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Foreign Policy

Can Hungary's All-Weather Friendship with China Shield It from Geopolitical Storms?

Jun 07, 2024
  • Vasilis Trigkas

    Visiting Assistant Professor, Schwarzman College, Tsinghua University

Xi Jinping Hungary.png

Chinese President Xi Jinping (left) is greeted by Hungarian Prime Minister Viktor Orban as he arrives at Liszt Ferenc Budapest airport at Ferihegy, Hungary on May 8, 2024. (Photo: Vivien Cher Benko/Pool/AFP)

Will the EU join the United States in efforts to contain China? This urgent question has loomed large in strategy forums across Beijing since the outbreak of the Russia-Ukraine war. Chinese President Xi Jinping's recent European tour aimed precisely at averting this scenario by engaging with two EU countries perceived by Beijing as more “strategically autonomous” in their foreign policy: France and Hungary. While the French response to Xi’s visit involved pomp and circumstance, coupled with pressure on China to distance its relationship from Russia, Hungary's message was unequivocally clear: the country will go to great lengths to ensure that Europe does not become an enemy of China and will use its close ties with Beijing to transform Hungary into a gateway for Chinese investments and people into the EU. As Gladden Pappin, the president of Hungary’s foreign policy research institute of state recently put it, “Hungary is helping Europe kiss decoupling goodbye.” With solid bilateral ties already established, China and Hungary have now elevated their relationship to an 'all-weather comprehensive strategic partnership'—the highest level of official bond China can offer, short of a full alliance.

During the press conference with Xi, Hungarian president Viktor Orban casted Hungary's engagement with China in a grand strategic light. He declared that Hungary "lost the 20th century" but will "win the 21st century," viewing China as a crucial ally in this ambition. Notably, Hungary's pivot to the East began shortly after the Great Recession, which is widely perceived as having undermined U.S. global influence. As former U.S. Secretary of the Treasury Henry Paulson once noted, until 2008, the Chinese frequently sought economic governance advice from American policy officials. Post-2008, their enthusiasm waned. Hungarian leaders have consistently emphasized that since 2008, the geoeconomic center of gravity has been shifting from the Atlantic to the Pacific, signaling the end of the unipolar era. With new power centers emerging, Hungary finds it essential to hedge and optimize its strategic options. Consequently, China, as a new epicenter of geoeconomic gravity, has become a strategic priority for Hungary.

Hungary has provided clear signals to China on its commitment to engage for the long term. During the joint China-Hungary ceremony, the first deal signed was related to the Belt and Road Initiative (BRI). While some EU states, notably Italy, have distanced themselves from BRI narratives, Hungary is doubling down. This commitment sends a powerful signal that Hungary is a "value investor" in China’s future trajectory. With Orban being the only EU leader present in all three BRI related “Mega-Fora” organized in Beijing, it is clear that Hungary has become the BRI beachhead in Europe.

Amid discussions of Chinese overcapacity and the EU's determination to erect protectionist barriers, Hungary may have cleverly opened a gateway for Chinese greenfield investments that upgrades Hungarian industry. Rather than exporting electric vehicles (EVs) to Europe, Chinese EV manufacturers might now build their products in Hungary, boosting local employment. Indeed, Hungary has attracted more than EUR 9 billion in EV-related investments from China and it is the only country in the world where all three major Chinese battery producers have established plants. Yet, this influx of Chinese greenfield investments has disrupted German dominance in a region that has been a de facto German sphere of influence. For the past 30 years, Hungary has been integrated into the massive German industrial ecosystem, but China has now competitively entered the scene. According to Hungary’s Foreign Minister China’s presence in Hungary is not antithetical but rather complementary to German industrial interests. The Chinese battery manufacturers in Hungary supply German automakers who are lagging behind in battery manufacturing. It's no surprise that Volker Wissing, Germany’s transport minister, supported the Chinese position on EVs and derogatorily compared the EU’s anti-subsidy probe to something Communist East Germany might once have come up with.

Further cementing the all weather relationship, China-Hungary cooperation will soon extend to the strategic energy sector, particularly nuclear energy. Hungary has envisioned nuclear energy covering 70% of its energy needs, with China becoming a core partner in the process. Although Chinese built generators are hard to imagine in the near future, such projects could be jointly developed with other EU member states. A Sino-French joint nuclear venture in Hungary, similar to Hinkley Point C, could alleviate EU fears and make Brussels more receptive to Chinese-related energy investments.

Looking ahead, the strategic partnership between Hungary and China raises the question: Could Hungary serve as a bridge between China and the EU as Orban envisions? Could it really “kiss decoupling good-bye?” In this context, significant connectivity projects supported by China in Hungary—such as the railway linking Budapest to Belgrade—might indeed lead to closer cooperation with the EU. The extension of the Belgrade-Budapest high-speed railway to Vienna in the west and Piraeus in the south could generate substantial value in the EU’s southeastern region and advance EU center – periphery cohesion – a core goal of the EU.

To be sure, as Hungary faces accusations from other European nations of betraying European unity and aligning ideologically with the "authoritarians" in Moscow and Beijing, China is keenly aware of the potential backlash from its all-weather comprehensive strategic partnership with Hungary. Standing next to Orban, Xi made a clear and unequivocal statement supporting a strong Hungary within the EU. Xi emphasized that the EU remains an irreplaceable partner in China's modernization efforts.

Hungary’s all-weather friendship with Beijing is undeniably bold. In geopolitics, small countries are like bicycles navigating highways alongside massive trucks—the great powers. A misstep could lead to catastrophic outcomes for these “bicycles,” either getting crushed under the trucks' wheels or pushed to the wayside. Aware of the danger, and in an effort to mitigate pressure from the U.S., Hungary has strategically hedged its relationship with China by cultivating ideological ties with the MAGA faction of the GOP. In March 2024, Orban met with Trump in the United States, and Orban related think tanks have established close partnerships with U.S. conservative groups. However, in the brutish and ruthless world of geopolitics, military and coercive power often play a disciplining role.

While Hungary's deepening relationship with China signifies an ambitious strategic pivot, limitations of the partnership remain. Without the capacity to project offshore power, China cannot offer Hungary a robust shield against potential geopolitical repercussions, particularly from the United States. Hungary's all weather engagement with China may provide substantial economic benefits, but without broader EU support, it risks isolation and increased vulnerability on the geopolitical stage. To truly secure its future, Hungary understands that it must balance its Eastern ambitions with a pragmatic approach that keeps it firmly anchored within the European fold, working from within to make that fold more strategically autonomous. Only then can it hope to safeguard itself from the geopolitical storms ahead.

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