The worrying Chinese projects in Orban’s Hungary

The worrying Chinese projects in Orban's Hungary |

Viktor Orbán has doubled-down on his commitment to building out an 'Eastern Opening' in Hungarian foreign policy and become Beijing's most reliable partner within the EU (Photo: European Parliament)

Chinese police officers may soon participate in joint patrols on the streets of Hungary, the Hungarian interior ministry confirmed this month.

The pact, with China’s ministry of public, proposes to “‘deepen cooperation in areas including counter-terrorism, combating transnational crimes, security and law enforcement capacity building”. However, there are fears that the Chinese government’s motivation is more straightforward: keeping tabs on their diaspora living in Europe, particularly dissidents.

This is part of a pattern of behaviour from prime minister Viktor Orbán, who is steadily deepening relations with Beijing. At a time when the EU and US are warning against becoming too dependent on an increasingly authoritarian China, Orbán has doubled-down on his commitment to building out an ‘Eastern Opening’ in Hungarian foreign policy and become Beijing’s most reliable partner within the EU.

In October, Orbán was the only EU leader to attend China’s Belt and Road Initiative (BRI) summit, (China’s plan to invest in global infrastructure) where he held talks with Chinese president Xi and Vladimir Putin. “We are convinced that this is an initiative that will change the world, change the global economy, and transform the world into a place which will serve the welfare of more people than before,” Orbán said in the Chinese capital. During Xi’s time in office, he claimed, relations between the two countries had “risen to an all-time high”.

The depth of these collaborations should not be understated. Hungary has repeatedly blocked or delayed EU statements critical of China, particularly on human rights in Hong Kong. Orbán has simultaneously courted Chinese companies to set up shop in Hungary.

Chinese technology and battery manufacturer, CATL, which is seen as having close ties with the Chinese Communist Party, has plans to set up a €7.3bn battery plant in Hungary. Chinese electric car giant, BYD, announced that it would build its first European car manufacturing plant in Hungary. Telecommunications company, Huawei’s, largest logistics and manufacturing base outside of China is in Hungary.

Secret railway

One of the BRI’s flagship projects, the Budapest-Belgrade railway, runs through Hungary. It is a much-delayed project, which has caused controversy for its reportedly high cost and for a decision by the Hungarian parliament to classify details about it. The railway construction is mainly financed via a Chinese loan.

Orbán ideologically frames Hungary’s ties with autocratic states, like China, Russia and the Central Asian republics, in his eurosceptic discourse. For him, it is logical for Hungary to deepen ties with these countries, given the decline of the West.

The railway project, however, serves as an example of how apparent corruption is the primary driver of Orbán’s China policy. Reports have alleged that the family of Lőrinc Mészáros, Hungary’s richest man and a childhood friend of the prime minister, is one of the main economic beneficiaries of the railway project.

As one person with knowledge of the situation told me, “while the umbrella concept of the Eastern Opening provided an ideological underpinning… the ruling elite considered it primarily as a business opportunity to accelerate wealth.”

Business elites connected to Orbán may also benefit from the Chinese battery plant investments in Hungary. Investigative outlet, VSquare, reported that Chinese companies are planning to build solar power plants to fulfil their energy needs as part of an estimated $2.5bn [€2.3bn] investment. This stands to benefit government-connected Hungarian companies working as subcontractors, as they dominate certain segments of the solar industry, according to VSquare.

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The main risk is that Hungary’s expanding business ties with China could help political elites to consolidate power over the state and society because they become a sinkhole for funds and lack transparency. These projects would thus deepen the clientel-ist network that Orbán has built over the past decade and a half, further undermining the quality of governance and trust in the country’s democratic institutions. China is using “corrosive capital” — lacking transparency, accountability and market orientation — to influence policy-making in Hungary and elsewhere, thereby contributing to the deterioration of democracy in Hungary.

Orbán is touting his ties with China to portray himself as a global player. Chinese investments support and legitimise his clientel-ist network and Orbán is likely to continue to rely on investments from autocratic states like China to shore up support at home. Hungary under Orbán is therefore likely to remain an obstacle when it comes to joint EU decision-making aimed at countering China’s growing global influence.

For the EU, which has lobbied member states to ‘derisk’, and, in some cases,’decouple’ themselves from Beijing, there should be concerns about how certain investments are being used to prop up an increasingly undemocratic government.

This is especially true in the supply of clean technologies, a space which China dominates. In Hungary, and in its Visegrad partner, Poland, there is a race to lead Europe’s shift to electric vehicles. This has placed emphasis on the need to scale lithium-ion battery production, and, in turn, created a climate where foreign direct investment is being actively courted by their respective governments. In the case of Poland, dependencies are such that 70 percent of the country’s PV panels are now manufactured in China, and, while this has begun to bleed into national discussion, very few, beyond expert circles, appear concerned by the double-play at hand, given Beijing’s role as as an enabler of Russia aggression on Europe’s borders.

The truth is that, without appropriate countermeasures, we are fast-approaching a point where large parts of central and eastern Europe risk becoming beholden to China, and bending to its demands. The impacts of such dependencies should not be viewed exclusively through a local lens, either. They will undermine and pose long-term questions about the future viability of the European market, given Beijing’s track record of eroding regulation and feeding corruption in investor countries.

The current behaviour of Hungary — a country that is already on downward democratic trajectory — and its neighbours should serve as a warning to EU leaders about the scale of member state dependencies and the damage that could be wrought in Europe from Chinese creep.


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