One Belt One Road And Its Possible Effects On Hungary

Brief History of Chinese-Hungarian Relations

The Sino-Hungarian relations started decades after Hungary’s recognition of People’s Republic of China (was among the first countries) in 1949 and began to develop  series of high-level visits followed by an improvement in political, economic and cultural ties.[1]In international arena, Hungary made close cooperation with Beijing and supported the Chinese position on Tibet, the reunification of China – “one China” policy- and the United Nations Security Council membership. (Dolkar, 2008, pp. 111-112) By the end of the 1950s and 1960s, significant ideological differences appeared, and during China’s “cultural revolution”, relations even became colder. After economic reforms and opening-up policy of the Chinese Communist Party in 1978, two countries became closer again.[2]

China was highly interested in Hungary, due to its experiences of 1968 and 1984 economic reforms and series of expert delegations visited Hungary in this period, therefore; state and inter-party relations were normalized.[3] Nevertheless, this did not take so long, after the democratic transition of 1989, relations decreased, due to the changes Hungarian foreign policy and primarily focused on Euro-Atlantic interests, for more than a decade relations declined to a minimal level. The Hungarian Prime Minister, Peter Medgyessy, visited China and new beneficial period started at the beginning of the new millennium in 2003. The Hungarian Prime Minister, Peter Medgyessy, visited China and late favourable period started at the beginning of the new millennium in 2003.[4]This new development wave was initiated independently by Hungary since the government identified China’s growing role in the global economic scale. This attempt was unique in the CEE region at that time and was well perceived in China, due to upcoming EU membership made Hungary more attractive to China. In this context, various gestures and diplomatic visits were made, and the result of these visits appeared in the growing economic relations; Chinese investments began to flow into the country.[5]

Background of China’s Belt and Road Initiative (BRI)

Complicated and profound changes are taking place around the world. The primary impact of the international financial crisis keeps emerging; the world economy is improving slowly, and global development is unstable; the international trade and investment view and rules for multinational trade and investment are undergoing significant regulations, and countries still face big challenges for their growth.[6] This initiative is to collectively construct the “One Belt, One Road”, embracing the tendency towards a multipolar world, economic globalization, and cultural diversity is intended to encourage the global free trade system and the open world economy in the essence of the open regional association.[7]

It is aimed at assisting orderly and free flow of economic factors, highly fruitful apportionment of resources and deep integration of markets; reassuring the states throughout the “Belt and Road” to obtain economic policy coordination and implement broader and more comprehensive regional cooperation of higher standards, and jointly creating an open, involved and balanced local economic cooperation architecture that benefits all.[8] Building collectively of the Belt and Road is among the interests of the world community.[9] Reflecting the common ideals and profession of human societies, it is a definite struggle to search new models of intercontinental cooperation and global governance and believed that it is going to establish new positive energy into world peace and enlargement. The Belt and Road Initiative aims to make economic connection among Asian, European and African continents and their contiguous seas, install and consolidate partnerships between the states along the Belt and Road, set up all-dimensional, and combined connectivity networks, and independent, balanced and sustainable development in these countries.

The world economy is closely connected with China’s economy. China will stay committed to the principal policy of opening-up, build a new model of all-purpose opening-up, and integrate itself into the world economic system. The Initiative will enable China to expand further and deepen its opening-up, and to strengthen its mutually advantageous cooperation with countries in Europe, Asia and Africa and the rest of the world. China is committed to assuming more responsibilities and obligations within its capabilities and making more significant contributions to the peace and development of humankind.[10]

One Belt One Road and its possible effects on Hungary

One Belt One Road Initiative (briefly BRI) is the most important initiative of the last decade.  According to experts, even though we are at the beginning of this century – the BRI is going to be the most significant economic and political project of the 21st century.

Here are numbers to better understand the importance of this initiative. Budgeting of this project ranges from 1 trillion and can go up to 8 trillion from country to country. There is a total of 69 countries, including Hungary and Turkey, who have joined this cooperation.

BRI makes up of a large percentage in different areas, such as 42% of the world’s Gross National Product (GNO), 64% of the world’s population, 40% of the world’s landmass and 75% of the world’s energy. In 2013, it was announced that China was committed to building trade routes that would connect Asia with Africa and Europe via land and maritime. The goal is to improve regional integration, increasing trade and stimulating economic growth.

This project includes many other countries in its investment in regarding building its infrastructure, because it will also include a large transportation network.  China is wanting to create a high-speed railway infrastructure.

This way, goods that are produced in China will be able to reach other countries a lot easier along this route. There are many Asian experts on the Asian side that were continually working on this subject. However, there are no European experts on the European side. One idea is because of “cognitive discrepancy,” meaning since there are not much available to non-Asians, they go majorly off by the European way of thought or lens to say. There seems to not be much understanding about the project yet.

“Belt and Road Initiative” also known as “One Belt, One Road”, is generally represented as a silk road of 21st century, made up of a “belt” of overland corridors and a maritime “road” of shipping lanes and proposed by the Chinese President Xi Jinping (The Guardian, 2018). It was announced in 2013 and the main aim of this initiative is to build trade routes connecting Asia with Africa and Europe via land and maritime networks along six corridors with the aim of developing regional integration, increasing trade and stimulating economic growth. BRI is the most important initiative of the last decades, it represents the driver force of China’s economic growth, and to support domestic growth and employment for cooperating countries (Cienciala, 2002). It is perceived that this initiative could bring economic success to the countries of Central Eastern Europe with developing trade relations and inflow of Chinese investments. In that region, Hungary is occupying important position in terms of its significant relations including increasing trade and investment with China, its geographical location standing between Western Europe and the Asian continent, and its membership of the European Union (Chin, H., Lau, F., He, W. and Cheung, T: 2015).

China’s perception in both Europe and Hungary has been changing for two reasons over the last decade. First, starting with the spread of innovative technologies and their easy access to them. As well as the growing tourism ensure that more people-to-people relations, with ties to the Chinese culture, the daily life in China etc. However, it is crucial that over the last decade, China is on its way on being an economic and political superpower. Thus, shifting political and economic attention to the East. These changes started in the 1990s when economic reforms began to open up the country to the world. Even before the 1990s, much of the attention was paid to the Chinese economic and political events in the Hungarian media; however, it was more about a distant country than a dominant economic and political partner, whose decisions could influence the Hungarian economy (Johnson, 2016).

Resource: Allan& Associates

If today looking at the headlines of the Hungarian newspapers, one can see the growing relevance of China. News and discussions on the possible outcome of the BRI, especially economic effects of the implementation of the BRI are discussed in academic events, conferences, covered extensively by Hungarian media and evaluated in political discussions (Xin, 2015).

The breakthrough came after the Great Recession (2008-2009) since it became clear that the rising economic power of China can significantly contribute to the stabilization of the world economy. The resilience of the Chinese economy to the financial crisis, mostly hitting North American and European countries, perplexed the broader Hungarian audience. The flexibility of the Chinese economy not only surprised this audience but researchers as well. Before the crisis, long and fierce discussions kept going on in Hungarian academic circles about the long term sustainability of the rapid Chinese economic growth and the real causes of the fast growth; since then the debates have abated, and the focus turned to the straightforward question how the Hungarian economy could reap the benefits of this fast growth by strengthening economic ties and attracting Chinese capital (Vámos, 2016).

Footnotes

1. “Political and Diplomatic Relations”,Beijing Embassy of Hungary, https://peking.mfa.gov.hu/eng/page/politikai-kapcsolatok
2. The Rise and Fall of Communist Nations, Anna M. Cienciala, Chapter 10:China since 1949. The Mao Years and Post-Mao China, http://acienciala.faculty.ku.edu/communistnationssince1917/ch10.html
3. “China and Eastern Europe in the 1980s: A Hungarian Perspective”, 20 January 2016, Péter Vámos, https://www.wilsoncenter.org/publication/china-and-eastern-europe-the-1980s-hungarian-perspective
4. Ministry of Foreign Affairs of The People’s Republic of China, 20 August 2003, https://www.fmprc.gov.cn/mfa_eng/wjdt_665385/wsrc_665395/t25191.shtml
5. “Chinese Economic Influence in Hungary”, Institute of World Economics Blog, 20 September 2018, https://vilaggazdasagi.blog.hu/2018/09/20/chinese_economic_influence_in_hungary_rhetoric_versus_realities
6. “The catastrophe if another global financial crisis strikes”, The Economist, 12 September 2018, https://www.economist.com/open-future/2018/09/12/the-catastrophe-if-another-global-financial-crisis-strikes
7. “China’s Belt and Road Initiative: A Global Model for an Evolving Approach to Sustainable Regional Development”, Muhammad Khalil Khan, Imran Ali Sandano, Cornelius B. Pratt, Tahir Farid, November 2018, https://www.researchgate.net/publication/329008016_China’s_Belt_and_Road_Initiative_A_Global_Model_for_an_Evolving_Approach_to_Sustainable_Regional_Development
8. “The Silk Road Economic Belt and the 21st Century Maritime Silk Road”, Helen Chin, Fong Lau, Winnie He, Timothy Cheung, Fung Business Intelligence Centre, May 2015, pages 7-8, https://www.fbicgroup.com/sites/default/files/The%20Silk%20Road%20Economic%20Belt%20and%2021st%20Century%20Maritime%20Silk%20Road%20MAY%2015.pdf
9. “Countries show interest in joining ‘One Belt, One Road’ initiative”, Global Times, 18 June 2015, http://www.globaltimes.cn/content/927894.shtml
10. “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road”, Issued by the National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, 28 March 2015, http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html

REFERENCES

Beijing Embassy of Hungary. Political and Diplomatic Relations. Retrieved from: https://peking.mfa.gov.hu/eng/page/politikai-kapcsolatok

Bodacz, P. (2017). They would leave Hungarian companies out of the hundreds of billions of billions of giant investments. Retrieved from: https://mno.hu/gazdasag/kihagynak-a-magyar-cegeket-a-tobb-szaz-milliardos-oriasberuhazasbol-2398203

Chin, H., Lau, F., He, W. and Cheung, T. (2015). The Silk Road Economic Belt and the 21st Century Maritime Silk Road. Fung Business Intelligence Centre. Retrieved from:  https://www.fbicgroup.com/sites/default/files/The%20Silk%20Road%20Economic%20Belt%20and%2021st%20Century%20Maritime%20Silk%20Road%20MAY%2015.pdf

Cienciala, A. (2002). The Rise and Fall of Communist Nations. Retrieved from:  http://acienciala.faculty.ku.edu/communistnationssince1917/ch10.html

Geopolitikai Kutatointezet. (2017). East-Central Europe on the New Silk Road. Retrieved from: http://www.geopolitika.hu/en/2017/03/20/east-central-europe-on-the-new-silk-road/

Global Times. (2015). Countries show interest in joining ‘One Belt, One Road’ initiative. Retrieved from: http://www.globaltimes.cn/content/927894.shtml

Institute of World Economics Blog. (2018). Chinese Economic Influence in Hungary. Retrieved from: https://vilaggazdasagi.blog.hu/2018/09/20/chinese_economic_influence_in_hungary_rhetoric_versus_realities

Johnson, K. (2016). China’s New Silk Road Into Europe Is About More Than Money. Foreign Policy. Retrieved from: http://foreignpolicy.com/2016/06/01/chinas-new-silk-road-into-europe-is-about-more-than-money/

Khan, M., Sandano, I., Pratt, C. and Farid T. (2018). China’s Belt and Road Initiative: A Global Model for an Evolving Approach to Sustainable Regional Development. Retrieved from: https://www.researchgate.net/publication/329008016_China’s_Belt_and_Road_Initiative_A_Global_Model_for_an_Evolving_Approach_to_Sustainable_Regional_Development

Matolcsy, G. (2017). Hungary – A Key State on the Silk Road. Retrieved from: http://www.geopolitika.hu/en/2017/03/20/hungary-a-key-state-on-the-silk-road/

Ministry of Foreign Affairs of the People’s Republic of China. (2003). Retrieved from: https://www.fmprc.gov.cn/mfa_eng/wjdt_665385/wsrc_665395/t25191.shtml

National Development and Reform Commission.(2015). Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road. Retrieved from: http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html

Pavlićević, D. (2016). China in Central and Eastern Europe: 4 Myths, The Diplomat. Retrieved from: http://thediplomat.com/2016/06/china-in-central-and-eastern-europe-4-myths/

The Diplomat. (2018). Who Benefits From the Chinese-Built Hungary-Serbia Railway? Retrieved from: https://thediplomat.com/2018/01/who-benefits-from-the-chinese-built-hungary-serbia-railway/

The Economist. (2018). The catastrophe if another global financial crisis strikes. Retrieved from: https://www.economist.com/open-future/2018/09/12/the-catastrophe-if-another-global-financial-crisis-strikes

Vámos, P. (2016). China and Eastern Europe in the 1980s: A Hungarian Perspective. Retrieved from:https://www.wilsoncenter.org/publication/china-and-eastern-europe-the-1980s-hungarian-perspective

Xin, C. (2015). Trade and Economic Cooperation Between China and CEE countries, China-CEEC Think Tanks Network. Retrieved from: http://16plus1-thinktank.com/1/20151123/817.html

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