Regional Focus: China’s Engagement with Central and Eastern Europe
China first established relations with Central and Eastern European (CEE) countries in the 1950s, mainly to strengthen diplomatic and economic ties with the socialist states of the region. The Sino-Soviet split, combined with the instability at home caused by the Great Leap Forward and later the Cultural Revolution, brought China–CEE cooperation to a halt. For decades, China followed the well-known motto “conceal your capabilities and avoid the limelight,” remaining largely absent from the region. It was only in 2012 that Beijing reemerged, first with the 16+1 framework and later through the Belt and Road Initiative (BRI).
At present, China is the EU’s largest source of goods imports. Until 2018, the majority of Chinese foreign direct investment (FDI) in the CEE region was concentrated in Hungary. Since 2015, Beijing has begun diversifying its FDI toward Poland and other CEE as part of an enhanced regional strategy.
China’s engagement has historically been structured through the Cooperation between China and Central and Eastern European Countries (CEECs) format. However, in recent years, the multilateral initiative has lost much of its traction. Due to limited participation and lack of interest, several countries have withdrawn. Today, China primarily engages with the region’s countries on a bilateral basis. There are several reasons behind this strategy. First, the region plays a key role in establishing value chains across sectors such as automobiles, food production, green technologies, and electric batteries. Second, Central and Eastern Europe has geopolitical importance, since it includes parts of theancient Silk Road route. This illustrates how Chinese interests in the region can be traced back to its historical geopolitical objectives.
Hungary’s Strategic Turn to the East
China is Hungary’s largest trading partner outside the EU, second only to Germany overall. In 2017, the two declared a Comprehensive Strategic Partnership. Under Orbán’s “Eastern Opening,” Hungary depends on a wide range of Chinese products and positions itself as Beijing’s focal point in Central Europe.
Several factors enabled this turn. When Orbán came back to power in 2010, Hungary was heavily indebted, with debt above 80% of GDP. The global financial crisis left it vulnerable. Through diversification and post-crisis management, Hungary achieved one of the fastest recoveries in the region. After repaying its IMF loan, Orbán gained the freedom to deepen relations with China, Russia, and others outside the West. By 2019, the debt-to-GDP ratio had fallen to 66.3 percent. Meanwhile, reliance on Chinese and Russian funds grew.
The Budapest–Belgrade railway is one example. Costing more than €2 billion, financed mostly by a Chinese loan, it has raised concerns about corruption and transparency. During Xi Jinping’s 2014 visit, both governments highlighted cooperation in railway and airport infrastructure, showing how central these projects are. Herewith, the 2025 nuclear deal demonstrates how Hungarian-Chinese relations have deepened not only economically but also through political and strategic partnerships. Budapest is willing to risk friction with the EU and NATO to strengthen security and defense ties with non-Western allies.
Hungary’s Strategic Ties with China
The 2026 elections will shape Hungary’s political trajectory. Péter Magyar, a pro-EU opponent of Fidesz, calls for stronger Western alignment. But with Fidesz’s entrenched two-thirds majority, which grants them the power to alter key laws unilaterally, change looks challenging. If Orbán stays, Hungary’s tilt toward the East will almost certainly deepen.
So far, the EU has responded with frozen funds and legal action. Even during Hungary’s six-month presidency of the EU Council in 2024, Budapest distanced itself further from Brussels. Transparency International points to declining media freedom and restrictions on civil society. Moreover, in October 2024, the European Commission referred Hungary to the Court of Justice over the “Defence of Sovereignty law”.
China, meanwhile, is stepping in. Projects in machinery, 5G, and especially electric vehicles bring both jobs and long-term dependency. Hungary has become a base for Chinese companies such as BYD and Huawei. CATL’s massive EV battery plant, the largest foreign investment in Hungary, will symbolize this reliance once completed. Hungary has also facilitated Chinese influence in the region, including a $500 million loan to North Macedonia financed throughBeijing. Moreover, Beijing also deploys soft power in Hungary through research institutions, Confucius Institutes, exchange programs, and student research centers. These channels aim to shift perceptions among many Hungarians, encouraging them to view Chinese investments and infrastructure projects in the country positively.
In the meantime, the EU has adopted sanctions against China, predominantly for human rights abuses, an arms embargo, and restrictions on certain Chinese products and trade activities. Sanctions have also targeted some Chinese companies and individuals in the context of the Russia-Ukraine war, as they were supplying Russia with drones and microelectronics and helping it circumvent the restrictions imposed on it. In this way, the EU affirms its role not only as an economic actor but also as a regulatory and normative power.
Future Scenarios: Balancing West and East
In the near future, Hungary’s political trajectory will focus on a balancing act: receiving economic benefits from China while managing diplomatic trade-offs and political costs with the EU. The increased pressure from the West regarding the rule of law and democratic backsliding is already being met by growing Chinese influence. As seen with the relocation of major automotive and electric vehicle production facilities by Chinese companies, Hungary is expected to become a hub for Chinese economic production and manufacturing.
A more coherent EU strategy is needed to counter China’s growing influence in the CEE. That could imply more rigorous investment screening, reducing reliance on Chinese infrastructure projects, or increasing the EU investments in the CEE region to naturally decrease Chinese involvement.
The stability of relations among other major actors, such as U.S.–China relations and Russia’s presence in the region, will also affect the political dynamics of China’s EU strategy.
However, all these relations are heavily centered around Viktor Orbán’s charismatic persona. If he leaves office, relations are likely to shift more toward Brussels. That said, this does not mean a complete collapse of Hungarian–Chinese relations, but it does imply less influence on the political agenda and greater alignment with EU policies. Opposition parties such as the Democratic Coalition, Momentum, and the Socialists are better aligned with Brussels.
The 2026 election will be decisive for Hungary’s fragile democracy. It will decide whether or not the populist far-right Fidesz determines the country’s political trajectory afterward. This outcome will reverberate across the EU, and in case of a Fidesz victory, Budapest will become Beijing’s political conduit. This will enhance China’s presence in Europe, and Beijing will have a say in the political decisions at the EU level.
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