Chinese leader Xi Jinping is embarking on a five-day tour of Europe, with stops in two small countries in the eastern part of the continent. Hungary and Serbia, both known for their China-friendly policies, have been key players in Beijing’s expanding economic ambitions in Europe. As other European leaders have turned towards protectionist measures, nationalist conservative leaders in Hungary and Serbia have actively courted economic ties with China, inviting investments in infrastructure, manufacturing, energy, and technology.
Hungary, as the first EU country to participate in Xi’s Belt and Road Initiative, has positioned itself as a strategic partner for China within the EU trading bloc. Major Chinese investments in production sites in Hungary have allowed China to bypass costly tariffs that the EU is considering imposing on Chinese electric vehicles. Hungary’s welcoming stance towards Chinese investments has already led to the establishment of an EV production factory by China’s BYD, with plans for further investments in the sector during Xi’s visit.
In Serbia, China has made significant investments in mines, factories, infrastructure projects, and loans, including a railway modernization plan between Belgrade and Budapest. Both Hungary and Serbia have been eager to utilize Chinese capital, with Chinese lenders issuing billions in loans to the two countries. Serbian President Vučić has welcomed Xi’s visit, expressing interest in further Chinese investment, especially in advanced technologies. Hungary has also created a favorable environment for Chinese companies, offering tax breaks, subsidies, and infrastructural assistance.
One of the major Chinese investments in Hungary is the construction of a large EV battery plant near Debrecen, run by the Chinese battery giant CATL. This investment, aimed at making Hungary a global hub for lithium-ion battery manufacturing, comes at a time when the country’s economy is facing challenges such as inflation and frozen EU funding. As EU funds have slowed down, China has stepped in to provide financial support to Hungary. Prime Minister Orbán has justified his focus on Chinese investment by citing his belief in China’s rising economic power and the decline of Western economies.
Hungary’s alignment with China has raised concerns among European leaders, especially regarding issues of democracy and human rights. Hungary’s openness to Chinese investments comes at a time when the EU is reevaluating its relationship with China and considering stricter measures to protect European industries. Despite concerns about China’s political system, Hungary and Serbia have continued to deepen their economic ties with Beijing, viewing Chinese investment as an opportunity to bolster their economies and infrastructure.
Xi’s visit to Hungary and Serbia underscores China’s growing influence in Eastern Europe and its efforts to expand its economic footprint in the region. As Xi seeks to strengthen ties with countries that have shown willingness to engage with China, the visit highlights the complex dynamics at play in Europe, where traditional alliances are being challenged by new economic partnerships. The outcomes of Xi’s visit to Hungary and Serbia are likely to have implications for future EU-China relations and the balance of power in the region.
