Xi Jinping could hardly imagine a more splendid reception, and right in the heart of Europe: Hungary welcomed China’s President in the courtyard of Buda Castle with the highest honors imaginable. Even more importantly, Hungary’s Prime Minister Viktor Orbán invoked the close friendship with Xi. In turn, Xi made it clear that he expects significant improvements in the relationship between the European Union and China, especially with Hungary taking over the EU Council Presidency in the latter half of the year.
However, the EU does not function quite as Xi apparently imagines. Its hallmark: disunity. And even an EU Council President Orbán will be able to change little about this. For once, this is a good thing: Xi’s visit is fundamentally anti-European, as Michael Radunski analyzes. And Orbán seems all too recklessly willing to be exploited for this purpose.
Emmanuel Macron demonstrates a different approach, having met with Xi earlier this week in Paris: Just before the visit of the Chinese President, Macron received the chairman of the Tibetan government-in-exile, Penpa Tsering. We remember: Angela Merkel was shunned by China for a long time after she met with the Dalai Lama in 2007.
In an interview with China.Table, Penpa Tsering calls for such courage from Olaf Scholz. “The world cannot simply watch as peoples are wiped out by the Chinese government for economic interests,” says Tsering. Read why he believes that Europe’s perceived weakness is an illusion and that the EU could dare to do much more, in the interview with Marcel Grzanna.
The visit of the Chinese President to Hungary was marked by assurances of mutual friendship: “The relations between China and Hungary are now better than ever in history,” said Xi Jinping on Thursday. Earlier, he had declared during a meeting with Hungarian President Tamas Sulyok that his country was ready to elevate bilateral relations with Hungary to a high level. Looking forward to Hungary taking over the EU Council Presidency in the second half of the year, he also expressed hope that this would be an opportunity to improve relations between the European Union and China.
Hungary is the last stop on Xi Jinping’s European tour – and the most important one. After visits to France and Serbia, China’s President finally met his close ally: Prime Minister Viktor Orbán. Beijing’s calculation is simple and fully effective: The People’s Republic invests billions in Hungary and in return gains maximum political influence within the European Union. The workings of this are evident in the decisions made.
Potential decisions/agreements – and their implications:
This fits the trend. Chinese direct investments in the EV sector have recently soared – with a specific focus on Hungary. In 2022, CATL invested 6.7 billion euros in building a Gigafactory in Debrecen. This was followed by Chinese EV manufacturer BYD, which recently announced the construction of its first European production facility – in Szeged, Hungary. The costs amount to approximately five billion euros, creating about 8,000 to 9,000 new jobs. Now, the Great Wall Motor factory in Pécs is on the list.
Behind these billion-euro investments lies another strategic move: With such large production sites within the EU, Beijing has a solid countermeasure should the EU Commission decide in mid-July to impose anti-subsidy duties on EVs imported from China.
China’s ambitions extend far beyond a simple railway line between the capitals of Serbia and Hungary. In February, Greece announced its intention to join the project. The railway line is set to become the main transport route for Chinese and Asian goods arriving in Europe by sea. The pieces fit together strategically: The Port of Piraeus is already predominantly under Chinese control.
Xi Jinping achieves several goals with these projects: Firstly, he gives new momentum to his stalled “Belt and Road” initiative. Secondly, he pursues strategic objectives that go beyond individual projects. And lastly, Xi supports his partner Viktor Orbán, who urgently needs economic successes, especially at times when the EU is scrutinizing its payments to Hungary – keyword rule of law. Chinese investments worth billions are highly welcome.
Another point that causes deep resentment in Europe is the security cooperation between Hungary and China: Concerns range from secret Chinese police stations to potential Chinese access to EU databases.
Hungary was the first EU state to join Xi’s flagship project in 2015. After Italy withdrew last year, it is now again the only EU country participating in the BRI. Thus, Orbán was also the only EU head of state to attend the third BRI summit in Beijing last October, where he encouraged more Chinese companies to invest in Hungary. Incidentally, to attend the event, Orbán missed an extraordinary video conference of EU heads of state, which was about the Hamas attacks against Israel.
The Budapest newspaper “Nepszava” also views this development critically. In a commentary on Tuesday, it stated: “Hungary’s government is entering into (infrastructure) investments financed with Chinese loans that may never pay off, solely to spite Brussels.”
And here lies the major problem for Europe. Xi’s visit is fundamentally anti-European. Hungary plays a crucial role in this. Under Orbán, the country has become a Chinese asset within the EU, which Beijing now needs more than ever.
The general mood in Europe towards the People’s Republic has considerably soured. Risk reduction is the order of the day – as evidenced by the clear words from EU Commission President Ursula von der Leyen to Xi Jinping earlier this week. Von der Leyen announced in Paris that Europe would not hesitate to “make tough decisions to protect its economy and security”.
In this context, Orbán is expected to help dilute overly critical EU policies – or completely block them if necessary. “The Hungarian government is China’s last true friend in the entire EU,” judges Tamas Matura, a China expert and professor at Corvinus University in Budapest. “For the Chinese, it is now very important to establish themselves in a country within the EU borders that is friendly towards the Chinese political system.”
That this is successfully happening is shown by the past: Hungary has vetoed several proposals at the EU level that would have condemned China for human rights violations or in relation to Hong Kong or Taiwan. According to research by the Budapest online portal valaszonline.hu, about 60 percent of the vetoes against Russia or China in the past six years came from Hungary. Understandably, Xi is looking forward to Hungary’s EU presidency.
A record number of European companies view their prospects in the Chinese market as worse than ever before. According to the annual business climate survey released on Friday by the EU Chamber of Commerce in Beijing, 23 percent of the companies surveyed expressed pessimism about their growth prospects for the next two years – more than ever before. In last year’s survey, only 9 percent had expressed pessimism.
Meanwhile, the number of companies that are positive about their growth prospects has dropped from 55 percent last year to 32 percent, the lowest value to date.
Many companies had dreamed of a massive boom following the COVID-19 pandemic last year, but they have now been brought back down to reality. The biggest problems for companies, listed in order, are:
The past year was marked by “growing uncertainty” for European companies in China, according to the Chamber. Although China’s reopening after the pandemic initially triggered a “sense of optimism”, “deep structural problems” such as weak domestic demand, high debt levels among local governments, and ongoing challenges in the real estate sector quickly clouded prospects again. Company confidence was further weakened by contradictory messages from the Chinese government.
The message that this complex situation is challenging for companies runs like a red thread through the Chamber’s publication.
The currently hotly debated issue of overcapacity is also highlighted in the Chamber survey. While China denies that these exist and claims they are only used by the West as a pretext to impose protectionist trade measures, EU companies paint a different picture.
Overcapacity has become a “significant problem” with the decline in domestic consumption. Overall, 36 percent of respondents observed overcapacity in their respective industries. An additional 10 percent expect to see it in the near future. The highest proportion of respondents (69 percent) reported overcapacity in construction and engineering. The automotive industry had the second highest proportion with 62 percent.
Three-fifths of respondents who reported overcapacity in their sector cited excessive investments in domestic production as the main cause. Half of them pointed to overcapacity due to insufficient domestic demand, and 34 percent cited a lack of foreign demand as another important reason.
As economic challenges intensified, regulatory obstacles remained high in 2023. Only 16 percent of respondents expect a reduction in regulatory barriers – also the lowest value ever. The Chamber detailed the problems of specific industries:
The Chamber also pointed out an issue that has received little attention so far. When it comes to the right strategy for China, there is an increasing “decoupling” between a company’s Chinese branch and its headquarters in Europe. This is “a trend that should be closely monitored,” according to the Chamber. Even if the branch in China sees opportunities for expansion, it is becoming increasingly difficult to obtain approvals as the headquarters increasingly misunderstands the actual conditions on the ground.
Sikyong Penpa Tsering, as the political leader of the Tibetans, you met personally with France’s President Emmanuel Macron just days before Xi Jinping’s arrival in Paris. What were you able to discuss with him?
Since my election three years ago, I have visited 24 countries in hopes of improving the situation for my people. As always, in political meetings, my goal is to work with our counterparts to find common strategies to end the cultural genocide against our people and other human rights abuses by the Chinese government as soon as possible.
What is your interim assessment after all these travels?
Other states should take a cue from President Macron, who did not avoid meeting with me out of concern for Chinese irritation. Unfortunately, I have found that at higher political levels, there is often a reluctance.
You were also in Berlin a few days ago for routine discussions, initiated by former Federal Minister and CDU politician Christian Schwarz-Schilling. What did you take away from Germany?
Honestly, I am not very pleased with how Germany positions itself. I am not even sure who is steering German foreign policy – the foreign ministry or the chancellery. During his trip to China, Chancellor Scholz left the impression that Germany prioritizes its economic interests at any cost.
Scholz said he addressed human rights issues.
I’ve heard that too. But is he really committed to advocating for them? I fear not. It is no secret what is happening in Tibet or East Turkestan. The world cannot just watch as peoples are decimated by the Chinese government for economic interests.
Do you sense a fear of Beijing in foreign governments?
I wouldn’t go that far. But almost everywhere I go, I encounter concerns that economic relations with China could be damaged.
You don’t accept that as a valid argument?
No, because it completely overlooks how vulnerable and how urgently China depends on Europe. However, China has managed to convince Europeans that they are dependent on China. Yet dependency is not a one-way street. Europe is not leveraging its strengths. And that is the self-inflicted dilemma that has arisen. China respects no one who does not stand up for their own values.
What do you expect from Western governments?
We have never demanded a decoupling. But it must be clear to all actors that the longer China is allowed to grow geopolitically stronger through massive trade surpluses that provide the funds to do everything the world would like to prevent.
For example?
Purchasing large quantities of Russian oil, which finances the war in Ukraine. Or billion-dollar investments in the Global South as part of the “Belt & Road” initiative, which traps many countries in debt and increasingly provokes Beijing’s political influence on these states.
In the Global South, many governments credit China with at least being willing to provide substantial aid.
China uses the history of Western colonialism to position itself as a supposed helper in need. But in reality, it is economic colonialism that China is practicing.
Sikyong Penpa Tsering is the democratically elected chairman of the Tibetan government-in-exile. Penpa was one of the longest-serving members of the Tibetan exile parliament in Dharamsala, North India, which he led as the Speaker of the House during the last two election terms from 1996 to 2016. Penpa also served as the representative of the Dalai Lama and the exile government in North America. He has testified before the US Congress and parliaments worldwide.
To commemorate “World Book Day”, the Chinese milk tea brand Lelecha 乐乐茶 printed an icon on the cups of their “Smoky Oolong”: Lu Xun, one of China’s most significant writers. However, the marketing campaign backfired. Online users debated that the use of the word “smoky” was disrespectful since Lu Xun had died from the consequences of excessive cigarette consumption. Others criticized that the Marxist was being misused as a capitalist brand ambassador. A great-grandson of the author, who passed away in 1936, sued on behalf of the Lu Xun Cultural Foundation for the unauthorized use of Lu Xun’s likeness. Lelecha apologized in an open letter: They had merely intended to inspire young Chinese to read.
Xi Jinping could hardly imagine a more splendid reception, and right in the heart of Europe: Hungary welcomed China’s President in the courtyard of Buda Castle with the highest honors imaginable. Even more importantly, Hungary’s Prime Minister Viktor Orbán invoked the close friendship with Xi. In turn, Xi made it clear that he expects significant improvements in the relationship between the European Union and China, especially with Hungary taking over the EU Council Presidency in the latter half of the year.
However, the EU does not function quite as Xi apparently imagines. Its hallmark: disunity. And even an EU Council President Orbán will be able to change little about this. For once, this is a good thing: Xi’s visit is fundamentally anti-European, as Michael Radunski analyzes. And Orbán seems all too recklessly willing to be exploited for this purpose.
Emmanuel Macron demonstrates a different approach, having met with Xi earlier this week in Paris: Just before the visit of the Chinese President, Macron received the chairman of the Tibetan government-in-exile, Penpa Tsering. We remember: Angela Merkel was shunned by China for a long time after she met with the Dalai Lama in 2007.
In an interview with China.Table, Penpa Tsering calls for such courage from Olaf Scholz. “The world cannot simply watch as peoples are wiped out by the Chinese government for economic interests,” says Tsering. Read why he believes that Europe’s perceived weakness is an illusion and that the EU could dare to do much more, in the interview with Marcel Grzanna.
The visit of the Chinese President to Hungary was marked by assurances of mutual friendship: “The relations between China and Hungary are now better than ever in history,” said Xi Jinping on Thursday. Earlier, he had declared during a meeting with Hungarian President Tamas Sulyok that his country was ready to elevate bilateral relations with Hungary to a high level. Looking forward to Hungary taking over the EU Council Presidency in the second half of the year, he also expressed hope that this would be an opportunity to improve relations between the European Union and China.
Hungary is the last stop on Xi Jinping’s European tour – and the most important one. After visits to France and Serbia, China’s President finally met his close ally: Prime Minister Viktor Orbán. Beijing’s calculation is simple and fully effective: The People’s Republic invests billions in Hungary and in return gains maximum political influence within the European Union. The workings of this are evident in the decisions made.
Potential decisions/agreements – and their implications:
This fits the trend. Chinese direct investments in the EV sector have recently soared – with a specific focus on Hungary. In 2022, CATL invested 6.7 billion euros in building a Gigafactory in Debrecen. This was followed by Chinese EV manufacturer BYD, which recently announced the construction of its first European production facility – in Szeged, Hungary. The costs amount to approximately five billion euros, creating about 8,000 to 9,000 new jobs. Now, the Great Wall Motor factory in Pécs is on the list.
Behind these billion-euro investments lies another strategic move: With such large production sites within the EU, Beijing has a solid countermeasure should the EU Commission decide in mid-July to impose anti-subsidy duties on EVs imported from China.
China’s ambitions extend far beyond a simple railway line between the capitals of Serbia and Hungary. In February, Greece announced its intention to join the project. The railway line is set to become the main transport route for Chinese and Asian goods arriving in Europe by sea. The pieces fit together strategically: The Port of Piraeus is already predominantly under Chinese control.
Xi Jinping achieves several goals with these projects: Firstly, he gives new momentum to his stalled “Belt and Road” initiative. Secondly, he pursues strategic objectives that go beyond individual projects. And lastly, Xi supports his partner Viktor Orbán, who urgently needs economic successes, especially at times when the EU is scrutinizing its payments to Hungary – keyword rule of law. Chinese investments worth billions are highly welcome.
Another point that causes deep resentment in Europe is the security cooperation between Hungary and China: Concerns range from secret Chinese police stations to potential Chinese access to EU databases.
Hungary was the first EU state to join Xi’s flagship project in 2015. After Italy withdrew last year, it is now again the only EU country participating in the BRI. Thus, Orbán was also the only EU head of state to attend the third BRI summit in Beijing last October, where he encouraged more Chinese companies to invest in Hungary. Incidentally, to attend the event, Orbán missed an extraordinary video conference of EU heads of state, which was about the Hamas attacks against Israel.
The Budapest newspaper “Nepszava” also views this development critically. In a commentary on Tuesday, it stated: “Hungary’s government is entering into (infrastructure) investments financed with Chinese loans that may never pay off, solely to spite Brussels.”
And here lies the major problem for Europe. Xi’s visit is fundamentally anti-European. Hungary plays a crucial role in this. Under Orbán, the country has become a Chinese asset within the EU, which Beijing now needs more than ever.
The general mood in Europe towards the People’s Republic has considerably soured. Risk reduction is the order of the day – as evidenced by the clear words from EU Commission President Ursula von der Leyen to Xi Jinping earlier this week. Von der Leyen announced in Paris that Europe would not hesitate to “make tough decisions to protect its economy and security”.
In this context, Orbán is expected to help dilute overly critical EU policies – or completely block them if necessary. “The Hungarian government is China’s last true friend in the entire EU,” judges Tamas Matura, a China expert and professor at Corvinus University in Budapest. “For the Chinese, it is now very important to establish themselves in a country within the EU borders that is friendly towards the Chinese political system.”
That this is successfully happening is shown by the past: Hungary has vetoed several proposals at the EU level that would have condemned China for human rights violations or in relation to Hong Kong or Taiwan. According to research by the Budapest online portal valaszonline.hu, about 60 percent of the vetoes against Russia or China in the past six years came from Hungary. Understandably, Xi is looking forward to Hungary’s EU presidency.
A record number of European companies view their prospects in the Chinese market as worse than ever before. According to the annual business climate survey released on Friday by the EU Chamber of Commerce in Beijing, 23 percent of the companies surveyed expressed pessimism about their growth prospects for the next two years – more than ever before. In last year’s survey, only 9 percent had expressed pessimism.
Meanwhile, the number of companies that are positive about their growth prospects has dropped from 55 percent last year to 32 percent, the lowest value to date.
Many companies had dreamed of a massive boom following the COVID-19 pandemic last year, but they have now been brought back down to reality. The biggest problems for companies, listed in order, are:
The past year was marked by “growing uncertainty” for European companies in China, according to the Chamber. Although China’s reopening after the pandemic initially triggered a “sense of optimism”, “deep structural problems” such as weak domestic demand, high debt levels among local governments, and ongoing challenges in the real estate sector quickly clouded prospects again. Company confidence was further weakened by contradictory messages from the Chinese government.
The message that this complex situation is challenging for companies runs like a red thread through the Chamber’s publication.
The currently hotly debated issue of overcapacity is also highlighted in the Chamber survey. While China denies that these exist and claims they are only used by the West as a pretext to impose protectionist trade measures, EU companies paint a different picture.
Overcapacity has become a “significant problem” with the decline in domestic consumption. Overall, 36 percent of respondents observed overcapacity in their respective industries. An additional 10 percent expect to see it in the near future. The highest proportion of respondents (69 percent) reported overcapacity in construction and engineering. The automotive industry had the second highest proportion with 62 percent.
Three-fifths of respondents who reported overcapacity in their sector cited excessive investments in domestic production as the main cause. Half of them pointed to overcapacity due to insufficient domestic demand, and 34 percent cited a lack of foreign demand as another important reason.
As economic challenges intensified, regulatory obstacles remained high in 2023. Only 16 percent of respondents expect a reduction in regulatory barriers – also the lowest value ever. The Chamber detailed the problems of specific industries:
The Chamber also pointed out an issue that has received little attention so far. When it comes to the right strategy for China, there is an increasing “decoupling” between a company’s Chinese branch and its headquarters in Europe. This is “a trend that should be closely monitored,” according to the Chamber. Even if the branch in China sees opportunities for expansion, it is becoming increasingly difficult to obtain approvals as the headquarters increasingly misunderstands the actual conditions on the ground.
Sikyong Penpa Tsering, as the political leader of the Tibetans, you met personally with France’s President Emmanuel Macron just days before Xi Jinping’s arrival in Paris. What were you able to discuss with him?
Since my election three years ago, I have visited 24 countries in hopes of improving the situation for my people. As always, in political meetings, my goal is to work with our counterparts to find common strategies to end the cultural genocide against our people and other human rights abuses by the Chinese government as soon as possible.
What is your interim assessment after all these travels?
Other states should take a cue from President Macron, who did not avoid meeting with me out of concern for Chinese irritation. Unfortunately, I have found that at higher political levels, there is often a reluctance.
You were also in Berlin a few days ago for routine discussions, initiated by former Federal Minister and CDU politician Christian Schwarz-Schilling. What did you take away from Germany?
Honestly, I am not very pleased with how Germany positions itself. I am not even sure who is steering German foreign policy – the foreign ministry or the chancellery. During his trip to China, Chancellor Scholz left the impression that Germany prioritizes its economic interests at any cost.
Scholz said he addressed human rights issues.
I’ve heard that too. But is he really committed to advocating for them? I fear not. It is no secret what is happening in Tibet or East Turkestan. The world cannot just watch as peoples are decimated by the Chinese government for economic interests.
Do you sense a fear of Beijing in foreign governments?
I wouldn’t go that far. But almost everywhere I go, I encounter concerns that economic relations with China could be damaged.
You don’t accept that as a valid argument?
No, because it completely overlooks how vulnerable and how urgently China depends on Europe. However, China has managed to convince Europeans that they are dependent on China. Yet dependency is not a one-way street. Europe is not leveraging its strengths. And that is the self-inflicted dilemma that has arisen. China respects no one who does not stand up for their own values.
What do you expect from Western governments?
We have never demanded a decoupling. But it must be clear to all actors that the longer China is allowed to grow geopolitically stronger through massive trade surpluses that provide the funds to do everything the world would like to prevent.
For example?
Purchasing large quantities of Russian oil, which finances the war in Ukraine. Or billion-dollar investments in the Global South as part of the “Belt & Road” initiative, which traps many countries in debt and increasingly provokes Beijing’s political influence on these states.
In the Global South, many governments credit China with at least being willing to provide substantial aid.
China uses the history of Western colonialism to position itself as a supposed helper in need. But in reality, it is economic colonialism that China is practicing.
Sikyong Penpa Tsering is the democratically elected chairman of the Tibetan government-in-exile. Penpa was one of the longest-serving members of the Tibetan exile parliament in Dharamsala, North India, which he led as the Speaker of the House during the last two election terms from 1996 to 2016. Penpa also served as the representative of the Dalai Lama and the exile government in North America. He has testified before the US Congress and parliaments worldwide.
To commemorate “World Book Day”, the Chinese milk tea brand Lelecha 乐乐茶 printed an icon on the cups of their “Smoky Oolong”: Lu Xun, one of China’s most significant writers. However, the marketing campaign backfired. Online users debated that the use of the word “smoky” was disrespectful since Lu Xun had died from the consequences of excessive cigarette consumption. Others criticized that the Marxist was being misused as a capitalist brand ambassador. A great-grandson of the author, who passed away in 1936, sued on behalf of the Lu Xun Cultural Foundation for the unauthorized use of Lu Xun’s likeness. Lelecha apologized in an open letter: They had merely intended to inspire young Chinese to read.
