What did Hungary do right when it received the “biggest investment in its history” from China? : Editorial from the Global Times

A view of CATL headquarters in Ningde, East China’s Fujian Province Photo: VCG

Contemporary Amperex Technology Ltd (CATL), China’s largest manufacturer of batteries for electric vehicles, has announced that it will build a 7.34 billion euro (50.79 billion yuan) battery factory in Hungary. Once built, it is expected to become Europe’s largest battery cell factory. Hungary said it would be “the biggest investment ever in the history of Hungary”. Some foreign media claimed that Hungary had obtained “the biggest investment in history” because of its “support for China”, which is a bit bitter: while verbally saying “no”, they granted a great attention to the investment trends of Chinese enterprises.

Why has Hungary attracted CATL investment? Anyone with discerning eyes can tell that this is a perfectly normal business decision. The geographical location in the heart of Europe, with a good base of industrial support, allows Chinese companies in Hungary to be closer to their European customers and to be able to respond to their needs in a timely manner. More importantly, Hungary offers Chinese companies predictability in terms of policy and business environment. Hungary, the first country in Europe to sign a memorandum of understanding with China on the joint construction of the Belt and Road Initiative, has offered Chinese companies many preferential policies for their investments. As a result, the number of Chinese companies investing in Hungary has steadily increased over the past two years. The scale of investment has also remained high, with bilateral trade between China and Hungary increasing by 34.5% year-on-year in 2021. Not so long ago, NIO, a Chinese electric vehicle manufacturer, announced its first overseas factory in Hungary, and in June Lenovo commissioned its first European manufacturing plant in the country.

Some foreign media have jealously claimed that Hungary has garnered huge investments to “support China for the long term”. With this effort, it is best to think deeply about why CATL has postponed plans to build a factory in North America. For a long time, the United States has been the country that attracts the most foreign investment. But over the years, under the poisonous atmosphere of pan-politicization and the generalization of the concept of security, the country has created many terrible precedents, increasingly transforming an originally rich investment soil into a minefield. For example, he forced foreign high-tech companies to divest their technology and even carried out “technical confiscation” of capital, which led many to say that Washington was close to “open-air robbery”. Can a business grow comfortably if it is constantly preoccupied with its investment and one day risks being confiscated or wasting all of its investment? According to US media, CATL has long planned to build battery factories in the United States and has visited some locations in the United States, but may eventually choose an alternative plan to build a factory in Mexico. It must be said that CATL’s doubts are also those of many other companies.

Over the past few decades, China has been among those who have benefited the most from economic globalization and contributed the most to it. In this process, Chinese companies that have invested and expanded their business overseas have contributed a lot. CATL’s factories in Hungary will undoubtedly benefit the development of electric vehicles in Europe. However, there are “Atlanticists” who interfere with Europe’s pragmatic and rational cooperation, as well as American and Western politicians obsessed with “values-based diplomacy”. We mean that these people should look inward, realizing that they should no longer be looking at Chinese investments through a particular lens. When a series of political provocations and decoupling continue to poison the atmosphere of bilateral trust and cooperation, no company in the world will come to invest, risking becoming the next target of brutal suppression and repression. If a nation continues to use such political means to restrain economic behavior, it will only counter the general trend of economic globalization. The truth is as simple as that.

CATL has chosen Hungary to build a factory this time. It is an isolated case, but also a phenomenon with a broader and inspiring significance. While some European and American forces are increasingly demanding to examine investments from China through the political prism, Budapest insists on being rational and pragmatic, not following blindly and avoiding its own national interests being hijacked by the political motivation of others and bear an unnecessary price for it. The stability and predictability of its investment environment paid off. Hungary’s ambassador to China said Hungary is proud to be the “main entry point” for big Chinese companies in Europe. The healthy and stable relations between China and Europe, including trade relations, are good for both sides and the world. The two sides are to meet halfway to promote business cooperation, including providing more “entry points” for Chinese companies to enter Europe and connecting the dots.

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