Xi’s visit boosts Chinese investment in Europe

During his visit to Hungary last week, Chinese President Xi Jinping secured significant agreements, reinforcing the perception of China as a vital ally in the EU rather than a rival. By the time he left on Friday, he had laid the groundwork for China’s economic expansion in Europe.

After meeting with nationalist Prime Minister Viktor Orbán on Thursday, the leaders announced an “all-weather partnership” aimed at ushering in a new era of economic cooperation between their countries.

While most EU nations are trying to mitigate perceived risks from China, Hungary has embraced Chinese investments, viewing the world’s second-largest economy as crucial for Europe’s future.

Though specific agreements were not disclosed immediately, Foreign Minister Péter Szijjártó later revealed a deal on a joint Hungarian-Chinese railway bypass around Budapest and a high-speed train link between the capital and its international airport. Additionally, the two countries agreed to collaborate extensively in the nuclear industry, and China will assist Hungary in building a network of electric vehicle charging stations and an oil pipeline to Serbia.

Zsuzsanna Vegh, a program assistant at the German Marshall Fund and visiting fellow at the European Council on Foreign Relations, noted that these deals signal China’s view of Hungary as a reliable EU ally amid Europe’s toughening stance on Chinese influence.

Xi’s visit, according to Vegh, indicates that Hungary’s government is indifferent to its allies’ concerns and is keen on strengthening ties with China to position itself favorably in a multipolar world.

Serbia, Hungary’s neighbor, is also pursuing a similar strategy by offering Chinese companies opportunities in natural resources and infrastructure projects. Serbian President Aleksandar Vučić, like Orbán, has developed an autocratic governance style, making both countries attractive to China for direct, less regulated deals.

During Xi’s visit to Serbia last week, an agreement to build a “shared future” was signed, making Serbia the first European country to formalize such a relationship with Beijing.

Vuk Vuksanović, a senior researcher at the Belgrade Center for Security Policy, stated that Xi’s interest in Serbia aligns with his strategy to engage countries less aligned with the U.S.-led economic and political order.

The “shared future” agreement with Serbia supports China’s vision of an international order where it holds more power and Western nations, especially the U.S., have less influence. China has invested billions in Serbia, focusing on mining and infrastructure, with strategic partnerships and trade agreements bolstering their relationship.

Although Serbia aspires to join the 27-nation EU, its alignment with China and certain agreements conflict with EU membership requirements. Vučić maintains a friendly relationship with Russian President Vladimir Putin and has condemned Russia’s invasion of Ukraine but has not imposed sanctions on Moscow.

The welcoming treatment of Xi in Serbia and Hungary has raised concerns among their Western allies, who view China’s regional influence as an economic and security threat. U.S. envoy Gabriel Escobar noted that Xi visited these countries because they are open to challenging the unity of the Euro-Atlantic community and warned partners to be cautious of China’s agenda in Europe.

In February, Hungary followed Serbia’s lead by signing a security agreement with Beijing, allowing Chinese law enforcement officers to assist their Hungarian counterparts. Critics argue this move could extend China’s control over its diaspora in Hungary.

Orbán’s deepening relations with Beijing come amid prolonged conflict with the EU, which has frozen billions in structural funds to Hungary over concerns about democratic governance and misuse of EU funds. Hungary’s pursuit of Chinese investment indicates it is not relying on EU funds for strategic projects.

The influx of Chinese capital benefits Hungary’s struggling economy and provides production sites within the EU, helping China circumvent tariffs and protectionist policies. Hungary recently announced that China’s BYD, one of the largest EV manufacturers, will open its first European factory in southern Hungary, inviting substantial investments in EV battery production.

Orbán emphasized that these investments, regardless of origin, are crucial for Hungary’s future competitiveness, stating, “The concept driving the Hungarians is that we want to win the 21st century, and not lose it.”