As Viktor Orbán departs the lavishly appointed prime ministerial residence in Budapest, the outgoing Hungarian prime minister will leave more than a corrupted and defiled state. He will also bequeath the problem of dealing with a string of Chinese investments in electric vehicles, batteries and rail links, whose production is criticised at home and abroad for low environmental and labour standards and undercutting companies in other EU states.
Chinese greenfield outward investment may create jobs and local production and bring invaluable green tech as oil prices soar. But in the US and the EU in particular, some governments struggling to build critical advanced industrial mass and establish independence from a geopolitical rival see Chinese companies as barbarians inside the gates. In the EU, an expanding toolbox of increasingly powerful instruments to manage those incursions is so far proving ineffective.
Foreign direct investment is often seen as a good thing, and a better alternative to imports. American auto protectionism in the 1970s and 1980s created Japanese (and later European) “tariff-jumping”, which involved their companies setting up production in the US and bringing cheaper, better cars to the US car market. But unlike misplaced US worries about Japan as a strategic competitor, handing control to a true geopolitical rival like China is a genuine problem. Although Donald Trump sometimes muses about encouraging Chinese car production to the US, so far he has maintained bans on Chinese auto technology inherited from Joe Biden. He now faces the challenge of Canada and Mexico, fellow signatories to the USMCA trade deal, welcoming Chinese FDI.