According to an interview given to CGTN by Hungary’s Minister of Foreign Affairs and Trade Péter Szíjjártó, 2023 was the second year after 2020 in which China contributed the most FDI to the Hungarian economy. In recent years, Chinese FDI in the e-mobility sector has grown especially rapidly in Hungary. Chinese investments announced in 2023 in the EV battery and EV (car) production sectors amount to billions in USD, as summarized in a recent report on China-Hungary bilateral relations by the Budapest-based China-CEE Institute. 

The biggest share within this is taken by the EV battery plant investment project of Contemporary Amperex Technology, Co. Limited (CATL) near Debrecen. The $7.6 billion project, announced in August 2022 drew widespread attention as the largest FDI project in the history of Hungary. The investment project is currently under construction, with the main structural elements already set up, as reported in Hungarian online media in December 2023. According to the general manager of CATL Europe, the plant will start its operations in 2025, as reported in local media. 

More recently, in December 2023, the major Chinese EV producer BYD announced a major passenger car plant to be built near Szeged, with an investment value of ca. $1.3 million, according to the online news site Világgazdaság (World Economy). As of January 31, 2024, the preliminary land purchase agreement for the Szeged BYD factory has been signed, based on Hungarian media reports.

2. Views on new Chinese industrial investment in Hungary

2.1 The state-promoted narrative

Among EU member states, Hungary became known for its strongly “China-friendly” attitudes in recent years. In October 2023, Hungary’s prime minister Viktor Orbán was the only EU leader attending the 3rd Belt and Road Forum for International Cooperation held in Beijing. From other Central and Eastern European (CEE) states, Serbia’s president Aleksandar Vučić was also present. During the event, a number of important agreements were signed between Hungarian and Chinese stakeholders from the public and private sectors. These included a list of priority Belt & Road Initiative (BRI) projects to be jointly realized. They also included four memoranda of understanding (MoUs) between public stakeholders on industrial and investment cooperation, economic development policy, digital economy, and green development, according to Chinese state sources. Further two MoUs signed during the Hungarian delegation’s visit to China included an MoU between Huawei and Hungary’s Ministry for Economic Development, as well as one between Huawei and Hungary’s leading telecommunications company 4iG.

The Hungarian government promotes a largely positive image of China’s new industrial investments in the country. It is frequently emphasized that China has a leading advantage in several industrial sectors which are expected to become key technologies in the coming decades. Such sectors most notably include e-mobility, green energy, and IT services. The need to attract Chinese investment in these sectors is usually framed as the key to long-term economic development in Hungary. 

In June 2023, after reaching various investment agreements worth €94.7 million with Chinese investors in Tianjin, Szíjjártó explained that the Hungarian government’s aim is “to maintain our position as the top investment destination for Chinese businesses in Central Europe”. Szíjjártó also noted that “Chinese investments are coming to Hungary mainly in the electric car sector, which we know is the industry of the future”. In October 2023 while attending the 3rd Belt & Road Forum, Szíjjártó stated that without Chinese investments, Hungary would struggle to “remain on a growth path”, and therefore Hungary is against any externally-forced limitations to economic cooperation with China. Referring to possible EU restrictions on new Chinese investments, Szíjjártó emphasized that “Hungary will reject and obstruct all unreasonable proposals that would limit or sever Chinese-European cooperation; we will not support tariffs or other obstructions on the Chinese electric car industry”.

Apart from statements made by state officials, there are various state-backed think tanks and research institutes in Hungary that promote positive attitudes towards new Chinese industrial investments. Most notably, the Eurasia Center based at the John von Neumann University of Kecskemét (one of the country’s universities managed by state-controlled “foundations”) is focused on exploring economic cooperation with the countries covered in the Hungarian government’s “Eastern Opening” strategy. The so-called “Eastern Opening” strategy launched by PM Orbán in 2010 focuses on building strong economic relations with Eurasian states to the east of Hungary, i.e. the post-Soviet states and Asia. Eurasia Center publishes the English-language magazine titled Eurasia Magazine, which brings together government and business elites, as well as expert opinions from Hungary, China, and other countries. The Center has also published various edited volumes on China-CEE cooperation, incl. one English-language volume at the 10th anniversary of launching the China-CEEC Cooperation (earlier known as 16+1 Cooperation). 

Other relevant institutions include the China-CEE Institute (中国——中东欧研究院) under the directorship of the Chinese Academy of Social Sciences (CASS, 中国社会科学院 ), as well as Hungarian-based institutions such as the Hungarian-Chinese Friendship Association (MKBT, 匈中友好协会) and Hungarian-Chinese Youth Friendship Association (MKFBE, 匈中青年友好协会). Hungary is also home to five Confucius Institutes located at various universities in Budapest and other major towns, as well as a China Cultural Center 中国文化中心 located in Budapest. Such institutes also contribute to promoting a positive image of China as an economic partner and investor in Hungary.

A March 2023 meeting titled “Hungarian-Chinese Dialogue: Chinese-Style Modernization and the Shared Destiny of the World” (中匈对话——“中国式现代化与世界共同的命运“), organized by the China Media Group in Budapest brought together various Hungarian experts from the foreign policy, business, health, and cultural fields, as well as local government and association leaders. The secretary of the China Biodiversity Conservation and Green Development Foundation (中国生物多样性保护与绿色发展基金会) Dr. Zhou Jinfeng 周晋峰 also joined the event via video link. The meeting was conducted in Hungarian, while a Chinese-language summary is available on Baidu. 

The opening speech of the event was delivered by Dr. Levente Horváth, former Consul General of Hungary in Shanghai, former Chief Advisor to the National Bank of Hungary (MNB), and current director of the Eurasia Center. Horváth and other participants from the foreign policy field emphasized the challenging geo-political environment in which Hungary needs to maintain its productive relations with China. The Ukraine war and its impact on EU foreign policy in particular was discussed as the greatest challenge in this regard. 

The opportunities brought by Chinese industrial investment were the main topic of the meeting. The mayor of the town of Kaposvár and the president of the Hungarian Association of Solar Panels (MNNSZ) emphasized the importance of Chinese investment in the renewable energy sector. The spokesperson of Huawei Technologies in Hungary noted the challenges posed by US-China technological competition for the company but emphasized that Hungary is likely to become the main hub of Huawei’s European investments in the future. As pointed out in her statement, due to supply chain challenges Asian IT investment in general will likely move closer to Europe in order to serve European customers better, and Hungary will play a major role in this process. The director of the Confucius Institute at the University of Szeged pointed out that China was Hungary’s largest foreign investor in 2022 and praised the fruitful cultural relations between the two countries, as well as Hungary’s role as a “bridge” between China and Europe.

2.2 Views among NGOs and critical media

Based on these insights, it is evident that the Hungarian government puts a great emphasis on creating a favorable environment for new Chinese industrial investment in the country. Attracting Chinese investment in the EV and renewable energy sectors features prominently in this context since these are seen as future-oriented investment sectors. As demonstrated above, apart from government officials, a number of institutions, mostly with links to either the Hungarian or Chinese states, incl. think tanks and cultural institutes are active in promoting a positive image of China as an economic partner and investor. Meanwhile, not all segments of Hungarian society share a positive view of China’s new industrial investments in the country. Their main concerns are related to the questionability of acceptable environmental standards, the potential negative impact on life quality due to noise pollution and other issues, as well as to the lack of transparency during the realization of the investment projects.

One important case in point is the major CATL investment near Debrecen in the eastern part of Hungary. With ca. 200,000 inhabitants, Debrecen is the country’s second-largest city after Budapest and most people here are voters of PM Orbán’s ruling Fidesz party. However, even the Fidesz-affiliated mayors of Debrecen and some surrounding localities have become increasingly worried about the negative impacts of CATL and other similar industrial investments recently. Based on an investigative trip to Debrecen and the CATL construction site in October 2023, I published an article with the Central European Institute of Asian Studies on the controversies surrounding the investment project. As discussed in this article in detail, various surveys show that ca. 60-80% of the inhabitants of Debrecen as of 2023 opposed the CATL project mainly due to environmental and life quality concerns. As also articulated by the leader of a Debrecen-based NGO Civil Fórum (Civilians’ Forum), most people do not see sufficient communication between local government officials and civil society on the issues of environmental standards. Moreover, the lack of communication from the Chinese investor’s side was also mentioned by representatives of the NGO during my October 2023 visit to Debrecen.

The plans to construct lodging facilities for migrant workers also worry many local residents who have been largely sympathetic to the ruling Fidesz party’s anti-immigration stances. The CATL investment demonstrates the major problem faced by industrial investments due to Hungary’s chronic shortage of labor force. The urge for the ruling Fidesz party to turn towards more immigration-friendly policies is becoming clear as well, but will not be an easy transition after years of harshly anti-immigration rhetoric.

Meanwhile, it is also worth pointing out that NGO and government-critical media grievances against major industrial investments in the EV sector did not start with the recent announcement of the CATL plant investment project. In the towns of Göd and Iváncsa, two major EV battery plants owned by the South Korean firms Samsung and SK On have been in operation for years. The negative experiences of locals due to noise pollution, environmental pollution, and unsafe working conditions have been widely reported by investigative journalists in Hungarian-language media. Two investigative reports on the Göd and Iváncsa factories by the online journal átlátszó.hu are available in English as well. With regard to the newly announced Chinese investments in the EV battery sector, it needs to be understood that the negative experiences of locals living next to already extant plants make many people in the country less supportive of such investment projects.

2.3 Mixed views among experts

Some Hungarian experts argue against the overtly negative picture of new investments in the EV battery sector. One of them is Dr. Csaba Moldicz, Head of the Center for International Economy at the Mathias Corvinus Collegium (MCC) Foundation, a state-backed think tank with international outreach. In 2023, Moldicz published a chapter comparing the responses to Chinese EV battery plant investments in various European countries. The chapter is part of a Hungarian-language edited volume published by Eurasia Center on the occasion of the 10th anniversary of inaugurating the Belt and Road Initiative in 2013. In Moldicz’s view, the reception of the CATL project and other recently announced Chinese EV battery investments is distorted by foreign (Western) pressure to limit economic ties with China and by the political agenda of Hungary’s domestic opposition parties as well. Moldicz argues that other European countries such as Germany are welcoming similar investment projects with positive attitudes, bringing up the example of another CATL battery plant investment in Arnstadt, Germany. 

Meanwhile, not all Hungarian experts share this relatively positive assessment of China’s EV battery plant investment projects. In October 2023, the Hungarian Academy of Sciences (MTA) issued a position paper in which a number of Hungary’s leading scientists with research interests in sustainable development expressed their concerns about the recently announced EV battery plant projects. They pointed to the lack of sufficient consultation with experts and civil society before the announcement of the new projects by the government. They also noted that lithium-ion production technology might not remain the leading technology of EV battery production in the near future. Hungary’s shortage of sufficient labor force and the potential need to invite large numbers of foreign guest workers is also mentioned.

Experts in the field of economics have also expressed concerns. Dr. Tamás Matura is an assistant professor at the Institute of Global Studies at Corvinus University (Budapest) with an extensive record of publications on China-Hungary economic relations. He is also the founder of the Budapest-based think tank Central and Eastern European Center for Asian Studies (CEECAS). Matura is skeptical about the long-term economic benefits of EV investments in Hungary, as he explained to me during our personal discussion in Budapest. As pointed out by Matura, the new type of EV battery plant investments do not bring much novelty to Hungary’s economic structure, which has so far been primarily based on providing relatively low-cost but skilled labor for German carmakers. In Matura’s view, Hungary is a laggard behind other CEE countries when it comes to shifting to high added value and innovative industries. Matura is also skeptical about whether lithium-ion technology will remain the leading technology of EV battery plant production in the long term.

Dr. Dóra Győrffy, a professor at the Institute of Economics of the Corvinus University of Budapest, is another expert with an extensive publication record on the EV battery industry, including a recent research paper (in Hungarian). Győrffy is critical about what she sees as major environmental hazards related to the operation of EV battery plants, as well as to the notion that they bring long-term economic benefits for Hungary. As she explained during our personal discussion, it is the government-near construction sector that will benefit the most from the new Chinese investments in Hungary, due to the need for infrastructure development generated by these new investments. In Hungary, major construction firms have long been known for their close connection to the government, for which reason such firms are interested in new investments that generate demand for infrastructure.

2.4 International context - Possible future challenges posed by EU policy on Chinese investment

While this article mostly discusses the domestic discourse on new Chinese industrial investment in Hungary, it needs to be noted that international factors are likely to shape the environment for Chinese investment in Hungary in the future. As noted earlier in this article, the Hungarian government has adopted a confrontational rhetoric against any future EU interference in its policy about Chinese investments, pledging to reject any EU legislation aimed at limiting its economic interactions with China. Meanwhile, there are increasing concerns among other EU member states about what is seen as unfair trade practices of Chinese companies in the e-mobility sector. 

In September 2023, the European Commission launched an investigation on the issue of subsidies provided by the Chinese state to Chinese EV producers, to weigh on the possibility of imposing tariffs to protect European carmakers. More recently, on January 24, 2024, the European Commission also published its new initiatives to strengthen economic security in the EU, with proposals to deepen the screening of risky foreign investments that might create unequal economic dependencies. While China is not named in the document, according to one commentator at the major news agency Reuters, the new economic security initiatives were proposed “with mind on China”. 

It also has to be noted here that EV battery production, incl. the CATL plant under construction, while often being criticized for its environmental risks, is still seen by economists as a future part of the European supply chain of car production. This means, as also pointed out by Dr. Tamás Matura during our conversation, that much of the EV battery output of CATL will be sold to German carmakers. On the other hand, the more recently announced BYD plant, to be built in Szeged, will likely be seen as a direct competition to European carmakers. Therefore, the EU’s push for heavy scrutiny of any state subsidies provided to BYD and other Chinese companies operating on the EU market and the possibility of protective tariffs against such companies will become ever bigger.

The Hungarian government, nevertheless, is likely to double down on its rhetoric for economic sovereignty in the future. Meanwhile, Hungary is still economically heavily dependent on its relations with other EU states. Based on the latest (2022) data from Hungary’s Central Statistical Office (KSH), around 70% of Hungary’s total trade volume was conducted with other EU states in 2022, while China’s share was only around 4% in that year. The freezing of billions of euros in EU funds due to Hungary’s rule of law issues put serious constraints on the government’s budget. Hence, it seems likely that while Budapest will continue to be vocal about its pro-sovereignty and anti-interference attitudes in economic matters, it will also not seek complete isolation from the rest of the EU, and to some extent will follow suit with the EU’s directions of economic policy. In the field of international relations, this is usually called “balancing”, i.e. Budapest’s approach will likely be based on searching for a balance between attracting Chinese industrial investment and not alienating itself from the rest of the EU at the same time.

2.5 Views among the general public

Concerning the question of how the majority of Hungary’s population perceives China’s new industrial investments in the country, it is difficult to find a survey on the issue of Chinese investments in particular. In recent years, there have been several surveys published on how China is perceived in general in Hungary, and some of them also measured China’s differing perceptions among voters of PM Viktor Orbán’s ruling Fidesz party vis-à-vis opposition parties. 

One survey published in 2022 by the Budapest-based CEECAS think-tank titled “Public opinion survey and assessment of perceptions on China in Hungarian Society” found that Fidesz voters have significantly more positive views towards China than opposition voters. Altogether, the survey found that ca. 51% of Hungarians had a “very positive” or “rather positive” view of China, while ca. 41% had a “very negative” or “rather negative” one. However, when dividing the respondents based on their self-identification as Fidesz vis-à-vis opposition voters, the contrasts between the two sides' views of China become apparent. 77% of Fidesz voters had a positive opinion of China, while only 15% of them had a negative one. In contrast, 73% of opposition voters had a negative view of China, while only 23% of them had a positive one. In the same survey, it is also asked how the respondents see the possibility of more Chinese presence in Hungary’s IT industry, where ca. 50% of respondents see it positively vis-à-vis ca. 38% of respondents seeing it negatively (no data is available here on Fidesz vs. opposition voters).

Another relevant survey by the Budapest-based think tank Policy Solutions, also supported by the Germany-based Friedrich Ebert Foundation, published in 2023, made similar observations in the context of foreign policy attitudes. The survey is mainly focused on comparing the attitudes towards various foreign countries, especially China, Russia, and the United States, among the Hungarian population. It also investigates the differences among Fidesz voters, the voters of the “6-party alliance” of moderate opposition parties, and far-right opposition voters. One demonstrative example is the ranking of the above-mentioned three major powers and Ukraine on a list of “how much do you think this country is a threat to Hungary?”. The overall results show that Russia is seen overall as the most threatening of the four countries, followed by Ukraine, China, and the US. For Fidesz voters, the ranking is Ukraine - US - Russia - China (that means, China is seen as the least threatening among the four), while in “6-party” opposition voters’ perception, the order is Russia - China - Ukraine - US.

These insights suggest that the governing Fidesz party’s China-friendly rhetoric has a polarizing effect on Hungarian society. While those who identify as Fidesz voters tend to accept the government’s narrative of China-Hungary relations and see China as a trustworthy partner instead of a threat, the same is apparently not true for the majority of those who identify as opposition voters. These insights should also be taken into account when Chinese investors make plans for their projects in Hungary, i.e. that government narratives on China-Hungary relations do not necessarily represent the attitudes of the population as a whole.

3. Conclusion and recommendations

While the government has a strong influence on shaping the narrative of China-Hungary relations, the present article demonstrated that a number of different viewpoints on the topic exist within Hungarian society. Concerning new industrial investments from China, the government promotes a welcoming narrative emphasizing “win-win” cooperation and Hungary’s role as a “bridge between China and Europe”. Meanwhile, opposition parties, NGOs, and critical media in the country have a significantly different view compared to that of the government. For people inside Hungary, the main concerns are the potential damage to the environment and life quality, also based on negative experiences about already operating EV battery plants. Some are also concerned about the possible influx of large numbers of foreign migrant workers due to the country’s shortage of labor force, a point especially emphasized by the country’s far-right opposition party Mi Hazánk (“Our Homeland”). Expert opinions are also divided on China’s new industrial investments, some pointing to the lack of prospects for long-term economic benefits for the country. This all takes place in an international environment where Hungary is increasingly seen as an outlier within the EU for its overtly China-friendly stance, while the rest of the EU is shifting towards more scrutiny about unfair competition and security risks when it comes to Chinese investments.

It is recommended for Chinese industrial investors in Hungary to be open about how their investments will impact the lives of locals, with a special view on environmental risks, health risks, and other potentially negative effects on life quality (e.g. noise pollution, increased traffic, etc.). Chinese investors should appoint spokespersons to communicate with local actors including NGOs, preferably ones who speak Hungarian and hence can facilitate direct communication with locals. These spokespersons should explain to locals how the investment will comply with national and EU-level environmental and working standards. The risks of major public opposition to Chinese investments despite the government’s welcoming attitudes should not be underestimated. This was also shown by the case of the government halting a planned Fudan University campus in Budapest. The high construction costs of the planned campus and high expected tuition fees led to large-scale protests in Budapest, organized by civil society actors and backed by opposition political parties as well, ultimately leading to the government backing down from the project in June 2021.

Understanding the complexity of Hungary’s domestic and foreign relations will thus clearly benefit Chinese investors during the planning and realization of their projects in Hungary. Going beyond official exchanges and listening to non-governmental voices will play a positive role in overcoming too naive expectations that everyone shares the same opinions of Chinese industrial investments in the country. Open communication with civil society and adaptation to national and EU-level environmental and working standards will thus be the real “win-win” situation for everyone.

(Sebestyén Hompot is a guest author for the China-CEEC Innovation Cooperation Research Center. The opinions expressed in the article solely reflect the author's personal views.)

NOTES ON THE AUTHOR

Sebestyén HOMPOT (Chinese name: Hong Siming 洪思明）was born in Budapest (Hungary) in 1991. Hompot holds B.A., M.A., and Ph.D. degrees in Chinese Studies and an M.A. degree in Global Studies. He received his first MA degree in Chinese Philology (汉语言文字学）at Xiamen University in 2017. His Ph.D. dissertation, defended in June 2023 at the University of Vienna (Austria), deals with the current historiography of the Zheng He missions and its impact on China’s cultural diplomacy. Hompot is currently a Research Fellow at the Bratislava-based transnational think tank Central European Institute of Asian Studies (CEIAS). His current research interests include the analysis of China’s international relations and media, with a focus on China-EU and China-Hungary relations.