US Ambassador Warns Hungary That Close Ties with Beijing ‘Comes With Strings Attached’

David Pressman, U.S. Ambassador to Hungary, is interviewed in Beregdaroc, eastern Hungary, on May 3, 2023. (Attila Kisbenedek/AFP via Getty Images)

A U.S. ambassador warned the Hungarian government ​​that close political and business relations with the Chinese regime come with consequences.

Speaking with U.S. companies that have invested in Hungary, U.S. Ambassador to Hungary David Pressman warned about the risks of maintaining close business ties with Beijing.

“Doing business with China comes with strings attached and the interest is often paid in sovereignty,” Mr. Pressman said at a June 11 event hosted by the American Chamber of Commerce.

He cited the example of Sri Lanka, which initially considered the ability to use Chinese financing for infrastructure development a great deal, “until Beijing used that economic leverage to trample on Sri Lanka’s sovereignty by taking control of its port.” Mr. Pressman also mentioned Italy, which joined China’s Belt and Road initiative but now “works hard to get out of the very system of Chinese coercive investment that Hungary is willingly running towards.”

Italy withdrew from the BRI at the end of last year. Italian Prime Minister Giorgia Meloni stated that the project had “not produced the results that were expected.” Italy’s foreign minister, Antonio Tajani, added that the Chinese project “has not had the desired results, and indeed those countries who have not taken part have had better results.”

Mr. Pressman said Hungary’s government under Prime Minister Viktor Orban has considered China a more important economic partner than the United States and noted that Washington also does business with Beijing but “transparently, based on clear rules, and with due concern for the security interests of our allies.”

In his speech, he also warned the Hungarian government of increased risks in exchange strong relations with the Chinese regime, including corruption, the influx of Chinese workers taking Hungarian jobs, and the presence of Chinese police officers in Hungary.

Close Ties with China

In recent years, China has invested heavily in Hungary compared with the rest of the European countries. According to a June 6 report by consultancy Rhodium Group and German think tank Mercator Institute for China Studies, in 2023, Hungary overtook the UK, France, and Germany combined, or “Big Three,” to become the top European destination for Chinese investment.

The report found that although China’s investment in the EU dropped to the lowest level since 2010, investment in Hungary has surged significantly in the last two years. Last year, investment in Hungary alone represented 44 percent of all China’s European investment. Hungary’s claim to the top spot is driven by the electric vehicle sector, with two Chinese companies, CATL and Huayou Cobalt, pledging to open battery factories in the European country.

Hungary was the first European country to join China’s Belt and Road Initiative in 2015. With Italy withdrawing from the program last year, Hungary remains the only European nation still involved in the initiative.

Last month, Chinese leader Xi Jinping visited Hungary and signed 18 agreements with Hungarian Prime Minister Viktor Orban to boost their economic ties. The two leaders praised the relationship between the two countries, calling it an “all-weather comprehensive strategic partnership,” according to a joint statement on China’s foreign affairs website.

During the meeting, Xi stated that the two countries would advance the construction of key projects, including the $2.1 billion Budapest-Belgrade railway project. Most of the funding for this project, which is part of the Belt and Road Initiative, comes from a Chinese loan.

China’s Belt and Road Initiative has sparked controversy, with critics accusing it of creating a debt trap for participating countries, leading to financial dependency and loss of sovereignty over key assets. Such victims include Sri Lanka, which had to lease its Hambantota Port to China for 99 years after failing to repay loans.

Reuters contributed to this article.