Summary of Key Points
This news article focuses on the economic and trade cooperation between China and Central and Eastern European (CEE) countries, particularly Hungary. On one hand, the overall trade and investment foundation between China and Hungary, as well as with CEE countries, is solid, with continuous growth for 10 years and numerous landmark projects. On the other hand, the new government in Hungary has initiated a systematic review of foreign-funded projects, which may pose short-term challenges such as increased compliance costs and slower approval processes for Chinese companies. However, the fundamental nature of mutually beneficial cooperation remains unchanged. Hungary's role as a stepping stone for Chinese companies to enter the EU market continues to be significant. Chinese firms should adapt to these new policies through deep localization and ESG (Environmental, Social, and Governance) compliance efforts, while also exploring opportunities in other European countries.
How Stable is the Foundation of China-Hungary and CEE Economic and Trade Cooperation?
Let's look at the data: In the first half of 2026, trade volume between China and CEE countries reached 580.1 billion yuan, a 11% increase from the same period last year, representing 3.7 times the level in 2012—indicating a nearly fourfold growth over ten years, showing an increasingly close relationship.
In terms of trade content, China mainly exports machinery and equipment (such as machine tools), electronic products (smartphones and computers), and transportation vehicles (cars) to CEE countries. In return, it imports machinery and equipment, chemical products (such as fertilizers), and agricultural products (possibly meat and grains). Among the seven CEE countries, Poland, Hungary, and the Czech Republic have the highest trade volumes with China.
In terms of investment, Chinese companies have focused on infrastructure projects (such as the Hungarian-Serbian section of the railway, which has already been opened to traffic), new energy (the Ningde Energy battery factory in Hungary has started mass production), and automotive manufacturing (the BYD factory in Hungary is set to begin operations by the end of the year). These are tangible examples of substantial cooperation.
What Impact Does the New Hungarian Government's Foreign Investment Review Have?
In May this year, Hungary appointed a new prime minister (György Móór), who has made foreign investment review a priority. The review covers unannounced investment decisions made by the previous government, including projects involving batteries, nuclear power plants, and railways, including BYD's investments from the past decade.
It's important to clarify that this review applies to all foreign investments, not just Chinese companies. The main focus of the review is on environmental impact (pollution), labor practices ( compliance with employment laws), and contract fulfillment.
The short-term effects include higher compliance costs for Chinese companies (e.g., additional expenses for environmental assessments) and potential delays in project approvals. Some companies may decide to wait before proceeding with their plans. However, most projects are still operating normally, so the full impact remains to be seen.
The reason for the review is that the new government wants to align its policies with EU regulations, as Hungary is a member of the EU and must follow EU standards.
What Are the Key Strategies for Chinese Companies to Cope with the New Policies?
Despite the short-term challenges, the long-term foundation of Chinese companies in Hungary remains strong:
1. Mutually Beneficial Cooperation: Hungary is China's largest trading partner outside the EU, and in 2025, China was Hungary's largest source of foreign investment (3.97 billion euros). Chinese investments cover 19 industries, particularly in new energy vehicles, batteries, and photovoltaics, creating jobs and driving economic growth. Such a win-win relationship is unlikely to change easily.
2. Compliance Strategies: By adopting deep localization and ESG practices—using local workers, purchasing local materials, and maintaining good relationships with local communities—Chinese companies can reduce risks and gain more opportunities under the new policies.
Is Hungary Still a Stepping Stone for Chinese Companies Entering the EU?
Yes, it still is. Hungary's advantages include:
- Strategic Location: Its central position in Europe facilitates convenient logistics for exporting products to other EU countries.
- Low Costs: The corporate tax rate is only 9%, one of the lowest in the EU, and labor and land costs are lower compared to Western Europe.
- Developed Industrial Clusters: The automotive industry accounts for a quarter of Hungary's industrial output, with 14 of the world's top 20 automotive suppliers having factories there. Electric vehicle sales are also growing rapidly (expected to increase by 33.5% in 2026).
These factors continue to attract investors from around the world, including Chinese companies.
What Should Chinese Companies Consider When Investing in Hungary in the Future?
Here are some recommendations for companies:
1. Proactive Compliance: Research new policies, cooperate with the review process, and address any issues promptly to avoid unnecessary delays.
2. Targeted Investments: Prioritize industries supported by the Hungarian government, such as green energy and artificial intelligence.
3. Deep Localization: Increase local research and development, hire local employees, purchase local materials, and build strong relationships with local governments and communities.
4. Diversify Opportunities: Look beyond Hungary to Germany, France, or other CEE countries to diversify risks.
In summary, while the new Hungarian policies present short-term challenges, the long-term prospects for China-Hungary cooperation are positive. As long as companies adhere to regulations and engage closely with local stakeholders, they can establish a solid presence in the European market.