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Budapest, Beijing, Brussels and beyond: a conversation on Viktor Orbán’s China policy

As China explores new strategic opportunities in Central and Eastern Europe, Hungary’s Viktor Orbán seeks his own advantages from the partnership. Despite the many limitations and lack of public support for closer Sino-Hungarian ties, threatening Brussels with the Chinese dragon yields some results.

July 20, 2021 - Meghan Poff - Articles and Commentary

A Chinese flag on the Chain Bridge in Budapest as part of the 16+1 conference with China and all the other 16 Central and Eastern European Countries. Photo: Studio Criekemans / Shutterstock

In what seems like only the latest in a series of moves and countermoves, the Hungarian Parliament recently approved a proposal to donate state land to the future site of Fudan University’s Budapest campus. The controversial project has sparked outrage in recent weeks and on June 5th thousands of Hungarians protested in the streets of Budapest. The capital’s mayor Gergely Karacsony even announced that several streets in the city would be renamed after politically sensitive topics related to China. The protests led Prime Minister Viktor Orbán to promise a referendum on the Fudan project but only in 2023 after the next elections.

The Fudan project is not the only thing keeping the Hungary-China relationship in international headlines. In early June, the Hungarian government blocked an EU statement that condemned China’s Hong Kong policy. This led to an official rebuke from German officials. In late May, Hungary also opted out of a new EU vaccine deal with the manufacturer Pfizer and instead decided to rely on vaccines from Russia and China. These vaccines have been approved domestically but not by the EU Medicines Agency. The Hungarian government even signed an agreement with China shortly after to produce its Sinopharm vaccine on its territory.

“I always tell my foreign friends that the world is very lucky Viktor Orbán wasn’t born Russian, American, French or Chinese, but into a small and less significant country”, says Dr. Tamás Matura, a China expert and assistant professor at Corvinus University Budapest.

“He is very ambitious, and many people around him would argue that he’s simply a bit bored with domestic politics in Hungary. He defeated everyone, and therefore a few years ago he turned towards EU-level and even world politics. So whenever you hear people in Western Europe say that China is a ‘Trojan Horse’ in the EU and Hungary is the major actor behind this, I think this is something Viktor Orbán loves to hear. The more dangerous China looks in Central Europe or in the EU, the more it elevates [Orbán’s] personal importance and his clout in the EU”.

Orbán’s recent moves are significant because they represent far-reaching anxieties and concerns over growing Chinese influence not just in Hungary but in the region as a whole. While some observers warn about Hungary being a “springboard” or “Trojan horse” for China inside the European Union, Matura takes a more measured position.

“I always argue that China’s influence has never been as strong as many believe, especially in Western Europe or the European Union. Hungary is, I think, the last EU member state which still stands firmly next to its pro-China policy”.

Matura also argued that it is misleading to speak of a “Hungarian” pro-China policy: “This is the foreign policy of the prime minister himself. If you check all reliable and available data, there is no public support behind this pro-China policy. A recent pan-European survey shows that almost 50 per cent of Hungarians have a very negative view of China and only something like 30 per cent have a positive view”.

Matura believes that public support has declined sharply in recent months due to the highly visible controversy surrounding the proposed Fudan University campus. The project has brought China’s role in Hungary to the forefront in a way Matura says was unquestioned in previous years.

“For many years, even the opposition parties did not question the pro-China policies of the Hungarian government. Generally speaking, all parties agreed that China was important. That has started to change in the past few years because of certain scandals like the Belgrade-Budapest railway line, and, of course, COVID-19. China has finally become a political topic in Hungary, and opposition parties realise that they can gain a lot of political support by bashing China. Even the economic elite are not as pro-Chinese as they used to be when there was this huge enthusiasm about the coming potential tsunami of Chinese investment into Hungary. But as you already know, all of these promises and expectations turned out to be false and there is huge disappointment. So now, it is only the prime minister who still pursues this pro-China policy”.

Matura says that much of the opposition to the Fudan University Budapest project, as well as China’s role in the country more generally, is more about government corruption rather than fears of malign Chinese influence. Speaking about the Budapest-Belgrade railway project, Dr. Ágnes Szunomár, a leading economics researcher at the Hungarian Academy of Sciences, supports this view. She argues that the populist leaderships in Hungary and across the region have attempted to limit public discussion on important issues. As a result, these administrations hope to make decisions in the ‘public interest’ without explaining what those interests are in the first place. The highly controlled media environment in Hungary also works in the ruling party’s favour by preventing access to critical information or opposing viewpoints.

Szunomár highlights the Budapest-Belgrade railway modernisation project as a particularly clear example of the secrecy and lack of transparency that surround many government projects. In 2020 the Hungarian parliament voted to classify the feasibility studies and loan agreement for the proposal.

Independent studies, however, have questioned the economic benefits of the planned railway and Szunomár agrees with their conclusions. She says that the project, which she called the most important of its kind in Hungary’s history, will not even benefit the Hungarian people, who will ultimately have to pay for the development.

“There are many railway tracks in Hungary that are in poor condition, some older than 100 years, which need to be refurbished. The line between Budapest and Kelebia [the Hungarian section of the Budapest-Belgrade railway] is not even close to the top of the priority list. It avoids all the most important cities in southern Hungary, and it will not help the Hungarian people get from city to city. It is purely for transferring Chinese goods from the Greek port of Piraeus through North Macedonia, Serbia and Hungary to Western European markets. We are not even the target market for these products”.

The railway project exemplifies Hungary’s continued position as a country located between larger actors. Orbán reportedly called his strategy for dealing with this reality the “peacock’s dance”, a delicate balance of advance and retreat with the great powers in which China is only one of many actors.

“I think if we want to understand the China policy of the Hungarian government we have to embrace a broader view. It is not only China that the Hungarian government has been supporting within the European Union, but also the governments of Russia, Turkey and recently Israel. China is only one dimension of this, as an official in Brussels called it, disruptive foreign policy of the Hungarian government”.

Hungary is not alone in pursuing this balancing act. Matura says the other regional players to watch are in the Western Balkans and particularly Belgrade. Certainly, Serbian President Aleksandar Vučić has been increasing his country’s economic and political ties with China over the past few years. Matura says that playing the great powers off against each other has long been a foreign policy strategy in the Balkans due to the competing regional roles of the EU, Russia and the United States.

While this strategy has sustained Orbán’s political position for more than a decade, Matura questions its sustainability. He argues that the contradicting interests and goals of the regional powers make it impossible for Orbán to satisfy them all.

“This balancing game is something we know very well in Hungary. The problem is that whenever we Hungarians play these balancing games it has always ended in disaster. It’s a foreign policy strategy known for its failure in Central and Eastern Europe”.

One emerging actor to consider in particular is the United States. Matura says that Washington has just returned to the region after an absence of almost a decade. The Trump administration began showing more interest in the area and especially Hungary around 2018. This was part of a larger trend related to America’s increasing interest in Chinese activities around the world. Orbán reportedly expected greater pressure from the United States to tone down its pro-China policy. Beyond several diplomatic warnings, however, this pressure never materialised in any meaningful sense.

According to Matura, Orbán is unbothered by these developments: “I was also told by people close to the government that the prime minister has always had the feeling that we shouldn’t care about America. Will American companies in Hungary leave the country because of the political tensions between Budapest and Washington? No, they won’t. This is not how America works. So [Orbán] believes that America cannot really punish Hungary, though I’m not sure about this. I don’t expect the Hungarian government to change their attitude towards the Chinese anytime soon, at least not due to American pressure”.

Szunomar contrasts this reality with the situation in Poland. Despite similarities in political leadership, Warsaw has taken a more cautious approach in its relations with China. She says that “The Polish side used to be more enthusiastic about doing business with China, but after a few years realised that it was not as beneficial as it seemed. The trade deficit between the two countries, for instance, has increased in the past few years to a very high degree. Also, the U.S. government started to pressure the Central and Eastern European countries to not do business with China, especially when it comes to the 5G issue”.

Szunomar says that the Polish position can be explained by the need to counterbalance its historical adversary Russia by maintaining a good relationship with America. Huawei was subsequently banned in Poland, while Hungary is using the company to build its 5G network.

Other EU member states, particularly Germany, have challenged Hungary’s vocal relationship with China. Matura questions this approach, saying that “it’s a huge question whether EU and Western European partners like the Germans or the French really believe that China is an important player in Central Europe and a threat to the EU, or if they just use this narrative to hit Hungary politically”.

He adds that Germany and the EU may be employing a double standard with Hungary, since China has become an important economic partner for Germany under the leadership of Angela Merkel.

“Yes, [Merkel] has criticised the Chinese on human rights issues. But if you check the tone and frequency of that criticism, I think you would find a decrease in the past few years. Probably behind the scenes, German diplomats have even indicated to the Chinese that “we have to mention these things in public speeches, but actually don’t take it that serious” because they still want to sell Mercedes and Volkswagen cars in China”.

Matura says that the German strategy of pursing economic relations while remaining critical on the political front raises interesting questions for Hungarians: “If Germany can be economically successful in China without publicly praising the Chinese as explicitly as the Hungarian government does, then why does the Hungarian government need to do so? I think the answer is that the Hungarian-Chinese relationship is more about politics than economics”.

Matura believes that the countries’ initial relationship was perhaps focused on economic cooperation. However, about five or six years ago the government realised that it was not receiving the benefits it was promised by Beijing.

“I think that was the moment when the prime minister realised that he could still use China as a political tool. So many people argue that China uses Hungary as a ‘Trojan Horse’ but I believe that it might be the other way around. In the past five years, I have heard complaints coming from Chinese experts, and many of them told me that, yes, we do understand all of these political gestures and gifts coming from the Hungarian government. But maybe you shouldn’t do that, maybe it’s a little bit too much”.

Matura explains that while Hungarian support for China can be convenient at times, Beijing is ultimately more concerned about its long-term relationship with the EU. Symbolic gestures, such as blocking EU condemnation of China over Hong Kong, subsequently have little material impact. “China knows that Hungary is a black sheep in the European Union, so they fear that Hungary’s gestures to China could impact the whole EU-China relationship”.

In 2019 the EU signalled a new direction in its China policy by officially defining the country as a “strategic rival”. Matura cautions, however, that an EU-level China strategy is unlikely to emerge: “Individual member states will always try to play their small, dirty bilateral games with China. I disagree with those who say China is trying to divide and rule Europe; the EU and its member states are very good at dividing themselves”.

Szunomár says that while the economic impact of China in Central and Eastern Europe will likely never match that of western EU member states, the region will remain economically relevant as long as China sees the EU as an important market.

“I think the region will remain an important target area for assembly activity from China, since I think it will take quite some time for CEE countries to catch up with the West in terms of salaries, for instance. To be honest, I don’t think this will ever happen. We will always be cheaper than the Germans or the French, which means it will be worth it for the Chinese to manufacture here instead of other countries”.

According to Matura, continuity or change in Hungary’s China policy is largely dependent on two crucial elections. The first are the German federal elections in September, which will bring an end to Angela Merkel’s 16-year reign as chancellor.

The second are the parliamentary elections in Hungary. Although the elections are not scheduled until 2022, select polling data show that ruling party Fidesz may face its first genuine opposition challenge in years. Budapest Mayor Karacsony, who is a current opposition frontrunner, has made China and the Fudan project an election issue regarding transparency, corruption and Hungarian sovereignty. This sentiment has been echoed by other high-profile opposition figures. While both Matura and Szunomár anticipate a significant shift in Hungary’s China policy should the opposition win next year’s elections, it is unlikely to be the vote’s defining issue. As Central European University research fellow Gabor Toka told Radio Free Europe/Radio Liberty, “people have many reasons to make their minds up about this government, but it won’t be made over China”.

Meghan Poff is an MA student in Central and East European, Russian, and Eurasian Studies at Jagiellonian University.

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