Chinese Corrosive Capital in Hungary Preserves Orbán’s Corrupt Clientelist Networks, Study Says

The Asso­ci­a­tion for Inter­na­tion­al Affairs (AMO), a Prague-based for­eign pol­i­cy think tank, has recent­ly pub­lished a study on Chi­nese influ­ence in Hun­gary, say­ing that Chi­na plays a “sys­tem-sup­port­ing and sys­tem-legit­imiz­ing role.” The study argues that Chi­nese “cor­ro­sive cap­i­tal” pro­vides lucra­tive busi­ness oppor­tu­ni­ties for Hun­gar­i­an prime min­is­ter Vic­tor Orbán’s clien­telist net­works and helps him por­tray Hun­gary as a key glob­al play­er. The AMO study describes cor­ro­sive cap­i­tal as follows:

Cor­ro­sive cap­i­tal refers to a dis­tin­guished state or pri­vate financ­ing that lacks trans­paren­cy, account­abil­i­ty, and mar­ket ori­en­ta­tion. It is instru­men­tal­ized by author­i­tar­i­an regimes like Chi­na to exploit gov­er­nance gaps to influ­ence pol­i­cy mak­ing in recip­i­ent countries.

The AMO study says that while the over­all scale of Chi­nese invest­ments in Hun­gary remains small, spe­cif­ic bilat­er­al projects have pro­vid­ed the finan­cial resources to Orbán’s clien­telist net­work of the gov­ern­ment and thus lever­age nec­es­sary to con­sol­i­date pow­er. The study high­lights the fol­low­ing non­trans­par­ent eco­nom­ic Chi­na-relat­ed projects in Hungary:

• Set­tle­ment bonds
• The Budapest-Bel­grade Rail­way project
• COVID-19 relat­ed purchases
• The Budapest cam­pus of the Chi­nese Fudan University

The AMO study says these Chi­nese invest­ments have result­ed in Hun­gary becom­ing one of the fiercest pro-Chi­na forces in Europe:

June 2022 Rela­tions with Chi­na have been ele­vat­ed to be a defin­ing fea­ture of the Orbán regime’s iden­ti­ty, embed­ded in a deeply Euroscep­tic pop­ulist nar­ra­tive in which the EU rep­re­sents the cor­rupt elite and Chi­na is even praised for its eco­nom­ic “effi­cien­cy.” Hun­gary has become one of the most ardent sup­port­ers of Beijing’s 16+1 co- oper­a­tion for­mat and Belt and Road Ini­tia­tive. As the EU and key Euro­pean pow­ers’ Chi­na poli­cies have shift­ed to reflect the grow­ing com­pe­ti­tion aspect of the rela­tion­ship, Budapest has dou­bled down on its pro-Chi­na pol­i­cy course, act­ing as a spoil­er of joint EU action.

Read the full study here.

The Glob­al Influ­ence Oper­a­tions Report has pre­vi­ous­ly report­ed on the adverse effects of Chi­nese invest­ments in Hun­gary and else­where in Cen­tral and East­ern Europe. We have also not­ed how Chi­nese cor­ro­sive cap­i­tal is used to access crit­i­cal assets,  facil­i­tate elite cap­ture, and dis­tort local dis­course on Chi­na in Slo­va­kia and Czechia.