Hungary's Chinese Factory Boom Brings Billions in Investment and Growing Local Resistance

Billions flow into factories as communities push back

Hungary attracted about €3.1 billion in Chinese foreign direct investment in 2023, more than 30% of China's investment into Europe and more than the combined total received by France, Germany and the United Kingdom. The figures, from a joint report by the Mercator Institute for China Studies and Rhodium Group, show how a country once regarded as being on the European Union's economic edge has become a leading destination for Chinese manufacturing.

Four of China's five largest active investment projects in Europe are now in Hungary. Electric vehicle maker BYD, battery producers CATL and EVE Energy, and battery materials manufacturer Semcorp are central to a factory expansion that is changing the country's economy, countryside and political relationships.

As of June 11, 2025, the investment drive promises factories, jobs and a larger role in Europe's automotive industry. It has also brought protests, lawsuits and fears about water supplies, pollution, children's health and the loss of agricultural land.

Prime Minister Viktor Orbán's government has actively sought Chinese investment through subsidies, tax breaks and close relations with Beijing. Local campaigners want greater transparency and stronger environmental safeguards, while political opponents question how much Hungary should depend on foreign capital.

The central issue is becoming concrete for the places hosting these projects: how to turn billions of euros in investment into lasting economic gains while protecting the people living beside the factories. Decisions about land, public funding and environmental enforcement will help determine how those gains and costs are shared.

Why Chinese manufacturers choose Hungary

Hungary combines access to the EU's large consumer market with a location close to established European automotive supply chains. For Chinese manufacturers, building there means placing production nearer to the companies that buy their components and the customers who buy their vehicles.

Labor costs are another attraction. Hungary's average hourly labor cost is about one third of Germany's, making manufacturing less expensive than in Europe's largest economy. Government support adds to that advantage through direct grants, tax breaks and other subsidies, particularly for automotive and advanced technology projects.

Orbán's government has also made political ties part of its investment strategy. Hungary joined China's Belt and Road Initiative in 2015 and has consistently supported Chinese interests within the EU. Budapest presents the country as a gateway to the European market, pairing its location with a welcoming approach to Chinese business.

The result is a concentration of capital that reaches beyond individual factory announcements. Foreign direct investment, or FDI, means an overseas business invests in operations in another country. In Hungary, much of that money is going into production facilities intended to give Chinese companies a lasting European base.

BYD builds a European base

BYD has chosen Hungary for its European headquarters, with a new center in Budapest and a major vehicle factory in Szeged scheduled to begin production in 2025. Together, the projects connect management, vehicle development and manufacturing within one country.

BYD chief executive Wang Chuanfu said the European center would create 2,000 jobs. Its work will include sales, services for customers after they buy a vehicle, testing and the development of models adapted to local markets.

The factory forms part of BYD's effort to produce vehicles closer to European buyers, reduce shipping costs and navigate new EU tariffs on vehicles made in China. Tariffs are charges imposed on imported goods, which can make those goods more expensive to sell. Producing in Europe changes where BYD makes the vehicles it wants to sell there.

For Hungary, the Budapest center also represents an attempt to attract work beyond factory assembly. Sales operations, testing and vehicle development bring a different range of activities alongside manufacturing, matching the government's ambition to draw more research and service investment.

CATL and its suppliers reshape the industrial map

CATL, the world's leading producer of electric vehicle batteries, is building an €8 billion plant near Mikepércs in eastern Hungary. Covering 221 hectares, the project is described as the company's largest battery plant outside China and is expected to supply major carmakers including BMW and Mercedes-Benz.

The Hungarian government has supported CATL through substantial incentives, including tax allowances and direct grants. CATL maintains that state support was only one factor in choosing the location.

EVE Energy has received roughly €37 million in direct grants for its battery cell plant. Semcorp is launching a €370 million factory to make separators for lithium-ion batteries. Separators are components inside batteries that keep their internal parts apart while allowing the battery to work.

These projects bring several stages of battery production into Hungary, from materials and components to finished cells. They also link Chinese manufacturers with European vehicle producers, making Hungary a meeting point for companies from both markets.

Foreign Affairs and Trade Minister Péter Szijjártó says 54 large Chinese investments worth HUF 7,000 billion, about €17.3 billion, have been established in Hungary over the past decade. According to the minister, they have directly created more than 30,000 jobs. The government presents those investments as evidence that Hungary is becoming a global leader in the automotive industry's technological transformation.

What building new factories changes

Much of the Chinese investment takes the form of greenfield projects. This means constructing a new factory or facility from the ground up, rather than buying an existing company.

For investors, a new site offers control over operations, technology and supply chains. Chinese companies seeking a lasting European presence can establish facilities suited to their own production methods while avoiding the complications of buying a business or sharing ownership through a joint venture.

Hungary can gain jobs, new production knowledge and opportunities for local suppliers. A large factory may need nearby businesses to provide materials and services, spreading some of the economic activity beyond the investor's own operations.

New construction also changes how land is used and increases the importance of environmental oversight. Dependence on overseas capital, pressure on existing local industries and the environmental effects of large industrial sites are part of the same investment decision. A national gain in manufacturing capacity can arrive alongside major changes for a village next to the development.

Mikepércs residents demand environmental safeguards

Mikepércs has become a focus of resistance to the battery expansion. Near CATL's construction site, residents have organized around concerns about pollution, water use, health and the conversion of agricultural land into industrial facilities.

Eva Kozma, an environmental engineer and mother of three, helped establish Mikepércs Mothers for the Environment, known as Miakö. The group has joined a national network of grassroots organizations challenging the government's approach to industrial development.

Campaigners have held protests, filed lawsuits and pressed local authorities to apply stricter environmental standards. Their demands bring decisions about industrial policy into local debates over what families should know about a factory and what protections should be in place before it operates.

Earlier investigations into battery factories funded by South Korean companies in Hungary found water contamination, toxic emissions and workplace safety violations. Chinese businesses have also faced environmental penalties, including Halms, the Hungarian arm of Zhejiang Huashuo Technology.

Those experiences help explain why residents want detailed safeguards as new projects advance. The concerns extend across the expanding battery industry, even as Chinese investment accounts for some of its largest new developments.

Health fears reach into household decisions

Vera Csuvarszki is among the residents who have tried to move because of fears that potential factory pollutants could affect their children's health. For families considering relocation, the industrial expansion has become a decision about where they can live.

Proximity to industrial sites has depressed property values, making homes harder to sell. Residents who want to leave can therefore face a financial obstacle at the same time that they are worried about the changes around them.

Many residents also describe government decisions as opaque and public consultation as inadequate. Their sense of powerlessness reflects both the scale of the projects and their difficulty in obtaining a meaningful role in decisions that affect their communities.

Semcorp has pledged to meet all environmental, health and safety standards and to work with local authorities and other stakeholders. For residents, the practical issues remain how those standards are enforced, what information is shared and how complaints are handled as industrial activity expands.

Local opposition has changed some plans

Community campaigns have already influenced individual projects. In Alsózsolca, protests halted plans for a battery recycling plant. In Heves, public opposition led the mayor to cancel a contract with a Chinese chemical company.

These outcomes show that local decisions can alter Hungary's industrial expansion even while the national government continues to seek major investments. A recycling facility or chemical project depends on choices made in a particular place, where residents can organize around its expected effects.

The government has also launched investigations into some civic organizations, accusing them of using foreign aid to influence elections. Critics regard those investigations as an effort to stifle dissent.

Environmental campaigns now sit within a wider political dispute over public participation and government authority. For organizations challenging factories, the work involves legal action, local pressure and demands for information, alongside scrutiny of their own activities.

China ties deepen Hungary's disagreements with the EU

Orbán's close relationship with Beijing has widened differences with other EU governments as the bloc has taken a harder position on China. The EU has described China as a "systemic rival" and imposed new tariffs on electric vehicles made there.

Hungary has repeatedly taken a different approach. During the COVID-19 pandemic, it became the first European country to accept Chinese vaccines. It has also consistently blocked EU criticism of China concerning Hong Kong and Xinjiang.

Relations between Budapest and other EU members have become strained, while Hungary has faced the freezing of EU recovery funds and increased scrutiny of its domestic policies. The Chinese investment drive is unfolding within that broader conflict over the country's direction.

The economic strategy also creates a practical tension. Chinese manufacturers are investing in Hungary partly because it provides access to the European market, while Hungary's political support for Beijing places it at odds with other members of that market. EU trade and investment decisions can therefore affect projects that Budapest has worked to attract.

Sovereignty becomes an election issue

Péter Magyar, leader of the opposition Tisza party, has argued that genuine sovereignty requires a strong, independent economy rather than reliance on Chinese loans or Russian influence. His position brings the investment debate into the contest over Hungary's political future.

Parliamentary elections are due in 2026. No outcome has been decided, leaving investors and communities facing uncertainty about whether Hungary's foreign policy or approach to industrial investment will change.

Supporters of the current strategy point to jobs, factories and Hungary's growing role in electric vehicle production. Opponents question the economic dependence that can accompany large amounts of capital from one country, particularly when government incentives help secure the projects.

The debate is about both the scale of investment and the conditions attached to it. Hungary's ability to retain economic benefits, protect communities and make independent policy choices is becoming part of the same political argument.

Telecommunications and logistics broaden the investment drive

Chinese investment is extending beyond cars and batteries. FiberHome, a Chinese telecommunications company, has opened ZettaNet, an optical cable manufacturing base in Kisber. The project adds telecommunications equipment to Hungary's expanding industrial relationship with China.

The government is seeking more Chinese research and development activity and investment in services. Its aim is to move beyond traditional manufacturing and accelerate a wider economic transformation.

Budapest has also become a major air logistics hub for Chinese exports to Central Europe. Record cargo traffic and direct flights connecting Hungary with multiple Chinese cities support the movement of goods through the country.

That infrastructure serves manufacturing as well as online commerce and the transfer of technology. Factories, cargo operations and services can reinforce each other, drawing Hungary more deeply into China's international supply chains.

The dates and decisions shaping the expansion

Hungary's role has developed through years of political alignment and investment, with major factory plans still moving toward production. The key milestones connect the diplomatic relationship to the industrial projects now affecting local communities.

• 2015: Hungary joined China's Belt and Road Initiative.
• 2023: Hungary received about €3.1 billion, more than 30% of Chinese foreign direct investment into Europe.
• June 11, 2025: Hungary's investment drive includes major projects by BYD, CATL, EVE Energy and Semcorp, alongside local protests and legal challenges.
• 2025: BYD's factory in Szeged is scheduled to begin production.
• 2026: Hungary is due to hold parliamentary elections.

Local protests and lawsuits could slow or reshape future projects. Changes in government policy or public opinion could also affect the welcome offered to Chinese investors, while evolving EU tariffs and investment rules may change the costs and feasibility of their plans.

The investment already under way creates momentum for more suppliers and service businesses to follow. Hungary's task is to turn that expansion into durable jobs and industrial capability while managing environmental pressures, public opposition and dependence on foreign capital. Those decisions will shape both its communities and its place in Europe's changing automotive industry.

Key Points

• Hungary received about €3.1 billion in Chinese investment in 2023, exceeding the combined total for France, Germany and the United Kingdom.
• Four of China's five largest active European investment projects are in Hungary.
• BYD plans vehicle production in Szeged in 2025, while CATL is building an €8 billion battery plant near Mikepércs.
• The government says 54 large Chinese investments over the past decade have directly created more than 30,000 jobs.
• Residents are challenging environmental risks, limited consultation and effects on property values. Protests have halted or changed projects in Alsózsolca and Heves.
• Chinese investment is expanding into telecommunications, logistics, research and services.
• EU policy, environmental enforcement and Hungary's elections in 2026 will help shape the investment strategy.