By CGTN’s Aljosa Milenkovic
China and Hungary signed a Memorandum of Understanding on the Belt and Road Initiative in June 2015. As experts claim, this long term steady proposal, which is in its infancy, should bring a lot of benefits to all sides participating.
As the Chinese government encourages companies to seek development opportunities overseas, more and more companies have shown an interest in Eastern Europe, a region where Hungary's economic performance cannot be ignored. By mid-2016, Chinese investments into Hungary exceeded 3.5 billion US dollars.
Chinese Wanhua’s acquisition of Hungarian BorsodChem is the largest Chinese investment in Central and Eastern Europe so far, providing one of the most successful stories in the region. In 2011, while BorsodChem encountered financial problems, Wanhua Industrial Group's acquisition of the plant turned the company around.
Thanks to the investment, demand is increasing, the factory is expanding and jobs are firmly secured. Local workers cannot hide their satisfaction with Wanhua’s acquisition of BorsodChem.
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“If Wanhua as an investor did not come to this city, then this would have caused a big problem for this city,” said Judith Juhasz Nagy, the advisor to the mayor of Kazincbarcika in northern Hungary.
Not only are Chinese investments welcomed by Hungarians, but China's Renminbi currency is also being labeled in the country as “the currency of the future”.
Hungary is one of the countries leading in the utilization of the RMB, and that may be the reason why the Bank of China opened its sole RMB clearing center in Budapest among other Eastern European countries.
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According to experts, there is a bright future ahead for the RMB, because in the next 5-20 years, the RMB has the potential to become a reserve currency for the entire world. An RMB clearing center would be of tremendous financial significance to the economy.
“The benefits to these economies will be new trade opportunities, new investment opportunities, financing opportunities. And most of these opportunities will likely be denominated in RMB. And that’s why is important for these countries. They need to catch this opportunity,” stressed Chi Lo, a senior economist at BNP Paribas.
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