China’s Belt and Road Initiative is bringing new risks to Europe

Hungary was the first European country to sign on to China’s trillion-euro Belt and Road Initiative. With Italy leaving the Belt and Road, or BRI, last year, and others in Europe expressing concern about engagement with China, Budapest may also soon be one of the last remaining links of the BRI to Europe. 

By all appearances, the BRI is in retreat, with Chinese infrastructure spending down around the world as Beijing deals with a troubling track record of BRI corruption, waste, debt distress, and failing projects. 

But as the infrastructure and ambitions for the BRI fade, something more dangerous may be rising up to take its place — an authoritarian alliance of security, surveillance, and repression that puts Europe at risk.

A railway worth a thousand years od debt

Hungary exemplifies this shift. Like many BRI countries, Hungary signed up for a massive infrastructure project it both didn’t need and couldn’t afford. 

The €3.8 billion Serbia-Hungary railway project, financed by Chinese loans under the BRI, is expected to be completed by 2025, but some estimates suggest that it will take a further 979 years — or nearly a millennium — for Hungary to break even on the project.

Hungary’s BRI issues are not unique. As described in a new report on the BRI, “Tightening the Belt or End of the Road”, many BRI projects around the world face serious challenges, from hydroelectric dams with thousands of cracks in Ecuador, to promised infrastructure that was never built in the Democratic Republic of the Congo, to massive debt distress in Zambia.

But despite the problems for host countries and the large portfolio of failing loans for China, Beijing has still been successful at building influence across authoritarian-leaning regimes, who are eager to follow the Chinese model of single-party state control and high-tech domestic repression. 

Venezuela, Ecuador, Bolivia, and Angola have all purchased AI-powered surveillance and facial recognition technology from China — presumably to track or intimidate political opponents. 

Of 90 countries that could be categorised on a spectrum from “closed authoritarian” to “flawed democracies,” China had sold its surveillance tech to 54 of them — often under the banner of the BRI.

NATO and the EU facing an existential crisis?

Hungary, a member of both the European Union and NATO that has been sliding deeper into authoritarianism over the past decade, is a perfect target for Beijing’s security-based BRI aspirations — the export of political repression with Chinese characteristics. Viktor Orban’s right-wing nationalist government seems an odd match for Communist China, but they share a commitment to what Orban has himself described as an intentionally “illiberal state”. 

Furthering their mutual interest in preventing domestic dissent, Beijing announced new bilateral cooperation between China and Hungary on “security and law enforcement capacity building under the Belt and Road Initiative”.

This new BRI security cooperation comes during a period where Hungary has been leveraging its position in European alliances to, water down or obstruct EU support for Ukraine, oppose EU efforts to criticise China for human rights abuses and impede and delay Sweden’s attempts to join NATO. 

Hungary’s willingness to enter security arrangements with Xi Jinping and do the bidding of Vladimir Putin while, simultaneously, maintain membership in NATO and the EU is deeply troubling and presents an existential crisis for those alliances.

On top of that, Chinese economic integration in Hungary presents risks of its own. Already home to Europe’s largest Huawei logistics and manufacturing base outside of China, China battery giant, CATL, has announced plans to build a €7.3bn plant near the Hungarian town of Debrecen — allowing China to dominate electric vehicle supply chains from inside the EU. 

This is similar to moves from other Chinese companies, like carmaker BYD, that are considering building factories in Mexico in an attempt to circumvent trade restrictions that would otherwise apply under the US-Mexico-Canada Free Trade Agreement.

It’s time to wake up to the risk of overreliance on China

As the US and its allies have awoken to the risk of overreliance on Chinese supply lines, Hungarian officials are taking the opposite approach, going so far as to call de-risking suicidal. 

This position, however, doesn’t impact Hungary alone. The entire EU market is open to Chinese manipulations through the Hungarian economy, such as dumping of cheap goods to prop up the failing Chinese economy or undermining domestic European industries with subsidised competitors. 

As German chemical giant BASF seeks to disengage from China’s Xinjiang region, leaked documents indicate that China is planning to build a chemical hub in Hungary.

China’s grand vision of the world-changing BRI may have not been realised, but something else is emerging in its wake — a powerful lever to bend authoritarian-leaning countries toward Chinese interests. 

For Hungary, this is detrimental to its citizens, its neighbours, and Europe as a whole.

Elaine Dezenski is senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies in Washington, DC.

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