On July 8, 2024, Hungarian Prime Minister Viktor Orbán visited China. This visit was seen as another indication of the Eastern European country’s desire to engage with the East, particularly China, to secure significant foreign investments.
Orbán’s visit came just two months after Chinese President Xi Jinping visited Budapest on May 8, 2024, which resulted in the signing of 18 cooperation agreements between the two countries. China has elevated its relationship with Hungary to a “comprehensive strategic partnership,” the highest level of foreign relations in China, a status shared only with Belarus, Pakistan, and Venezuela.
Since Orbán came to power in 2010, Hungary has been the primary target for Chinese investment in Eastern Europe, and Hungary supports Xi Jinping’s Belt and Road Initiative. By adopting the “Eastern Opening” policy, Hungary has shifted its bilateral relations with China from a political focus to one emphasizing trade and investment.
In 2023, Chinese investments in Hungary equaled its investments in all European countries combined, with Chinese investments constituting three-quarters of all foreign investment in Hungary. China seems intent on penetrating Europe via Hungary by investing in infrastructure such as the Budapest-Belgrade railway line and modern industries like electric vehicle battery manufacturing. Consequently, Western countries are concerned about the expanding economic interests in Hungary.
China’s neutral stance on the Russian attack on Ukraine has strained its relations with the European Union, leading to the loss of European markets as Central and Eastern European countries increasingly distance themselves from China. In 2022, the Baltic states exited the 17+1 cooperation mechanism between Central and Eastern European countries and China. The Czech Republic and Romania have barred Chinese companies from building nuclear power plants, while Central and Eastern European countries signed a memorandum of understanding with the United States to restrict Chinese companies like Huawei from building 5G infrastructure.
Amid ongoing geopolitical competition with the United States, China seeks to maintain positive relations with Europe by building ties with Hungary. Thus, Hungary has become China’s “gateway” to the European Union, with Beijing’s investments in Hungary being highly significant for Chinese politicians.
Budapest is the preferred choice for Beijing to access European markets. One current joint project is the construction of a 160 km high-speed railway, launched in 2014 and managed by the Chinese shipping company COSCO. This project, part of the Belt and Road Initiative, is valued at approximately $2.5 billion, with about 85% of the funds coming from a loan from the China Exim Bank to the Hungarian government.
China is also involved in renovating the largest highway border crossing between Hungary and Serbia, which falls within the external borders of the Schengen Area. China’s participation in such projects indicates its intention to enhance the Belt and Road Initiative in the Balkans and Hungary, hoping it will become a gateway for Chinese products to Western Europe.
China is currently engaged in a tariff war with the United States but may also face economic disputes with the European Commission, which is under pressure from the US to impose hefty tariffs on Chinese goods. Meanwhile, China has made progress in producing electric vehicle batteries, even as European competitors in Germany, Poland, and Sweden manufacture these batteries. Thus, China has turned to Hungary to establish a major production and logistics base for the automotive industry within Europe, allowing tech companies like Huawei to operate without risking European tariffs.
Despite warnings and pressure from the US, Budapest has continued to forge economic relations with China, including developing 5G networks with Huawei, bolstering Hungary’s position in Western Balkan countries. For instance, Hungary’s 4iG Group has pursued intensive cooperation with Montenegro’s telecommunications sector, planning to develop 5G networks. Other Visegrád Group countries (especially Poland and Slovakia) are open to Chinese investment due to their heavy reliance on the automotive industry. However, other EU member states are concerned about Hungary’s increasingly close ties with China.
Beijing’s partnership with Budapest has raised concerns about high debt levels and whether Hungary might become a Chinese colony. Critics of Orbán oppose Hungary’s economic dependence on China. In recent years, Hungary has become the primary advocate for Chinese interests in the European Union.
Between 2016 and 2022, Budapest used its veto power six times to block European Council decisions condemning China, repeatedly opposing EU initiatives that would undermine China’s economic interests. For example, in December 2023, Hungary refused to sign the EU Wind Charter, which calls for protecting the EU wind energy industry from unfair practices by Chinese manufacturers.
European critics accuse Hungary of expanding Chinese media influence in Eastern Europe. Four of the 18 bilateral cooperation agreements signed in May 2024 pertain to media cooperation. In this regard, Beijing appears to intend to shape public discourse in Hungary, evident in the way Hungarian ministries interacted with major media outlets controlled by the Chinese Communist Party. China also views the Hungarian government’s willingness to disseminate Chinese Communist Party narratives about China’s global role as a sign that Budapest will defend Chinese narratives within the EU. This is significant because Hungary assumed the international presidency of the European Council in July 2024.
Hungary’s involvement with China has raised security concerns in Europe, with NATO countries worried about the close cooperation between China and Hungary under the security agreement signed by the two countries in February 2024. EU countries fear that Orbán may adopt illiberal measures to gain new supporters in Europe, as evidenced by the victory of Nikola Gruevski’s party in North Macedonia in May 2024, which has bolstered Hungarian regional influence, especially since Orbán granted asylum to former Prime Minister Gruevski after embassy staff smuggled him into Hungary.
Nevertheless, Budapest is content with the current situation as it needs Beijing’s investments in light of EU budget cuts. Similarly, China values Hungary’s support as its “gateway” to Eastern Europe. However, it remains to be seen how Hungary will react as EU authorities intensify pressure on this partnership.
