NewsHungary turns to China for railway funding amidst EU fund freeze

Hungary turns to China for railway funding amidst EU fund freeze

As reported by the investigative portal VSquare, the Hungarian government, led by Prime Minister Viktor Orban, is facing economic problems and a significant portion of EU funds is still blocked. In light of Chinese leader Xi Jinping's upcoming visit to Hungary, the government is turning to China for new railway investment funding.

Hungarian Prime Minister Viktor Orban
Hungarian Prime Minister Viktor Orban
Images source: © Getty Images | Bloomberg

30 April 2024 19:52

The portal discusses two new railway projects integral to the Chinese Belt and Road Initiative (BRI), in which Hungary is the sole participating European Union country. These projects include a rapid connection between Budapest airport and the city centre and the long-planned V0 railway line designed to divert freight trains from Budapest.

Orban seeks China's aid in financing investments

VSquare points out that Russia initially expected to fund the V0 railway, but the invasion of Ukraine disrupted those plans. Due to a tight budget and financial difficulties, the project was put on hold. VSquare noted on Monday, citing a source close to the Hungarian government, that a Chinese loan appears to be the only viable alternative with the government effectively giving up on unlocking EU funds and with Hungary's finances depleted.

The Budapest-Belgrade railway connection, another BRI project, faces similar financial challenges in Hungary.

VSquare, quoting an EU country's ambassador in Hungary, conveyed that the Orban government is making its stance clear by habitually threatening the European Commission with an increased reliance on Chinese financing should cohesion funds remain unreleased.

VSquare adds that it's improbable that Hungary will meet the necessary criteria to unlock the rest of the cohesion funds. In December, the European Commission released £8.7 billion of the £18.8 billion allotted to Hungary for 2021-2027, acknowledging improvements in the country's judicial system. However, the remaining funds and the National Recovery Plan, valued at over £8.5 billion, are still frozen.

Additionally, VSquare emphasized that new railway projects might provoke issues with EU regulatory bodies. "These concerns stem from the potential use of Chinese technology, which might not align with EU standards," the portal notes.

China and Hungary drawing closer

Hungary's strategic location within the EU and its stable political and economic landscape makes it a significant partner for China, evaluated Eurasia Center and China expert Levente Horvath, quoted by the Index portal. The analyst added that the shared perspectives on global order evolution and economic collaboration have further solidified the Hungary-China relationship.

As reported by Szabad Europa, Radio Free Europe's Hungarian service, during Xi's May visit, a major new Chinese investment in Hungary might be announced involving Great Wall Motors (GWM), the eighth-largest Chinese electric vehicle manufacturer, setting up its first European factory in Bicsérd, near Pécs in southeast Hungary.

Moreover, BYD, Tesla's major competitor from China, recently declared its plans to establish its first European passenger car factory in Szeged, southern Hungary. Around mid-2022, Chinese CATL announced its over £7.2 billion investment in a battery factory with a 100 GWh capacity in Debrecen, eastern Hungary.

During his visit to China last week, Hungarian Foreign Minister and Trade Minister Peter Szijjarto stated that they stand against any actions by the European Union that would impede economic cooperation between Europe and China, particularly in the Chinese electric vehicle sector.

During his Beijing visit, Szijjarto also revealed that FiberHome, a leading Chinese network and telecommunications equipment supplier, would establish its largest European factory in Hungary to produce optical cables. This investment is expected to amount to around £22 million.

The minister highlighted that China was Hungary's most significant investor last year.

Leader of China in Europe

On Monday, the Chinese Ministry of Foreign Affairs spokesman, Lin Jian, announced that the People's Republic of China's leader, Xi Jinping, will visit France, Serbia, and Hungary from 5 to 10 May. In Hungary, his visit, scheduled from 8 to 10 May, comes at the invitation of President Tamas Sulyok and Prime Minister Orban. According to reports, Xi will be accompanied by a 400-person delegation.

The purpose of the visit is to further strengthen interstate as well as economic and trade relations between Hungary and China, and to extend cooperation to further areas, said Bertalan Havasi, the spokesman for the Hungarian prime minister, on Monday.

Xi last visited Hungary in 2009 before assuming a leadership position in the Communist Party of China. His upcoming visit coincides with the 75th anniversary of establishing diplomatic relations between the two countries.

© Daily Wrap
·

Downloading, reproduction, storage, or any other use of content available on this website—regardless of its nature and form of expression (in particular, but not limited to verbal, verbal-musical, musical, audiovisual, audio, textual, graphic, and the data and information contained therein, databases and the data contained therein) and its form (e.g., literary, journalistic, scientific, cartographic, computer programs, visual arts, photographic)—requires prior and explicit consent from Wirtualna Polska Media Spółka Akcyjna, headquartered in Warsaw, the owner of this website, regardless of the method of exploration and the technique used (manual or automated, including the use of machine learning or artificial intelligence programs). The above restriction does not apply solely to facilitate their search by internet search engines and uses within contractual relations or permitted use as specified by applicable law.Detailed information regarding this notice can be found  here.