SINO-HUNGARIAN RELATIONS

The Hungarian government's invitation to Chinese President Xi Jinping on Europe Day and the 20th anniversary of Hungary's accession to the bloc is a blatant message to the EU. Hungary has been ready to defend Chinese interests at the political level for almost a decade, rendering Budapest an attractive target for Chinese diplomatic efforts and influence campaigns, Chinese President Xi Jinping’s arrival in Budapest with a delegation of some 400 is also timed for the 75th anniversary of the restoration of diplomatic ties between the two countries and it could be a milestone in the two countries’ relations with important global implications, 

Sino-Hungarian relations have blossomed over the past decade, marked by a significant increase in political and economic cooperation. This has coincided with Prime Minister Viktor Orban’s  "Eastern Opening" strategy, launched around 2013, aimed at diversifying its trade partnerships by looking eastward. This opened doors for China's growing economic clout in the region, but nowhere did it go as  deep as in Hungary.

In 2017, the two parties established a comprehensive strategic partnership. Over the past five years, Chinese investments in Hungary have experienced steady growth, with China now standing as the largest foreign direct investor in the country. Over the last 6-7 years Hungary has strengthened its financial ties to China with the aim of becoming a regional financial hub, besides being an economic meeting point between East and West.

The country is home to the biggest banks, including the Bank of China, China Construction Bank and the China Development Bank in Hungary. CDB, known for financing infrastructure projects, could provide funding for BRI projects in Hungary, like the Budapest-Belgrade railway, while CCB is present in Budapest with a fintech lab.

During Orban’s last visit to China Hungary signed a cooperation agreement with the Industrial and Commercial Bank of China (ICBC), which could pave the way for its entrance to the market.

Tourism has also blossomed over the years and China introduced visa-free travel for Hungarian tourists in March. The number of direct flights between the two countries could increase to 20 this summer, the highest among countries from Central Europe.

Hungary will assume the EU’s rotating presidency in July, which serves as a tool to exert its own political position on other member states. Beijing expects Hungary to pursue a rational and pragmatic policy towards China during that period and encourage other EU member states to do the same. Hungary is against the European Commission’s proposal to impose extra tariffs on Chinese EV imports, Hungary has now become the primary European destination of Chinese corporate investments, with a string of new projects in the pipeline. At the end of 2023 Hungary had the third-largest EV battery production capacity globally, which will increase from 50 GWh per year at present to 150 GWh by 2025. 

China’s President Xi Jinping’s visit to Hungary is aimed at exploiting divisions in the EU and Nato. China regards Hungary as one of its closest partners in Europe and has lavished investment promises on the country. One potential project under discussion is an electric vehicle plant for China’s Great Wall Motor, following investments by EV maker BYD and battery maker CATL. At least 16 deals are expected to be signed with China while Xi was in Hungary, covering infrastructure and the construction, energy, and industrial sectors. The two countries will start a co-operation program encompassing the entire portfolio of nuclear energy. According to Chinese estimates, accumulated foreign direct investment by Chinese enterprises in Hungary could reach €30bn by the end of this year. Xi believes Hungary could help China deepen ties with central and eastern European countries to ensure “steady” relations between Beijing and the EU.