Prime Minister Viktor Orbán’s strategy to make Hungary the main European destination for Chinese capital led to in the past two years, more than a quarter of the Chinese investments arriving on the continent were directed to Hungary. This includes investments in plants that produce electric vehicles and batteries.
Speaking to the Financial Times, Economy Minister Márton Nagy highlighted that Chinese investment has been key to sustaining the country’s auto industry, which is a “very strong core” of the economy. The sector as a whole is expected to account for almost one third of the GDP.
The article recalls that China’s largest electric vehicle and battery manufacturers, including BYD and CATL, are making significant investments in Hungary. BYD recently chose Szeged as the site of its first large European factory, while CATL is building a 7.3 billion euro plant in the eastern part of the country.
Both BYD and CATL are set to open in the second half of next year, along with a host of other Chinese greenfield investments whose impact on the economy and wages will be felt as soon as work begins
– predicted Márton Nagy.
The Hungarian government believes that these investments are a lifeline for the economy, which is currently facing serious challenges. The country is in recession, GDP fell by 0.7 percent in the third quarter, and the budget deficit is expected to exceed 4.5 percent of GDP this year.
The summary reminds us that, according to Viktor Orbán, maintaining the balance between East and West is the “strategic basis” of his economic policy. The prime minister believes that Hungary is able to maintain close relations with Beijing, while maintaining good relations with the United States even under the possible re-election of Donald Trump as president.
The article states:
Viktor Orbán’s challenge now is to pull off the diplomatic maneuvering necessary to remain an ally of both Xi Jinping and Donald Trump’s new anti-China government while dealing with the threat of chronic cuts in EU funding.
The article points out that, according to experts, Chinese investments alone are unlikely to be able to fully compensate for the lack of EU funds. According to data from the European Commission, Hungary previously received about 5 billion euros in EU transfers annually, which was about 2.5 percent of GDP.
In addition to Chinese investments, the development of Hungarian infrastructure also faces challenges. According to railway expert and opposition politician Dávid Vitézy railway investment worth around 10 billion euros, mostly financed by the EU, was cancelled. The only significant ongoing railway construction project is a Chinese-funded line between Budapest and Belgrade.
Cover image source: MTI Photo/Prime Minister’s Press Office/Benko Vivien Cher
Source: www.portfolio.hu
