a hard-line stance against it.

The Xi Jinping administration is attempting to leverage Hungary's cooperative stance with China to gain a foothold in the EU. It aims to enter the market for electric vehicles (EVs), a crucial industry for the European Union.

In the summer of 2022, Chinese company Contemporary Amperex Technology Co. Limited (CATL), the world's largest manufacturer of EV batteries, announced that it would build a new factory. It has invested €7.3 billion EUR (about $7.8 billion USD) into its new EV battery plant, which will be 45 times as large as the Tokyo Dome. It is slated to yield enough batteries for about one million EVs. 

Big German automotive names, such as Volkswagen and BMW, are among its clients. Many more Chinese EV-related companies other than CATL are expanding into Hungary.

The Lure of the Belt and Road

Hungarian Prime Minister Viktor Orbán's increasingly authoritarian stance has earned him a bad reputation in the EU. Consequently, Hungary has rapidly approached China under the "Opening to the East" slogan, as if to defiantly proclaim to the EU, "Decoupling? Absolutely not!"

In February, Wang Yi, a member of the Chinese Communist Party Politburo and the head of foreign affairs, visited Hungary and praised its cooperation with Beijing's Belt and Road Initiative. 

The Hungarian government announced that it has launched an investment project with Chinese companies worth nearly €10 billion EUR (about $10.7 billion USD). The affection appears to be mutual.

Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto, right, welcomes China's Foreign Minister Wang Yi, left, for a meeting in Budapest, Hungary, February 20, 2023. (Zoltan Mathe/MTI via AP)

Ignoring the People's Voices

The Orbán administration's closeness to China has made domestic observers uneasy as well.

The Fudan University campus is scheduled to open in 2024. But even the groundwork has yet to begin. I went to Budapest City Hall and spoke to Janos Kendernay, senior advisor to the mayor on city diplomacy. He said, "It seems that the government has frozen the project. Perhaps the opposition movement achieved its effect." 

The Mayor of Budapest led the opposition to the University's construction, naming the roads surrounding the site "Dalai Lama Avenue" and "Hong Kong Freedom Avenue." Citizen-led protests were held against the CATL factory, as well.

Hungary is historically located where the West clashes with the East. In 1956, it was part of the Communist Bloc, and the pressure of the Soviet Union crushed its desire for democratization. It is now at the epicenter of a new East-West conflict, with China on the Eastern side.

Mr Kendernay was previously a diplomat. He changed jobs because he disagreed with Orbán's foreign policy. He voiced his uncertainty, saying, "Foreign policies that do not align with the EU come with risks. Where is the Prime Minister trying to take our country?" 



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(Read the related article in Japanese.)

Author: Mina Mitsui