BUDAPEST, Hungary (AP) 鈥� Chinese leader Xi Jinping will spend most of his this week in two small countries in the continent鈥檚 eastern half, a region that Beijing has used as a foothold for its expanding economic ambitions in Europe.
Following on Monday to kick off his first European trip in five years, Xi will travel to , two nations with autocratic leaders that are seen as China-friendly and close to Russian President .
As mainstream European leaders have pursued more protectionist policies to limit Beijing and Moscow鈥檚 reach on the continent, the governments of nationalist conservative leaders Viktor Orb谩n of Hungary and Aleksandar Vu膷i膰 of Serbia have courted , inviting major investments in infrastructure, manufacturing, energy and technology.
As the first European Union country to participate in Xi鈥檚 signature , Hungary has straddled a middle ground with its membership in the EU and NATO and an unusual openness to diplomatic and trade relationships with eastern autocracies.
Tam谩s Matura, a China expert and associate professor at Corvinus University in Budapest, said Hungary鈥檚 hosting of major Chinese investments and production sites 鈥� and its agnosticism on doing business with countries with spotty democratic and human rights records 鈥� has opened a crucial door to China within the EU.
鈥淭he Hungarian government is the last true friend of China in the whole EU,鈥� Matura said. 鈥淚t is very important now to the Chinese to settle down in a country that is within the boundaries of the EU … and is friendly to the Chinese political system.鈥�
One of the major benefits to China of establishing bases within the EU is avoiding costly tariffs. The European Commission, the bloc’s executive arm, is considering raising duties on the import of from its current 10% to protect the European auto manufacturing market 鈥� a mainstay for Germany, the 27-member bloc’s largest economy.
Yet in December, Hungary announced that one of the world鈥檚 largest EV manufacturers, China鈥檚 BYD, will open its in the south of the country 鈥� an inroad that could upend the competitiveness of the continent鈥檚 auto industry.
That shift is visible in Budapest, where one car dealership has begun scaling down its supply of European vehicles and introducing models produced by BYD.
M谩rk Schiller, the strategy and marketing director for the family-owned Schiller Auto Group, said he believes that European carmakers are 鈥渁lready behind鈥� China in transitioning to EV production. His company recently stopped selling cars made by German carmaker Opel and switched to BYD.
鈥淭his was a huge shift,鈥� Schiller said.
Hungarian state television on Monday appeared to confirm earlier reports that Xi and Orb谩n would travel to the southern city of P茅cs to announce another EV manufacturing investment there involving China鈥檚 Great Wall Motor.
In a news conference later, Hungarian Foreign Minister P茅ter Szijj谩rt贸 castigated journalists for reporting on the potential deal, saying that those who mention specific companies before agreements are finalized are 鈥渃learly acting against Hungary鈥檚 national interests.鈥�
The report on Xi’s potential trip to P茅cs was later removed from the state television’s website. Orb谩n’s office didn’t respond to multiple requests for information on Xi’s schedule.
In Serbia, to Hungary’s south, China runs mines and factories across the Balkan country, while billions more in infrastructure loans have funded roads, bridges and new facilities.
Hungary and Serbia have to modernize the railway between the countries鈥� capitals of Budapest and Belgrade, part of a Belt and Road plan to connect with the Chinese-controlled port of Piraeus in Greece as an entry point for Chinese goods to Central and Eastern Europe.
The bulk of the project, which after numerous delays is expected to be completed in 2026, is financed through loans from Chinese banks 鈥� the kind of capital that Hungary and Serbia have been eager to utilize.
According to the AidData research lab at William & Mary, a university in Virginia, Chinese lenders have issued loans worth more than $22 billion to nine countries in Central and Eastern Europe between 2000 and 2021.
Of that sum, $9.4 billion has gone to Hungary and $5.7 billion to Serbia, dwarfing the totals of other regional countries.
Vu膷i膰 has said he is 鈥渉onored鈥� that Xi 鈥� whom he often describes as a 鈥渇riend鈥� 鈥� is visiting on Tuesday. He said before the visit that Serbia would seek further Chinese investment, particularly when it comes to advanced technologies.
But economic analyst Mijat Laki膰evi膰 said he didn’t expect any major new investment deals, because 鈥渆verything that Serbia does with China has already been agreed.鈥�
Hungary, too, has created a favorable investment environment for China, providing generous tax breaks, subsidies and infrastructural assistance to Chinese companies, as well as helping them navigate Hungarian bureaucracy.
鈥淭hey get the red carpets rolled out and they get everything tailor-made by the government. And that is a huge advantage,鈥� said Matura, the China analyst.
Near Debrecen, Hungary鈥檚 second-largest city, of a nearly 550-acre (222-hectare), 7.3 billion euro ($7.9 billion) EV battery plant, Hungary鈥檚 largest-ever foreign direct investment.
Orb谩n鈥檚 government hopes the factory, run by Chinese battery giant CATL, will make the country a global hub of lithium-ion battery manufacturing in an era where governments are increasingly seeking to limit greenhouse gas emissions by switching to electric cars.
Such investments are coming at a time when Hungary’s sluggish economy has been further hindered by record-setting inflation and the freezing of billions in EU funding that has been withheld over Orb谩n’s track record on democracy standards and the rule of law.
With EU money at a standstill, Matura said, China has been willing to fill in the gaps in Hungary’s budget.
“EU funds have almost came to full stop flowing into the Hungarian economy, so now there is a desperate need in Hungary to turn towards other alternatives, other sources of financial capital,鈥� he said.
Orb谩n has been open about why he has prioritized Chinese investment: his belief that Western economies are declining, and that China is on the rise.
During a recent speech at the CPAC Hungary conservative conference, Orb谩n outlined a vision of a “global economy that will be organized according to the principle of mutual benefit, free of ideology.鈥�
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Gec reported from Belgrade, Serbia.
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