Chinese investments redefine Hungary and Serbia's economic landscape

Since 2003, Chinese companies' investment expenditures in Hungary have amounted to approximately 19.77 billion CAD. Serbia, on the other hand, has received Chinese investments amounting to about 14.00 billion CAD - reports say. Thanks to Beijing, both countries occupy a unique position in Europe.

Analyses conducted by the Polish Economic Institute show that Hungary and Serbia have dominated the Chinese investment market in Central and Eastern Europe. "Since 2003, Chinese companies' investment expenditures in Hungary have totaled about 19.77 billion CAD. Serbia, on the other hand, has received Chinese investments totaling about 14.00 billion CAD.

As a result, these two countries account for one-quarter of all Chinese greenfield FDI in the EU and Serbia" - writes the author of the analysis.

In his article, Dr. Dominik Kopiński highlights that, in relative terms, Hungary and Serbia are at the forefront in Europe. The value of all Chinese greenfield investments in relation to GDP for 2022 was 8% in Hungary and as much as 17% in Serbia, while per capita—approximately 2,060 CAD for Hungary and 2,114 CAD for Serbia.

As he points out, the influx of declared Chinese investments in both countries accelerated significantly in 2018. From January 2018 to March 2024, nearly one-third of greenfield FDI dollars came from China (Hungary—29%, Serbia—31 %).

The high position of China among foreign investors in Hungary and Serbia is primarily due to political conditions. Hungary is a particular case among EU countries in terms of shaping relations with Russia and China. Serbia has also significantly reduced its relations with the EU in favor of China in recent years - reads the report.

Thanks to these investments, Hungary and Serbia have ranked 2nd and 4th in Europe, respectively, in terms of declared Chinese greenfield FDI in absolute terms.

PIE emphasizes that the scale of investments in recent years is unprecedented. Half of all Chinese greenfield FDI in Hungary (about 10.03 billion CAD) has been absorbed by: the construction of a giant battery factory near Debrecen by CATL, a 2.01 billion CAD investment by Huayou Cobalt (cathode material for batteries), and a 1.47 billion CAD investment by Eve Energy (batteries).

A small investment will surely not be the planned first Chinese electric car factory in Europe by BYD in Szeged. As a result, with only 81 projects, the average value of investments involving Chinese capital in Hungary is about 244 million CAD (compared to the EU average of 52 million CAD for Chinese investments).

Similarly in Serbia, two announced investments by Zijin Mining Group in 2023 – for the expansion of a copper mine and renewable energy projects – doubled the average value of projects involving Chinese capital from about 118 million CAD to 264 million CAD - writes Dr. Dominik Kopiński.

He specifies that in Poland, Chinese greenfield FDIs cumulatively for the entire period 2003-2024 (March) amount to about 3.54 billion CAD (a total of 86 projects). "This means that in relation to Poland's GDP for the year 2022, it is only 0.38%, and per capita about 93 CAD" - writes the PIE expert.

Greenfield investments are a type of direct investment where a foreign company builds its operations in another country from scratch - on a "green field." Unlike "brownfield investments," where a company purchases or leases existing facilities for operations, greenfield investments start from unused land and require larger capital investments.