China – Hungary relations, new era in Europe
All-weather partnership

ANALYTICS  10 May 2024 - 14:55

On May 8, Chinese leader Xi Jinping landed in Budapest upon the invitation of Prime Minister Viktor Orban, marking the first time a Chinese head of state has visited Hungary in 20 years. Recently, Hungarian Foreign Minister Péter Szijjártó emphasized the importance of investment and trade with the East for competitiveness and growth during a speech in Uzbekistan, noting the shifting economic landscape, with significant growth increasingly occurring in the East rather than the West, citing China as a prime example.

China and Hungary had upgraded their relationship to an all-weather comprehensive strategic partnership for the new era. During the visit, the two leaders signed 18 agreements with a focus on infrastructural projects. Despite the current diplomatic confrontation between China and Western countries, led by the United States (US), Hungary seeks to boost bilateral relations with Beijing by actively participating in the latter's ambitious Belt and Road Initiative (BRI).

Back in 2003, Hungary was the first Central European country to initiate a rapprochement with China, following decades of low-profile relations. After his return to power in 2010, Prime Minister Orbán has not only maintained the previous socialist government’s pro-China policies but has also elevated the relationship to even higher levels, including launching the Eastern Opening Policy and signing a comprehensive strategic partnership with China in 2017.

During the joint press conference, Prime Minister Orban underscored the economic benefits of China's participation in Hungary's modernization efforts, considering it an honor and a great opportunity. He also reiterated his government's commitment to ensuring fair conditions for Chinese companies. The economic impact of this partnership is evident in the recent data, which shows that bilateral trade reached $12 billion last year, with $17 billion of Chinese investments currently underway in Hungary.

In recent years, Hungary's relations with regional partners within the EU have become more strained, particularly in light of the Russo–Ukraine war that unfolded in 2022. Hungary became one of the few countries criticizing and vetoing Western military aid for Ukraine, citing the necessity of pushing Kyiv to negotiate with Moscow. However, official Budapest's controversial statements and stance on the Ukrainian issue added more fuel to Hungary’s relations with neighboring countries.

Despite its growing economic ties with China, Hungary has been careful to balance its relations with the EU and China. While Hungary is keen on an economic partnership with China, it has also been cautious to ensure that its support for Chinese political interests does not adversely affect European economic interests. This nuanced approach is evident in China's willingness to support Hungary’s national development strategy by further integrating it into the BRI.

For example, in December 2023, Hungary announced that one of the world’s largest electric vehicle (EV) manufacturers, China’s BYD, will open its first European EV production factory in the south of the country — an inroad that could upend the competitiveness of the continent’s auto industry. Hungary also hosts several Chinese EV battery plants and hopes to become a global hub of lithium-ion battery manufacturing. It has undertaken a railway project within the BRI framework to connect the country with the Chinese-controlled port of Piraeus in Greece as an entry point for Chinese goods to Central and Eastern Europe. Hence, three-quarters of investments in Hungary last year came from China.

As for China, relations with Hungary are an essential pillar of its rising economic influence in Europe while a source of concern for the EU and the US. However, at this stage, the EU prefers not to demonstrate an open discontent with Chinese influence in its backyard, instead maintaining a certain level of dialogue with Beijing. Given this approach, Beijing also attempts to capitalize on that and establish a strong footprint in Europe. Notably, Hungary provides a diplomatic win for China, showing its deep ties with an EU member state that will still roll out the red carpet for Chinese investment.

Caliber.Az