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On July 1st, 2024, I read this article from Portuguese newspaper, Sprezz, titled A Chinese Trojan Horse
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In it, the author points out how Hungary has for a long time served the Chinese cause and Beijing's interests in the EU
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explaining how the rotative takeover of the European Union presidency by Hungary in the second half of 2024
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might present new challenges in this field, especially when Europe and China fight somewhat of a trade war
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This is a topic that has long interested me, ever since I saw this crazy news story a longer time ago about how Chinese pamphlets were being distributed in Hungary
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and how the streets of Budapest could also be playing host to Chinese police forces
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In order to take this step into what I guess is a little bit more of investigative journalism, I partnered with The European Correspondent
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a journalism platform presenting us with direct reports from their on-the-ground journalists
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Since this video focuses on the Chinese influence in Europe using Hungary and Serbia as case studies
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I thought it was a perfect fit to get the help of their Hungarian and other European specialists to better understand the reality on the ground
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But before we jump to that, let's learn a little bit about the historical context that brings Europe and China to this moment
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By the mid-late 19th century, China looked a little something like this
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It was still the time of imperial Qing China, and around 45 foreign concessions were granted to the great powers of the time
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Among them were the United Kingdom, the United States, Russia, Japan, Italy, Germany, France, Portugal, Belgium, Austria-Hungary
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and a couple international ones that gathered within them delegations from many other European nations like Denmark, the Netherlands, Norway, Sweden, or Spain
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The Legation Quarter of Beijing was a perfect example inside the city itself and covering some three acres including 11 foreign embassies
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embassies. The entire legation quarter was considered foreign sovereign ground and was
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even off limits for Chinese citizens. Full territorial concessions could also be found
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in Hong Kong, Macau, Tianjin, Port Arthur, Amoy, Angku, among many others at times shared
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These were territories inside China but governed and occupied by foreign powers who through these
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enclaves exerted their influence within it. In these concessions, the citizens of each foreign
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power were given the right to freely inhabit, trade, perform missionary work, and travel
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With the exception of Macau, which was established earlier, it all began with the treaty ports that
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China was forced to open to the West following their defeat in the first Opium War, creating
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trade and profit, not to mention political and influence opportunities for foreign great powers
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But then everything changed. When the Qing Dynasty collapsed and China became a republic
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the concessions continued. But after the communist revolution, that wasn't the case anymore. The
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world also changed, and European powers, weakened by world wars and adept of more progressive views
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began the process of decolonizing. Macao and Hong Kong were the last European colonies in China
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to be returned to the People's Republic, and with them ended over a century
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a foreign presence and influence within China. Not only that, but the situation was soon inverted
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After initial struggles, the Chinese sleeping giant awoke and China quickly became one of the
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fastest growing economies in the world, soon becoming one of the greatest overall. First
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they offered cheap manufacturing, leading most of the western world to partially de-industrialize
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and move their factories there, which arguably provided them with some degree of influence
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over the world's economy to begin with. And then, they began setting off on their own
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not establishing colonies or acquiring concessions, but instead buying influence throughout the world with their own economic projects. You can find various examples in Africa
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South America, and even Europe. The term infrastructure diplomacy began being used
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as China would swoop into countries under economic distress very often and offered to build them
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roads, bridges, ports and infrastructure of all kinds. In return, either a direct financial debt
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towards China or opening the door to Chinese influence. Now, Chinese influence might not
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necessarily be a bad thing. It could be a bit of a western point of view that eastern influence is
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always bad when we ourselves seek our own influence elsewhere and see no problem with it
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or see no obstacle to US influence in Europe but when it comes from another place, it's suddenly
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bad. But I think there is some logic to that line of thought, given the fact that for instance
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US influence has often been aligned with European interests, or maybe it's just shaped them in
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order for them to be, while Chinese interests currently clash with European ones, and so their
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influence becomes a negative point. And the reality is we have seen some examples of how this influence
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can in fact be negative. For instance, in 2018, French newspaper Le Monde Afrique published a
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story alleging that the headquarters of the African Union in Addis Ababa in Ethiopia were
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being spied on by the Chinese government who had helped to construct the building. The cost for the
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infrastructure financing here would have been espionage. China denied this and the African
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Union itself did too, perhaps due to the embarrassment of such a serious mistake
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but they also stated that many issues with the building were still being resolved with the Chinese
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In Asia, Chinese influence is most evident and the effects of the Belt and Road Initiative
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also known as the New Silk Road, are the most visible. This project is a global infrastructure development strategy adopted by the Chinese government in 2013
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to invest in more than 150 countries through roads, railways, energy projects
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digital infrastructure and ports. The construction of a gigantic port in Sri Lanka is an example
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the Padma Bridge in Bangladesh as well, essentially stretching the reach of China's
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economic influence and by association its political one too. And certain maps even show us which
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countries are members of the project, with a large number of European ones being in it
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In South and Central America, a region under almost exclusive US influence since the Monroe
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doctrine times, Chinese influence grows more and more. China has become South America's top trading
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partner and has begun intervening in infrastructure and energy projects with large direct investments
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With them comes the strengthening of military ties with several countries in the region
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such as Venezuela, as well as other strings attached. This article from CFR phrases it well
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While Chinese loans often have fewer conditions attached, dependence on them can push economically
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unstable countries into what critics call debt traps that can result in default
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Indeed several Latin American countries are seeking to renegotiate the terms of their debt China growing control over critical infrastructure such as ports and energy grids also poses national security risks
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The cost for the infrastructure financing here would be economic dependence and loss of control over key infrastructure
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And even in Europe, the home of those that used to exert direct influence on China itself, this begins to happen
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In Montenegro, China financed the construction of a highway under a loan system
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Soon after, the interests of that loan settled the country with debt and nearly resulted in economic collapse
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even arguably putting at risk the country's application process to join the EU
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The cost of the infrastructure financing was directly financial dependence. That was definitely and still is an issue
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It was a big loan and the entire process of setting up the financial arrangements for the highway or motorway, how you wish, was definitely controversial
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In Portugal, the Liberal government of 2011 decided to privatize the country's national energy company
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except it wasn't a real privatization because the buyer was the Three Gorges, a state-controlled Chinese company
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who suddenly had the highest stake in Portuguese energy. The cost of this was to put the country's energy infrastructure partly in the hands of China
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And either through espionage, debt, military pacts, or key infrastructure control, Chinese influence in each of these countries or continents grows
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But before we go on, I want to take a second to tell you about the partner of this video
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the European Correspondent. A few months ago, I started reading the reporting done by the European Correspondent
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and let me tell you, I love it. So here's the thing, the smartest ideas and people rarely come from our home country
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The decade defining events usually happen elsewhere, but their impact is felt across Europe
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That's why you need to read European journalism. Every morning I have the latest edition in my inbox in just 11 minutes
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I get everything I need to understand the bigger picture of what's happening in Europe
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It's written by local journalists from every country in Europe and the best part, it's free
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The European Correspondent is not-for-profit, so you know that they really have your best interest in mind
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Sign up now to their newsletter. The link is europeancorrespondent.com slash generalknowledge
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Check them out for all your European news needs. I promise you won't regret it
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But speaking of Europe, since that's the main point of the video, how is Chinese influence being exerted the most here
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The example of Portugal can be applied to many countries across the continent where China or Chinese government-controlled companies have purchased stakes in key European companies
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The best case scenario when it comes to motives is financial profit and the diversification of their country's investments
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The worst is that they're buying their way into each country and aiming to grow their influence through these investments
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This article by Bloomberg titled How China is Buying Its Way Into Europe makes this evident
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stating that between 2008 and 2018, China has bought or invested in assets amounting to at least $318 billion
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And that was six years ago, so imagine how much that has grown in the meantime
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Their map shows us how where the investment is mostly focused on
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Germany, the UK, France, Italy, and the Netherlands. and other maps show us individual investments fully or partly controlled by China
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be they ports, airports, power companies or even football clubs, the latter opening the door to cultural influence as well
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It's a simple equivalence, investments equal debt traps or control of key infrastructures
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which in turn equals growth of influence. What China aims to do with that influence is however unclear
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Are they preparing for a global conflict where countries can be dissuaded to join up against them
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or be weakened if they choose to do so? Are they, as I mentioned earlier, simply diversifying their
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investments for financial profit? Or are they just aiming to make sure their interests are kept
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and that the world doesn't change in a way that isn't beneficial for them? I would say all three
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can be true, but realistically the latter seems the most likely. Especially in Europe, the European
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market is gigantic and the access of China and Chinese products to it is very important for its
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economy. After all, the majority of European countries have a negative trade balance with
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China. The regulatory power of EU institutions can also be seen as a threat to Chinese interests
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Take three specific examples. Recently, the EU has been working on the Digital Services Act
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which would increase regulation on certain online stores, such as Temu and Xin, both Chinese-owned
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This would impact their sales potential and harm Chinese interests. In a similar way
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EU regulation on how products entering their market have to be in terms of conditions
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materials or even manufacturing practices also impacts the production methods and processes of
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Chinese factories. Europe is such a big market that if it changes its rules, those rules end up
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forcing the Chinese industries to adapt, maybe making manufacturing more expensive and thus
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less competitive which would also harm Chinese interests. On the opposite side, there are also
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EU regulations that could benefit Chinese interests, like wanting the EU to remove tariffs
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on electric vehicles, therefore making their own brands more competitive in terms of price
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Buying their way into Europe through investments may allow them to buy influence that contributes
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to halting these processes. It's not hard to think about the strategy
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You buy a European company, finance it enough so that its lobbyists make their way to Brussels
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and lobby slash pressure the regulators to pursue or not pursue specific agendas that are beneficial
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to China. And if that doesn't work, they always have direct diplomacy or direct state contacts
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The Chinese president comes to Hungary, announces that it's going to invest in the Hungarian
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e-vehicle infrastructure. Then the EU commission announces to put tariffs onto electric vehicles
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and Hungary is against them. That's pretty obvious what happened there. Their growing influence and
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friendliness with certain member states may help this too. Take the example of the European Council
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the EU institution which gathers the heads of state and government of each member country
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and defines its general political guidelines. Some EU council decisions must be approved by
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unanimous agreement. So all China needs is to buy influence with one member and suddenly the EU is
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stopped from moving against them in certain ways. There have been instances in the past where Chinese
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influence or that friendly relationship between those two countries has affected the European
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policymaking or cohesion. And one example is the protests in Hong Kong. As we all know, in 2021
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we had people protesting in Hong Kong against increased China's influence and against the
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crackdown on democracy. The European Union wanted to send a unified signal towards China and let
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them know that this is not okay. Hungary, due to his veto power at the European Council, blocked
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that European Union statement. If these political statements, they are negative towards China or
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Russia, then Hungary will basically veto them. All of this leads me to believe that European
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countries aren't necessarily inviting China in, it's China itself that is reaching out. And some
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European countries are simply lacking the good judgment or face desperate enough situations that
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prevent them from not answering positively to Chinese efforts So let go into that subtopic a little more and look into a specific example where this might be happening Hungary Hungary was the first EU state to become a member of the BRI in 2015
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The list of examples of Chinese financed projects within Hungary is long
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and European correspondent Eric Boros from Hungary helped list them out. In his long list, we can find examples such as the Budapest-Belgred railway
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and the classification of its documents at the request of Beijing, a planned but eventually cancelled Fudan University in Budapest due to strong opposition from the mayor of Budapest and the local population
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the establishment of Chinese electric car and battery factories in regional big cities
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the fact that the ruling party Fidesz reached out to Chinese citizens in Budapest as part of the municipal election campaign
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officially only to spread information about the elections and in practice to encourage them to vote for their own candidates
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And most crazy of all, cooperation with Chinese police forces, which includes potential joint Hungarian-Chinese police patrols in Budapest's tourist locations
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What the Hungarian and Chinese police agreed upon is that there's going to be more cooperation in the future
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which involves having Chinese policemen patrol with Hungarian policemen in some touristy areas
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because actually in Hungary, especially in Budapest, there are many Chinese people living here
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While not being a member of the EU, a similar situation takes place in Serbia
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The first example on the Hungarian list makes the connection between the two countries
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an actual physical and infrastructure connection enabled by China. Hungary and Serbia have been key participants in China's Belt and Road Initiative
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China has financed the construction of that Budapest-Belgrade railway. In May of 2024, Chinese President Xi visited Hungary and Serbia as part of his European trip
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and announced new investments specifically around those e-vehicle infrastructures. And many other infrastructure projects within Serbia have been partly or fully financed by China
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Journalist Marco Milikic from Montenegro also helped list them out, such as the Zemun Borca Bridge, also known as the Bridge of Brotherhood and Unity
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completed in 2014 with financing from Chinese banks, or a steel plant in Smederevo acquired
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by Chinese company Estil Group in 2016, followed by significant investment to modernize and expand
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their operations. China has also been involved in various highway construction projects in Serbia
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including sections of the E763 highway which connects Belgrade with Montenegro, or the Kostolak
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power plant where Chinese companies have been involved in the expansion and modernization of
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thermal power generation. However, while this influence might be met with friendliness by the
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ruling class, it can be met with more doubt and even resistance by the population, oddly even those
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who elect those same politicians, although this seems to be the case more in Hungary than in
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Serbia. European affairs journalist Thibaut Kraus even stated, it's crucial not to exaggerate
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Chinese influence in Hungary, given the lack of broad societal support and uncertainty regarding
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China's actual contribution to Hungary's national economy and global perception. Some polls point to 44% of people in Hungary having a positive view of China, and while this
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is in fact not the majority, it's still a relevant number. There are two different aspects that need
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to be looked at. Firstly, how is China perceived in Hungary as a country? And the good news I could
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say is that this Hungarian society is not particularly pro-China or anything. The Hungarian
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society doesn't really support China over any other Western countries or the European Union
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itself. It's pretty reluctant when it comes to China as a country and as a nation
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Most of them are supporters of the Orban government. Well, when it comes to the support of Fidesz and the support of China, there is definitely
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an overlap between the supporters of Fidesz and those who think of China positively. A much
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much larger overlap than between those who support the opposition and look positively towards China
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And the fact is that this Hungarian government is very close to China, which causes the Chinese
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to have direct influence in the country's role in the EU. As a member, Hungary has consistently
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obstructed and vetoed EU statements and actions trying to signal strength towards China
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Thibault Khoz summarizes them well. In 2021, Hungary blocked an EU statement on China's
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crackdown on democracy in Hong Kong. In 2019, the EU adopted a framework to screen foreign
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investments for security risks, largely in response to concerns about Chinese investments
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in strategic sectors. This outcome was watered down by Hungary's push for a less stringent set
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of measures, reflecting its favorable stance towards Chinese economic involvement. Hungary has been supportive of involving Chinese companies like Huawei in the development of its 5G network infrastructure, despite security concerns raised by other EU members and official recommendations for stricter controls
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Hungary opposes the plans of the EU Commission to install custom tariffs on imported Chinese e-vehicles, although Hungary cannot single-handedly overturn those tariffs
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In summary, Chinese influence disrupts the EU's ability to adopt a unified stance on human rights issues involving China and its allies, weakening the EU's collective foreign policy and strategic autonomy as seen with sanctioning Russia
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While China's impact on economic policies is notable, it is less significant since unanimity is not required for these decisions
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Hungary is also one of the most firm defenders of Serbia's process to become a EU member due to their regional but also political and ideological proximity
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Serbia's friendliness with China has slowed down that process and should it end up happening, their membership might hinder the functioning of the EU even more, with China having not one but two Trojan horses inside the organization
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Serbia is also moving into an illiberal direction. So it would be very beneficial for Orbán to have a country like Serbia being part of the European Union
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because that would strengthen his cause. Within Serbia, support for China seems to be growing among the people as well
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with recent polls pointing to a majority thinking Chinese government methods are positive
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Of course, it's important to mention that the countries themselves aren't the issue, neither are their people, but only their current governments
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Should they change, these issues might disappear as well. But while in Hungary the opposition's dislike of proximity with China opens the door to, upon an electoral shift, the policies being reverted, the same can't be said about Serbia
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European correspondent journalist Marko Milikic points out how Serbia is an autocracy, even though people are afraid of using that word, and the possibility of the opposition reaching power is extremely low, if existent at all
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Hungary's favorable stance towards China is mainly due to Orbán's authoritarian, anti-EU government
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style rather than widespread public and economic openness towards China. I believe the same can be
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said about Serbia. Both countries are also particularly close to Russia, which itself is
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a Chinese ally. That proximity can be explained with a pre-World War I Slavic sphere of influence
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that Russia has since tried to establish in the Balkans, although that mostly fits with Serbia
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and not so much with Hungary Either way both countries due to either cultural or political slash ideological proximity seem to be wanting to have one foot in the West and one foot in the
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East. And that really seems to be the only reason. Neither Serbia nor Hungary are particularly poor
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countries. They're not rich either, but they're not in a crisis situation that warrants selling
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off to whoever is willing to help. So far, this economic cooperation with China has been
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a big political leverage for the government. When you look at the national news in Serbia from
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virtually every major television, it's always president of the TV saying, oh, I opened the
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factory. And all of these factories that he allegedly opened are basically Chinese factories
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However, Hungarian journalist Erich Boros mentions how Budapest-Beijing cooperation became more intense after the pandemic, as EU-China and EU-Hungary relations worsens. China wants
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to keep its presence and further expand into the EU market, while Hungary needs money and
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investment to keep the economy afloat, especially since EU funds are not coming to the country
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often due to sanctions for not keeping with EU rules. I would argue that their friendliness with
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China stems mostly from two things. First, political opportunism, wanting to benefit from
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being in the EU, but also from being friends with those who oppose EU values by leveraging their
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position inside it. And two, ideological proximity. Despite being in the EU, which defends a set of
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values, the ruling class of these countries doesn't agree with them, and so chooses to extend a
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friendly hand to other powers who oppose them too. I mean, that's what it all comes down to
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And what do autocrats usually do? They find allies, and those allies are usually other autocrats
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So countries like China or Russia. Journalist Marko Milikic confirms how there's definitely
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a desire to play both sides. In Hungary's case, a smaller factor could also be taken into account
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which is the Eastern opening concept presented by the government, which aims to establish stronger
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political and economic ties with Asia. Hungary's Magyar past has led some very small, far-right
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groups to come up with a concept called Turinism which aimed to further connect Hungary with its
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Turkish heritage partners. And while China isn't a Turkish nation, the two concepts are dangerously
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close, at least in the cardinal direction of their foreign policy. So what is the end result of this
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we've already understood the danger it poses to Europe and especially to the European Union
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Outside influence of another world power exerted through close ties to specific EU members
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which essentially carry out lobbying efforts according to Chinese interests. This outside influence and internal meddling makes the EU less effective in its foreign policy
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and can also hinder economic policy. In order to fight this other than the people electing
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different governments in the member states, there's a few things that the EU could do
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to strengthen its way of working in order to become less vulnerable to these tactics
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Thibault helped us list them out. First, develop a new and updated clear vision for their foreign policy
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Then, define clear goals and principles regarding its connection with China specifically
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Perhaps creating a dedicated Chinese institution to provide expertise. Then, strengthen the role of the EU Parliament so that power shifts from member states to elected representatives
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and thus weakens the unfair influence of some single member states. And finally, consider abolishing the unanimity rule for certain EU council decisions
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effectively removing or at least considerably weakening Chinese influence in the institution
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When it comes to the countries under Chinese influence themselves, individual threats also emerge that their population should be aware of
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While these deals may increase foreign direct investment into Hungary, creating more workplaces and boosting the economy
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as well as developing infrastructure, a lot of challenges come along with them
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Ever since 2009, when one of the first arrangements was concluded with China
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it's been going upwards. So every year, the Chinese investments, Chinese businesses, exports have been intensifying
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And also what we can see is that the public opinion in Serbia towards China
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has been getting more positive each year. Eric, as an Hungarian, mentions a few, such as increased isolation from traditional partners, EU and NATO, in favor of Chinese cooperation, more reliance on Chinese loans and investment, which leads to a one-sided dependence, adoption of Chinese-style domestic and justice policies, leading to less individual freedom
27:19
Another cooperation agreement that wasn't made public and was actually, as far as I remember
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it was also denied by the government that it exists in this way, that could involve cooperation
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when it comes to security cameras, the same kind of security camera system that China has implemented
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And decreased economic and political sovereignty caused by one-sided dependence. Among others
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with the situation with Serbia being very similar, adding on the additional challenge of not being
27:45
able to join the EU at all. So definitely it's getting riskier
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and it's becoming more of a security problem for the EU. So far, they haven't established any red lines
27:55
but I can see that going forward. Limiting a far greater economic development
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the country could have if it did. It also might lead them down a road of resource
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and financial dependence on China in a similar way that Montenegro did
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being forced to call for external help without much luck and eventually resulting in a shift away
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from proximity with China due to finally understanding the potential consequences. I think on the one hand, there has been more scrutiny from the side of other external partners in Montenegro, such as the US or the EU
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There's been more scrutiny over what the country is doing economically, because, you know, we are dependent on the European Union, especially as a candidate state
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I do agree that the government definitely in the recent period has been approaching things related to China more carefully
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Because, you know, when you walk into that kind of a project with all of the financial implications, you might want to avoid another $1 billion loan
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Maybe the process with Serbia and Hungary will be similar, a growing proximity and friendliness
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until China wants to cash in on its favors and they can't write the check, be it financial
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political or even military, forcing a breakup of the relationship. So this way we can understand how China is reaching its arm into Europe, how Hungary
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has become somewhat of a Trojan horse within the EU, as well as how influence within Serbia
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extends Chinese reach throughout the continent. What do you think? Is Chinese influence in Europe a danger and is it as serious as we portrayed it here? Let me know in the comments
29:26
Thank you so much to Julius, Thibault, Marco and Eric from the European Correspondent
29:31
Their connections, local insight and contributions helped make this video better than it would ever be if I made it on my own
29:37
We'll be working together more often Again, I highly recommend you subscribe to their newsletter over at the European Correspondent
29:44
so that you can stay informed on everything that goes on in Europe
29:48
through the testimonies of people who live in each country. Thank you so much for watching this video
29:53
and I will see you next time for more general knowledge