Hungary - China Relations
Finding the right balance between friendly gestures to Beijing and still maintaining the trust of Western allies has been a unique feature of Hungary's foreign policy. Hungary is the only EU member country that hasn't acknowledged potential security concerns posed by Chinese vendors like Huawei to 5G mobile networks. Budapest is even home to Huawei's largest manufacturing base outside of China and hosts a new regional research and development center for the company.
Hungary became the first European Union member state to sign up for distribution of the Sinopharm coronavirus vaccine in January 2021. The Hungarian government provided emergency authorization for vaccines such as Sinopharm and Sputnik V, bypassing the authorization procedure of the European Medicines Agency. The Russian and the Chinese vaccines have been received with strong reservations by the opposition because they were authorised in Hungary without impartial studies to prove their safety and efficiency.
A controversial Chinese university project renewed concerns about Beijing's growing influence in Hungary and pushed Prime Minister Viktor Orban's close ties to China back into the spotlight. Hungary signed a strategic agreement with Fudan University on 27 April 2021 that would open a campus in Budapest by 2024. The deal would make it the first Chinese university in the European Union and the first foreign outpost for the prestigious Shanghai-based school, which the government says will raise higher-education standards in Hungary. But growing concern about a lack of transparency over the project, as well as revelations that the Hungarian government is planning to take on a huge, opaque Chinese loan to build the campus, left the venture embroiled in controversy. The pretax construction costs for the Fudan campus are estimated at $1.8 billion, more than the Hungarian government spent on its entire higher-education system in 2019.
The Fudan announcement came after the Central European University -- founded by billionaire George Soros and considered one of Hungary's premier postgraduate institutions -- was effectively forced out of the country in 2018 after amendments were passed to a higher education law that were widely seen as targeting the university. The European Court of Justice said in October 2020 that the move against the university violated Hungary's commitments under the World Trade Organization and infringed upon the provisions of the EU Charter of Fundamental Rights relating to academic freedom.
The proposed Fudan University campus was the latest manifestation of China's growing footprint in Hungary, which has expanded since Orban returned to power in 2010 and launched an "Eastern Opening" policy meant to cultivate close ties with Beijing and Moscow in order to attract investment and new economic opportunities for Hungary following the global financial crisis. While Chinese investment into Hungary and Central Europe as a whole has been slow to materialize, Orban has cultivated a strong relationship with Beijing over the years.
Hungary has pursued a foreign trade policy of “Opening to the East”, while China has its own “Belt and Road” initiative. Hungary is the first country in Europe to sign a cooperation agreement with China on the joint construction of the “Belt and Road”. This is a tangible manifestation of the convergence between Hungary’s “Opening to the East” and the “Belt and Road” initiative.
On October 4, 1949, Hungary announced its recognition of the People's Republic of China; on October 6, the two countries established diplomatic relations with each other. Since then, friendly relations between the two countries have developed in many ways, mutual visits of leaders and other other types of exchanges have become frequent, and co-operation has been steadily strengthening in all areas. The friendship between the peoples of the two countries gradually deepened, they also mutually supported each other in international affairs and worked closely together.
When China came up to defend the Koreans against the US, or fought for the unification of the country, or to regain its rightful place in the UN, as well as on the issue of Tibet, Hungary has always positively supported China's position. High-level leaders from the two countries often visited each other. In 1956, Vice President Zhu De and in January 1957, Prime Minister Zhou Enlai visited Hungary. In September 1957, a government delegation led by the Prime Minister of Hungary, János Kádár, visited China, which issued a joint statement. In March 1959, Vice President Zhu De visited Hungary, leading a delegation from the Party and the government. In April, Ferenc Münnich, a member of the Political Committee of the Hungarian Socialist People's Party and head of a party and government delegation, visited China, where the Sino-Hungarian friendly cooperation agreement was officially signed with Prime Minister Zhou. In September 1959, the President of the Council of Ministers of the Hungarian People 's Republic, István Dobi, headed a party and government delegation to China. In December 1959, Comrade Tan Zhenlin, Secretary of the CCP Central Committee, participated in the VII Congress.
At the end of the 1950s, Sino-Hungarian high-level relations gradually broke down. Between 1960 and 1966, relations between the two countries became cool, frictions increased, but interstate relations were basically normal. In the period from 1966 to 1969, the ideological difference between the two parties deepened, the "cultural revolution" broke out in China, and bilateral relations deteriorated. From 1970 to 1979, the two countries maintained normal interstate relations, but not interparty relations.
Between 1980 and 1989, thanks to the joint efforts of the two countries, state and inter-party relations gradually normalized, the level of contacts increased, and the areas of cooperation expanded. In June 1984, Chen Mu Hua, a member of the Council of State and Minister of Foreign Affairs and Trade, visited Hungary. For more than twenty years, it was the highest-level delegation from the two countries, resulting in breakthrough developments in inter-party relations. This has facilitated bilateral economic, trade and economic technology cooperation. In 1987, Sino-Hungarian relations entered a new stage of development with the mutual visit of the top leaders of the two parties. In January, Ferenc Havasi, a member and central secretary of the Political Committee of the Hungarian Socialist People's Party, visited China at the invitation of the Chinese Communist Party. The 1989 regime change affected bilateral scientific and technological cooperation to some extent.
Traditionally, the Chinese commercial presence in Hungary was equated with Chinese fast food outlets, individually-owned shops selling inexpensive Chinese clothing, and stands in crowded flea markets. Although all are still present here, Hungary's commercial relationship with China has evolved considerably. As the bilateral economic relationship between the countries matured, Chinese companies increasingly looked at Hungary as a place to invest, instead of merely as an export market. Hungarian officials believed this was a result of the Chinese Government's "go global" campaign of economic expansion, and are trying to capitalize on it by promoting Hungary as China's "gateway to Europe." This approach not only encouraged the exports of finished Chinese products, but also promoted Chinese investment in Hungary, particularly in distribution and logistics projects, as well as in light manufacturing to enable products to qualify for "made in the EU" designation.
Shortly after 2010 the development of Hungarian-Chinese political relations began to resume in a relatively short period of time. It was clear that, as the political relations improved, the development of the bilateral economic relations would also accelerate. Due to the enormous size difference between the two countries, the geographical distance and the differences between the two business cultures, the ChinaCham Hungarian-Chinese Chamber of Economy was established in 2012 to support Hungarian enterprises in the form of a non-profit association.
In 2020, China ranked as Hungary’s third largest trading partner and second largest import source country. According to Chinese statistics, the bilateral trade volume reached USD 11.69 billion in 2020, an increase of 14.4%, despite headwinds; Hungary exported USD 4.28 bln to China, which is a year-on-year increase of 14.3%. The top five categories of goods imported from Hungary to China are: electrical machinery, electrical equipment and parts; vehicles and accessories (except railway vehicles); mechanical appliances; precision instruments; and pharmaceuticals. China’s exported goods to Hungary mainly consist of: electrical machinery, electrical equipment and parts; precision instruments and equipment; mechanical appliances; vehicles and accessories (except railway vehicles); and other textile products. Hungarian agricultural products are also very popular in the Chinese market.
According to Hungarian statistics for 2020, for the first time, China became Hungary’s largest foreign investor. Chinese enterprises are investing in and setting up businesses in Hungary, creating more than 23,000 jobs. China’s cumulative investment in Hungary had exceeded USD 5.5 bln dollars by the end of 2020.
Since 2005, Huawei has been operating here on the principle of “in Hungary, for Hungary”, investing a total of USD 1.5 bln and creating more than 2,400 jobs. It also established a European Supply Center and its Budapest Research and Development Center. Huawei is the world’s largest telecommunications equipment supplier, and a leading enterprise in 5G technology. In September 2020, after earlier years of contract manufacturing, Lenovo decided to build a new, in-house manufacturing unit. The Hong Kong-based company will manufacture products for data centres and desktops in its brand new facility in Üllo in the framework of an investment worth EUR 24.7 million, in the meantime creating almost 1,000 new jobs.
The Budapest-Belgrade railway will play an important role in enhancing Hungary’s location advantage. In this context, both Hungary and Serbia are willing to expand and reconstruct the railway connecting the two countries, but this requires a long-term, large-scale investment and the involvement of a third party. In recent years, China’s railway has developed rapidly, so its advantages in terms of technology, equipment, construction experience etc. are obvious.
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