Hungary is embracing China’s Belt and Road Initiative, undermining efforts to reduce human rights abuses

News analysis

As the free world unites to condemn and punish human rights abuses and the aggressive expansion of the Chinese Communist Party (CCP), one European country is moving against the flow.

Hungary has shown a solid pro-CCP stance in a recent series of events after the European Union, the United States, the United Kingdom and Canada announced sanctions against China over the genocide of Uighur Muslims on March 22. Hungarian Foreign Minister Peter Sijart has accused him of being “meaningless, self-expanding and harmful.” Of the 27 EU member states, Hungary was the only country to vote against sanctions.

Three days later, Budapest welcomed China’s Defense Minister for an official visit. Between March and May, Hungary blocked EU efforts to sanction and condemn the CCP four times.

Since the leaders Xi Jinping of China was very satisfied with the Chinese defense of Hungary, multiplied by the Victor Oban Prime Minister direct phone in on April 29, he praised the “China and the significant contribution to the Europe of maintaining relationships”.

Hungarian Prime Minister Victor Oban
Hungarian Prime Minister Viktor Orban in Budapest on February 10, 2019. (Bernadett Szabo / File Photo / Reuters)

Orban deserves a favor. He adopted the Belt and Road Initiative (also known as BRI, One Belt, One Road), signed by Xi, which is the backbone of China’s roadmap to world hegemony. Hungary signed a BRI Memorandum of Understanding with China in 2015. This is the first country to sign in Europe.

Since then, Hungary has been aggressively incorporating almost everything BRI sells, from high-speed rail, machinery and chemical manufacturing and transportation to Chinese education, movies and even CCP virus vaccines. By April 2019, China had invested $ 4.5 billion in Hungary, Europe’s highest, according to Orban. BRI’s official website lovingly calls Hungary a “Pioneer of the Belt and Road Initiative.”

Epoch Times Photo
On April 18, 2019, a crane that transfers containers to a train on the China Railway Express to Europe in Erenhot, the border city of China in the Inner Mongolia region. (STR / AFP via Getty Images)

Of course, BRI is not a charity. The CCP has invested heavily in Hungary for practical reasons rather than friendship. Hungary is becoming increasingly dependent on China due to huge lending, growing reliance on the yuan, labor supply and local employment. Educational programs and universities imported from China plant and nurture communist ideologies in China.

For the CCP, the benefits of dominating Hungary are clear. The location of Hungary is, from an economic point of view, a good starting point for China to enter the European market. China also uses Hungary to obtain high tech and know-how from European countries. Financially, by bringing RMB clearing services to the border, Hungary has helped accelerate the globalization of the RMB.

But perhaps the most pleasing thing about CCP is political interests. Hungary has proved to be a loyal ally to the CCP in the recent veto of EU sanctions against China, despite China’s long track record of atrocities that other countries in the world are trying to stop. Hungarian support was widely reported by the Chinese media to convince the Chinese people that sanctions were a malicious conspiracy against China and that persecution and genocide were just rumors.

BRI debt weakened sovereignty

The total amount Hungary has borrowed for the BRI project is unknown, but the announcement is already very alarming. $ 2.4 billion for railroad renewal. $ 1.6 billion to build Fudan University Budapest Campus. $ 426 million to Hungarian power company in 2021. $ 121 million for the Kaposvár solar power plant. In 2016 and 2017, Hungary issued RMB-denominated bonds worth $ 310 million in China.

Hungarian critics say that financing a railroad project will generate $ 500- $ 800 million in interest. Zoltan Boros, an assistant professor of political science and international studies at the University of Pécs, said: Voros also noted that Hungarian companies are excluded from most procurement processes.

High BRI debt is a concern for many reasons. In April 2021, “a small Montenegro country approaches the European Union to help repay nearly $ 1 billion in loans to China’s Export-Import Bank (EXIM), which it borrowed to fund the construction of a large highway project. At that time, a warning bell rang, “Europe,” said Jennifer A. Hillman, senior researcher at the Council on Foreign Affairs (CFR). The debt of the BRI project was 103% of Montenegro’s GDP.

Montenegro was not the first country to fall into the BRI debt trap. China has lent $ 461 billion to BRI projects since 2013, which may have excluded the undisclosed amount. Most of China’s BRI lending is directed to high-risk countries such as Pakistan, Iran, Nigeria and Venezuela, and China’s lending decisions do not take credit ratings into account.

As Sri Lanka’s blunder shows, default on BRI debt can be catastrophic for these countries. Sri Lanka had to hand over 70% to China when the island nation failed to meet its debt to China for a $ 5 billion BRI loan. Hambantota’s deep-sea port has a 99-year share of $ 1.12 billion. Fearing similar consequences, Bangladesh, Malaysia, Burma, Pakistan, and Sierra Leone all subsequently decided to cancel or reduce their BRI projects.

More countries may default due to the CCP virus hit. According to the Financial Times, China is receiving a wave of debt relief applications from the crisis-stricken BRI.

Corruption raises another concern. Former Hong Kong Secretary of State Patrick Hochipin was sentenced to three years in prison in March 2019 to reward senior Ugandan and Chad officials to support the BRI project. Ho is said to have provided a $ 2 million bribe to President Chad Idris Devi in ​​2014 to obtain valuable oil rights from the Chad government. The $ 2 million in cash was hidden in several gift boxes offered to President Devi at the end of the deal. Ho also allegedly planned to send a $ 500,000 bribe to Ugandan Foreign Minister Sam Kutesa and a $ 500,000 bribe to Ugandan President Yoweri Museveni. Ho’s case seeks scrutiny of how other dangerous BRI projects were approved.

Large-scale acquisitions help China gain an industry advantage

Over the past decade, China has subsidized state-owned enterprises for billions of dollars to buy Western manufacturers and build factories abroad, according to The Wall Street Journal. The acquisition will not only shake China’s global market with low-priced commodities, but will also evade western anti-dumping tariffs. In Hungary, China has made several major acquisitions, including the $ 246 million acquisition of Invitel, Hungary’s second largest corporate communications provider.

The chemical industry is one of the pillars of China’s global expansion strategy. MDI is a widely used chemical in the manufacture of construction, automobiles, appliances, and apparel. China has long longed for a market for high profits and a wide range of markets, but technology was a challenge.

In 2011, China’s Wanhua Chemical Group acquired Hungary’s Borsod Chem (BC) for $ 1.6 billion, surpassing Dow and BASF to become the world’s largest MDI supplier.

Chinese media described the acquisition as a major benefit to BC and Hungary. CGTV, the UK branch of the Chinese Communist Party’s mouthpiece Xinhua, said a local mayor’s adviser said, “If Wanhua as an investor hadn’t come to the city, this would have caused major problems in the city.” Stated.

The truth is that Manka imposed an acquisition in BC. When BC was in debt due to the 2008 global financial crisis, Manka tried to buy the company, but BC owners Permira and Vienna Capital refused to buy it.

Wanhua did not retreat, as the acquisition was an important step in pushing Belt and Road to the world through Europe. By purchasing BC’s mezzanine debt, acquiring BC’s shares, and calling options, Wanhua eventually took full ownership of BC.

Chinese propaganda praises Wanhua as “Huawei in the chemical industry” because of its size and ambition to dominate the industry globally. Wanhua currently accounts for 24% of the world’s MDI and is currently attempting to expand into US territory. The first attempt to build a facility in the Parish of St. James, Louisiana was thwarted in 2019 by fierce opposition from locals, but said the company still wants a US MDI facility.

Educational partnership invites communist ideology

While BRI is primarily known for its infrastructure projects, China has built a pillar of soft power to promote communist ideology in BRI countries through the Confucius Institute and talent exchange programs.

In Hungary, this has been taken to the next level. Hungary opened its fifth Confucius Institute (CI) in November 2019 following the wave of CI closures by universities around the world. In the United States, the number of CIs has dropped from more than 100 to less than 50 in the last two years. Many European countries followed, including Denmark, Sweden, France and the Netherlands.

Epoch Times Photo
On April 23, 2021, the local mayor of Christina Barany stands in the 9th district of Budapest, Hungary, where the construction of Fudan Campus, the top university in China, is planned. (Attila Kisbenedek / AFP via Getty Images)

As if protesting, Hungary signed an agreement with Shanghai-based Fudan University to set up a campus in Budapest on April 27. The campus will accommodate 5,000 to 6,000 students and about 500 professors. Hungary has received a $ 1.56 billion loan from China’s State Development Bank of China to pay for construction, following a typical BRI financing model. The campus is mainly built by Chinese companies and Chinese workers.

All Chinese schools are strictly controlled by the Chinese Communist Party and are subject to strict censorship by the Chinese Communist Party. Various Hungarian politicians, including Budapest Mayor Gergely Karassony, have expressed concern that bringing China’s state universities into the country would pose a national security risk.

The first BRI project, eight years after its announcement, is still pending

The first BRI project in Hungary was a 220-mile high-speed train in Budapest and Belgrade. The $ 2.98 billion project is said to be the first step in the planned Budapest-Belgrade-Scopie-Athens railroad linking the Chinese-operated Piraeus port in Greece with the “center” of Europe. ..

Since then, the plan has changed several times without much explanation. When Hungary and China announced the project in 2013, the plan was to complete construction and upgrades in 2018. In 2017, China Daily reported that railroad construction began in November 2017 and will be completed in about 2.5 years. Year.

Nothing happened. Then, in April 2019, Hungary announced that it would sign a contract to upgrade the country section by May 25. The project has now been reduced to a 100 mile upgrade, which is only 45% of the previously announced length. Costs have fallen, but down 3% to $ 2.8 billion, with a five-year extension expected to be completed in 2025. The portion covered by Chinese loans remains at 85%. No further updates have been made since then.

Pingping Yu has been a writer, translator and researcher for The Epoch Times since 2007. She focuses on human rights, economics and business and covers a variety of topics related to China.

The views expressed in this article are those of the author and do not necessarily reflect the views of The Epoch Times.

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