Politicians from the European Union might be talking among themselves about placing Viktor Orbán’s Hungary under quarantine, but it is unlikely that the Hungarian prime minister lost too many sleepless night over this leaked piece of news. Even less is he worried about Adam Michnik, the famous Polish dissident, who frets about Orbán’s dismantling of the democratic institutions in Hungary. Most likely he feels on the top of the world at the moment. Hungary’s courtship of China that started in 2002, after Orbán’s defeat at the polls, and continued all through the socialist-liberal period, at last bore fruit.
Viktor Orbán, who during 1998-2002 refused to do business with Russia or China, changed his mind by 2009-2010. One heard more and more about those “eastern winds” that will move Hungary’s sail in the right direction. In fact, Orbán repeatedly asserted that the “decline of the West” is at hand and therefore he–as he made clear several times–will look around outside of Europe for economic opportunities.
The courtship of China has been intense in the last year. Tamás Fellegi, minister of economic resources, was made special commissioner in charge of the economic negotiations with China. He visited the country in December 2010 and again in March 2011, and bits and pieces of information were leaked about possible Chinese projects in Hungary. It was apparent almost from the beginning that Hungary was especially keen on China’s buying Hungarian government bonds. Then there were rumors about Chinese companies being involved in a complete rebuilding of the Hungarian railway system, including a new super fast line from the Franz Liszt Airport to downtown Budapest. Perhaps, the rumors continued, China will be involved in the enlargement of the airport itself. There were also talks about a Chinese company buying the ailing Hungarian airline, Malév.
The intensive Hungarian efforts bore fruit. On June 6 it was announced that Prime Minister Wen Jiabao will include Hungary in his five-day European trip. It will be from Budapest that he will fly to London and then to Berlin. The Financial Times called the inclusion of Hungary in the itinerary “a big coup.” But just as Fu Jing, deputy foreign minister of China, said in Budapest on June 17, “positive signals should be followed by a positive response.” And there were many positive signals coming from Budapest. The details of these negotiations were not released, but we know that Chinese businessmen are very shrewd so the offers from the Hungarian side had to be quite attractive.
Let’s see what we definitely know about Chinese investments in Hungary in the last year or so. On August 23, China’s second biggest telecommunication company, ZTE Corp., signed an agreement to supply second, third, and fourth generation LTE cell phone systems to Telenor Magyarország. On September 13, a Chinese-Hungarian law office opened its doors to offer legal assistance to Chinese firms doing business in Hungary and Hungarian firms operating in China. A few days later, on September 20, Chinese investors purchased the Tisza Szálló in Szolnok. On January 31, 2011, the Chinese Wanhua Industrial Group bought BorsodChem Zrt. and now holds a 96% stake. On March 23, the Chinese invested two billion forints to build a factory (Chinese-Hungarian Orient Solar Kft.) in Berettyóújfalu that will produce solar collectors. The Chinese partners have the majority share in the business. Another Chinese company is setting up a pharmaceutical company in Gyula. The investment is worth 10 billion forints. In the same month another Chinese company signed a contract with the City of Szolnok to produce tricarballylic acid. The city is providing a 20-hectare site for the factory. In May Zsolt Páva, mayor of Pécs, visited Beijing and came home with a promise from Huawei, a leading telecom provider, that the company will establish its second largest distribution center in the southern Transdanubian city badly in need of foreign investment.
It was against this backdrop that the Chinese prime minister visited Budapest yesterday and today. The Hungarian authorities didn’t leave anything to chance. A few weeks ago an e-mail was circulating on the Internet from the Department of Chinese Language and Literature at ELTE written to the students who study Chinese saying that they should all be present when Wen Jiabao meets with the students. The more the merrier, so if the students have friends who look like students, bring them along. The goal was to convince the Chinese prime minister to offer scholarships to Hungarian students, and a large group is certainly more impressive than a puny one.
Another problem was the presence of a fair number of Tibetan refugees in Hungary. They tried to demonstrate, but the police announced that they would interfere with traffic. To be on the safe side, all Tibetans were called into the Office of Immigration and Citizenship to have their IDs checked. And who can do anything about a long wait? Nobody. They couldn’t leave and thus spent their time in the corridors of the office. The authorities didn’t have to worry about an illegal demonstration. On the other hand, the Chinese inhabitants of the city were thrilled and greeted the prime minister with Chinese flags.
The meeting between the two prime ministers was exceedingly friendly. Both Wen and Orbán talked about the long-standing and close friendship between the two countries going back sixty years. Indeed, Mao Tse-tung’s communist regime was established in 1949 and shortly afterwards there were yearly student exchanges between China and Hungary. According to Wen, “”friendship is always more important than business.” The Chinese and the Hungarian prime minister walked along the bank of the Danube after a meeting lasting an hour and a half, after which Wen remarked that “the beautiful Danube River is flowing exactly the same way as it did twenty-four years ago when we first visited Hungary although great changes have taken place. But the friendship between the two countries remained the same.”
If possible, Orbán was even more expansive. During the press conference Orbán was overflowing with compliments. For example: “Hungary is glad that it could welcome the prime minister of a state who not only contributed so much to the development of his own country but also splendidly benefitted the global well being of the world. We don’t know of any such other instance in history when during such a short time so many people were lifted out of poverty and brought to levels worthy of human beings.”
Or here is another example: “China’s progress is not a short-lived phenomenon. In the future China will play an ever-growing role in the world. We want to have a long-lasting alliance [emphasis by ESB], longer than the time I will spend in politics, although that will not be short either.”
As for Wen, he was not too specific about the details of this strategic alliance. He did mention that the Chinese Development Bank will give a loan of one billion dollars for Hungarian investors in China. China also wants to double trade between the two countries that will be, according to plans, 20 billion dollars by 2015. Wen confirmed that China will purchase Hungarian government bonds but no amounts were mentioned.
It was known already yesterday that the two countries will sign twelve different bilateral agreements. Here they are: (1) an agreement on cooperation in matters of air- and water-transport between Foreign Minister Yang Jiechi and Tamás Fellegi; (2) a general agreement on cooperation between the Chinese Ministry of Commerce and the Hungarian Ministry of National Development signed by the two ministers; (3) an agreement on the development of the railway system signed by Gao Jian, the Chinese ambassador to Hungary, and Tamás Fellegi; (4) an agreement on the establishment of a Huawei European Supply Center signed by Peng Zhiping, vice president of Huawei, and Tamás Fellegi; (5) an agreement on the mutual establishment of cultural centers signed by Miklós Réthelyi, minister of national resources, and Gao Jian, Chinese ambassador in Budapest ; (6) an agreement on the establishment of a bilateral business council signed by Wan Jifei, the president of the Chinese Chamber of Commerce, and Sándor Demján, president of the National Association of Entrepreneurs and Employers; (7) an agreement on the establishment of the Chinese East-Central European logistical and commercial platform signed by government officials reponsible for Hungarian-Chinese relations; (8) an agreement between BorsodChem Zrt. and the Bank of China concerning the use of a 1.1 billion euro loan for the development of the company; (9) an agreement for strategic cooperation between the HNA Group and the Magyar Tőketársaság signed by Chen Feng, president of HNA, and Sándor Demján; (10) an agreement concerning the establishment of a Central European Hungarian-Chinese Commercial Logistic and Development Cooperation Zone signed by Li Fangrul, president of Shandong Imperial International Investment, and Ernő Takács, owner and president of Talentis Group; (11) an agreement about the establishment of the Szolnoki Citromsav Gyár to produce 60,000 tons of tricarballylic acid a year signed by Imre Andrási, the president of the Szolnok Industrial Park, and Chen Liping, financial director of BBCA, and finally (12) an agreement to establish a European base of Shenzhen Canyi Technology Co., Ltd. producing energy-saving lighting equipment signed by Du Wei, president of Wujiang CANYI New Lighting, and András Szollár, head of DML Europa Vállalat.
All this is very impressive, and I’m sure in the short run it will be useful to Hungary since the Chinese infusion of money and investment will offer great opportunities. But the devil is in the details, and I’m not sure whether such a close embrace of China may not have some unintended consequences.