China Development Bank President Tan Jiong held separate meetings with Hungary's National Economy Minister Marton Nagy and Finance Minister Mihaly Varga to discuss joint projects financed by China and on the future of financial cooperation between the two countries on October 19.

Hungary has become the number one destination for Chinese investments in Central and Eastern Europe, and the country aims to enhance its role as a bridge for capital, know-how and technology from the East and the West, they added.

The discusssions on October 19 encompassed infrastructure, energy, digitalisation and e-mobility. Officials also exchanged views on deepening the sovereign financial cooperation in the Chinese-Hungarian Cooperation Framework, the National Economy Ministry said in a statement.

Nagy said Hungary was counting on Chinese financial institutions in implementing infrastructure projects including the V0 railway bypass around Budapest, a rapid railway line connecting Liszt Ferenc International Airport with the centre of the capital, and upgrades of infrastructure at crossings along the border with Serbia.

The upgrade of the Budapest-Belgrade rail line is expected to finish in the summer of 2025. The major project is set to pave the way for an alternative route for bringing Chinese goods to Western Europe from ports in Greece.

Chinese financial institutions have confidence in the Hungarian economy, Varga said after the meeting, adding that several Chinese lenders had picked the country as a base of operation in recent years, Finance Minister Mihaly Varga was quoted in a statement.

China Development Bank opened a regional branch in Budapest in 2022 to finance development projects in Central and Eastern Europe.

Hungary signed an agreement with state-owned ICBC in October. The largest commercial bank in China and the biggest bank globally in total assets could open a branch in Hungary

Overall, Chinese companies have ploughed over €7.6bn into local projects. Varga highlighted the plants of battery manufacturers CATL, Huayou Cobalt and EVE Power, and an EV factory of BYD.

Varga noted that China Development Bank, Export-Import Bank of China and Bank of China had signed a €1bn loan agreement with Hungary earlier in the year to finance infrastructure and energy developments and other projects.

However, the transaction was kept secret until the end of July, when the financial press reported the story based on the regular update of government debt data on the website of state debt manager AKK.

The terms of the three-year floating loan, including interest rates and repayment terms, were not disclosed, but according to recent comments by government officials, Hungary has asked the Chinese partners to agree to make the conditions public.

According to Vsquare, Hungary originally hoped to secure a much bigger loan during Xi Jinping’s visit to Budapest in May as a substitute for the country’s frozen EU funds.

Of the €1bn, Hungary disbursed a €500mn loan to the North Macedonian government led by Hristijan Mickoski, an ally of Viktor Orban. 

China is Hungary's biggest trading partner outside the EU, with bilateral trade reaching €12bn in 2023.

Hungary was the first sovereign in the world to issue a green panda bond in 2021, organised by the Bank of China. 

According to earlier reports, the government is in talks with Chinese banks on the issue of yuan-denominated bonds later this year.