Hungarian soldiers on horseback gave President Xi Jinping a warm welcome on the grounds of Budapest's spectacular Buda Castle yesterday on the third and final stop on Xi's first European tour in five years.

Hungary under right-leaning Prime Minister Viktor Orban has become an important trade and investment partner for China, unlike some other EU nations considering becoming less dependent.

Xi is scheduled to meet Orban later in the day, with the war in Ukraine and infrastructure projects high on the agenda.

After meeting President Tamas Sulyok, Xi said their nations' friendship was neither targeting, nor dictated by, any third party.

Xi also said that he hoped Hungary would take the rotating presidency of the European Union in the second half of the year as an opportunity to promote the sound development of China-EU relations.

Hungary and China, which mark their 75th year of diplomatic relations, are expected to sign 16 to 18 new cooperation agreements, one of which could be a large-scale infrastructure project under the Belt and Road Initiative, Foreign Minister Peter Szijjarto said this week.

Orban started bringing his country closer to Beijing after he came to power in 2010. Warm political relations turned into investments about a decade later when battery and electric vehicle makers started to bring production to Hungary.

One of the biggest investors, CATL, is building a 7.3 billion euro (HK$61.3 billion) battery plant in Debrecen while EV maker BYD announced late last year that it was building its first European plant in southern Szeged.

China brought battery production into Europe first to save on shipping costs, as they were so heavy that it made sense to move production next to car factories of companies such as Daimler and BMW, said Tamas Matura, assistant professor at Corvinus University.

The next step is producing Chinese EVs in Hungary as the EU's protectionist plans are threatening their expansion, he added.

"These could affect them much less if they are already established and produce inside the EU," he said.

REUTERS

Xi Jinping and Hungarian President Tamas Sulyok stand at attention as soldiers ride past in a warm welcome for the Chinese delegation at Buda Castle in Budapest. Inset: Xi greets Viktor Orban ahead of their meeting.

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