The Hungarian prime minister, who secured a decisive electoral victory last Sunday, does not intend to make a substantial shift in Hungary’s trade policies with China. Nonetheless, he has committed to better harmonize with EU regulations, managing a balance between Beijing’s ties and mounting pressure from Brussels.

Viktor Orbán has established Hungary as a hub for Chinese electric vehicle producers within Europe, despite the EU’s tariff regulations targeting them.

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His political heir, Péter Magyar, now seems less willing to drastically change this approach.

During a press briefing on Monday, following a strong victory over Orbán, Magyar commended China as “one of the world’s largest, most significant, and most powerful countries.”

“I look forward to traveling to Beijing, and we are pleased to host Chinese officials here in Hungary,” he stated.

Magyar also mentioned plans to “reassess” Chinese investments in Hungary — particularly in the electric vehicle industry — but clarified it will not be “with the intention to halt or obstruct those investments.”

In recent years, Hungary has actively courted Beijing’s scale, with BYD launching its first European passenger EV factory in Szeged in 2024, alongside significant investments from companies like CATL, NIO, and EVE Energy in the country.

However, this open-door stance increasingly conflicts with the EU’s efforts to intensify oversight of Chinese investments, especially as China inundates Europe with low-cost imports and forecasts indicate up to 600,000 job losses in the EU automotive sector during this decade due to mounting competition from Chinese manufacturers.

Magyar also faces challenges linked to allegations of forced labor involving Chinese workers at BYD’s Hungarian facilities, as well as a recent European Commission investigation into unfair subsidies at the same location. These issues have damaged the company’s credibility and elevated concerns about Beijing’s investment practices.

Enhancing returns from investments in Hungary

At Monday’s press event, the head of Hungary’s Tisza party refrained from elaborating extensively. Still, he emphasized Hungary’s intent to better align its policies with Brussels.

“Our objective is to ensure that projects comply with European Union and Hungarian environmental standards, health safeguards, labor safety norms, and contribute to Hungary’s economic progress,” Magyar explained.

He also seemed determined to diverge from Orbán’s skepticism toward the recent European Commission proposal concerning “Made in Europe,” which specifically targets China.

The draft legislation, now under discussion by EU member states and MEPs, aims to impose stricter requirements on foreign direct investments exceeding €100 million in strategic sectors such as batteries, electric vehicles, solar panels, and critical raw materials.

According to the proposal, investors from countries holding a 40% share of the global market in a particular sector must employ at least 50% EU-based workers. Additional stipulations might include limiting foreign ownership below 49%, mandating joint ventures with European partners, and requiring technology transfers.

“What we reject — and will not permit — is foreign enterprises coming to Hungary, obtaining substantial state support, employing very few Hungarian workers, generating minimal added value for the Hungarian economy, and at the same time compromising the quality of Hungary’s soil, air, and water,” Magyar concluded, signaling his commitment to align Hungary’s policies more closely with Brussels.