“Beijing puts Budapest on the credit needle. What plans does Xi Jinping have for Viktor Orbán?”, — write: epravda.com.ua
China flooded European countries with cheap consumer goods and set itself a new ambitious goal – to conquer the EU electric car market. However, against the backdrop of economic threats and geopolitical disagreements due to Beijing’s support for Moscow, Brussels is gradually beginning to distance itself from the Middle East. The first steps in response to the growing appetites of the latter were the increase in tariffs on electric cars and the investigation against Temu. In this confrontation, China is betting on Hungary. Xi Jinping’s regime is using Viktor Orbán’s quarrels with Brussels and the European Commission’s blocking of tranches for the crisis-ridden Hungarian economy in its interests, giving Budapest billions in loans and financing important infrastructure projects. Over the past 10 years, the volume of bilateral trade between the countries has increased by 73% to 14.5 billion dollars. On the one hand, Hungary has become an ideal launch pad for Chinese factories producing electric cars and their further penetration into the EU. On the other hand, Beijing is duplicating its strategy of lending to African countries rich in critical resources.Advertisement: For the Orbán government, Chinese investment is a “lifeline” ahead of the 2026 parliamentary elections, as Hungary’s economy is in recession and inflation is rising.Advertisement: Will Chinese factories in Hungary save the local economy? And why will it be more difficult for Orbán to maneuver between the EU, the USA and China after Trump’s victory? Maneuvers between the West, China and Russia In 1989, Hungarians took to the streets of Budapest en masse to get rid of Soviet influence. At that time, it was believed that it was Moscow’s pressure that deprived Hungary of its rightful place in the center of European life and politics. Among those who celebrated the fall of the communist regime at the time was the young politician Viktor Orban. 35 years later, already in the position of prime minister, he receives the leader of the Chinese Communists, Xi Jinping, in Budapest. Viktor Orban began his political career in 1989, calling for the withdrawal of Soviet troops from the country. Since then, he has gradually leaned toward opportunism Photo: AP According to Washington and Brussels, Hungary has become perhaps the biggest troublemaker within NATO, opposing sanctions against Russia for its war in Ukraine and delaying Sweden’s entry into the North Atlantic alliance. “Such a turn for the country would have been difficult to predict in 1989. But there were always reasons for this behavior in Hungary – and Orbán used them,” explains the Bloomberg agency. Many Hungarians are taught from an early age that they are a unique ethnic group that came from Central Asia more than 1,000 years ago and settled in Europe among the Germanic and Slavic peoples. Orbán relied on this narrative in the development nationalist economic and social policy. The West’s great geopolitical competition with the Sino-Russian partnership gives it a bigger stage on which to demonstrate the idea of Hungarian individuality. “In many ways the narrative of uniqueness is a myth. However, Hungary’s linguistic isolation is very real, as is its shrinking population. Add to that a history of foreign domination, and it fuels a national identity of needing to defend itself and resist any external force, which poses the greatest threat,” the agency writes. Read also: Make Tesla Great Again. Why Elon Musk is campaigning for Trump Previously, Moscow was such a threat. Hungary joined NATO and the EU, adopting democracy, a new security umbrella and painful economic reforms necessary to receive funding from the European Union. Today, Orbán is successfully positioning himself for many Hungarians as the defender of the nation: a leader who opposes the intrusive European bureaucracy and resists migrants. It’s not a unique political formula, Bloomberg notes, but it’s working well so far in a country where, historically, many feel vulnerable to outside forces. The EU believes that with his “protection” Orban is undermining the independence of state institutions, in particular the courts, and also expanding his influence on the media and education sector. The steps taken by the Hungarian Prime Minister to expel European companies from the country and transfer their local shares to structures connected with politicians add to the tension in the relations between Budapest and Brussels. In particular, in early 2024, the Dutch chain of grocery stores Spar Holding appealed to the EU to take legal action against Budapest. During Xi’s visit to Budapest, Hungary and China announced a “comprehensive” partnership Photo: Getty Images Deputy Chairman of the German Eastern Business Association Philipp Hausmann emphasizes that excessively high taxes, a changing legal environment and regulatory pressure are ways to push investors out of the EU. In return, Hungary welcomes investors from China. Orban also enlisted the support of Russian President Putin by encouraging state investment from Moscow. “While it is popular in some circles to think of Orbán as a ‘right-wing’ politician, this is probably wrong. Having started as a liberal, he has never demonstrated a real ideological base, but rather behaved as an opportunist. Today, Orbán’s political opportunism is being adapted to benefit from global rivalries between Russia and China on the one hand and the West on the other,” summarizes Bloomberg. Chinese money and conflicts within the EU, Orbán turned Hungary into the main home of Chinese capital in Europe in a few years. His country received more than a quarter of all Beijing’s investments in the European continent. If in 2018 the direct investments of the PRC barely exceeded 400 million dollars, then in 2022 they reached 7.6 billion dollars. In 2023-2024, Hungary received another 5 billion dollars. Significant funds have become an additional incentive for the Hungarian economy, which is suffering from the suspension of financing by the European Union for more than 20 billion euros due to problems with the rule of law. In September 2022, the European Parliament recognized that Hungary had turned into a “hybrid regime of electoral autocracy”. In response, Orbán repeatedly delayed the approval of EU programs for financial and military support to Ukraine. The Hungarian prime minister also tried to block the decision to start negotiations with Ukraine regarding its accession to the bloc, which required the consent of all leaders. In the end, in order to bypass Orban’s veto in a historic vote for Ukraine, German Chancellor Olaf Scholz offered him to “drink coffee” in front of everyone. outside the hall – he agreed under pressure. Such a step was humiliating for Orbán. He, of course, made up his own version of events for the Hungarian audience: they say that the EU’s decision was so bad that Hungary “didn’t want to take part in it” and therefore abstained from voting. After that, he had to endure the openly mocking statement of the Prime Minister of Belgium, Alexandre De Croo: “If you have already given up the veto, then keep quiet.” Bet on the Chinese auto industry Hungarian Economy Minister Marto Nagy admits that Chinese money has helped to keep the country’s automobile industry “as a very strong core” “. He hopes that over time the auto industry will account for almost a third of GDP. Chinese electric car and battery giants BYD and CATL were looking for options for production sites in the EU even before Brussels introduced new import duties. Last year, the first choice fell on the Hungarian city of Szeged, where the company will open its first European plant for the production of electric cars. BYD already has a plant for the production of electric buses in Komarom, Hungary. BYD is building Europe’s first electric vehicle plant in Szeged Photo: Getty Images CATL is building a battery plant in Debrecen for 7.3 billion euros – the largest foreign direct investment in Hungary’s history, which will create about 9,000 jobs. This will be CATL’s second plant in the EU after the production site in Erfurt, Germany. Debrecen is located in the very center of Europe: CATL expects that the city’s close proximity to the factories of its main customers – Mercedes-Benz, BMW, Stellantis and Volkswagen – will allow it to quickly increase its influence on the European market. Hungary has become an ideal place for expanding Chinese ambitions thanks to the lower, than in other parts of Europe, labor and land costs, and, most importantly, warm political ties with Beijing. China upgraded its partnership with Hungary to “comprehensive” in May, and Xi, during his visit to Budapest, promised to expand investment in energy and railway projects, signing a total of 18 bilateral agreements. Recession lifeline Orbán’s government hopes that Chinese investment will be a lifeline circle for the local economy, which entered the recession amid weak indicators in industry and agriculture: Hungary’s GDP fell by 0.7% in the third quarter of 2024. “No one expected the economy to perform so badly. It looks like the government will have to implement a new stimulus package to meet its growth target next year, but this will put the budget deficit target at risk,” said ING Bank Hungary economist Peter Wirovac. The forint fell to its lowest level against the euro since December 2022. The currency’s weakness has already hampered the local central bank’s plans to continue cutting interest rates, which at 6.5% are still the highest in the EU. Read also: The new global technohub: how Malaysia is conquering the global chip market In Budapest, it is expected that the budget deficit will reach about 4.5% of GDP this year, which is significantly higher than the 3% limit set by the EU. The Ministry of Economy blames stagnation in Germany, the country’s largest export market, for the troubles. “A big jump in economic indicators can be expected only in the third quarter of 2025,” Nagy admitted. Analysts believe that the figure of 4.5% may turn out to be optimistic. They worry that Orbán will increase spending ahead of the 2026 election to a level the country cannot currently afford. Before Xi’s visit to Budapest in May, China granted Hungary a 3-year loan of 1 billion euros. The loan will help to finance infrastructure, transport and energy projects. Loans from Beijing are one of the key elements of Orbán’s anti-crisis strategy Photo: Getty Images In addition to loans from Beijing, Hungary continues to rely on the sale of international and domestic bonds to finance its growing budget deficit. New diplomatic challenges After concluding new agreements with China and Trump’s election victory Orban faces a new diplomatic task in the US, the FT writes. Hungary will have to simultaneously remain an ally of both Xi and the new White House, which will include “anti-China hawks”, and at the same time face the threat of chronic cuts in funding from the EU. The European Union is getting tougher in trade relations with China, sharing US concerns about Beijing’s overcapacity in “green” energy. Orbán went all-in in relations with the Chinese: Hungary will be the location of the first European BYD car factory, ahead of Germany and France, which also applied for these investments. Read also: From laughing stock to giant in 20 years: how BYD conquers the global electric car market Orbán and Xi’s rapprochement coincides with growing trade tensions between Beijing and Brussels, and Russia’s support for its war in Ukraine further destabilized their relationship. Orbán has often clashed with the US and the EU over the rule of law, as well as close ties to Russia and China, and has rejected Western pressure to reduce ties with China. He is still convinced that Budapest’s close ties with Beijing can be preserved while maintaining warm contacts with Trump, despite his threat to impose a 60% tariff on all imports from China. The Hungarian Prime Minister calls maintaining the balance between East and West the “strategic basis” of economic policy. “China is strong and developing, our task is to make good deals with it,” Orban says. Orbán was one of the first to congratulate Trump on his election victory. The Hungarian prime minister hopes to maintain warm relations with both Trump and Xi. Photo: Getty Images However, experts admit that China is unlikely to be able to fill all the gaps left by Brussels. “Chinese investments alone will not compensate Hungary for the current lack of funds from the EU,” Gregor Sebastian, a senior analyst at Rhodium Group, emphasized. Another problem facing the government, which has made it vulnerable to criticism from opponents, is the dilapidated rail network. According to railway expert and opposition politician David Vitezi, due to Orbán’s quarrels with the European Commission, investments worth 10 billion euros, financed mainly by the EU, were canceled. And the domestic budget is too limited to compensate for their loss. “We could have a “golden era” in the railway sector already in this decade. The remaining funds are almost nothing,” says Vitezi. Read also: China plunges into a debt crisis and closes itself off from the world. What will be the consequences? The only major project remains the high-speed rail connection between Budapest and Belgrade. For this construction, which started in 2020, China allocated 2.1 billion dollars. credit Moreover, the project is part of Xi’s global plan “One Belt, One Road”. The railway is expected to be completed in 2025. By the way, Serbia is another important hub for expanding Beijing’s European ambitions. Xi signed a free trade agreement with Serbian President Vučić, which is worth $27 billion. Chinese investment in infrastructure.