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Energy has been an important issue during the almost one-week long visit of Chinese President Xi Jinping to Europe. The Chinese leader traveled to France, Serbia, and Hungary, and in both Belgrade and Budapest, he focused part of his meetings on energy-related programs. This is especially true in the context of China-Hungary relations in the sector: the two countries signed more than 16 new cooperation agreements covering topics such as cars and nuclear energy, which are quite important for the Hungarian government. Prime Minister Viktor Orban highlighted that the country seeks to expand economic cooperation with China in the field of nuclear energy, while Budapest is already working with Russia on adding a new reactor to its Paks nuclear infrastructure. Right now, China is the fastest-growing generator of nuclear energy in the world. According to World Nuclear Association figures, it currently has 56 operable reactors with a capacity of 54 GW, while the country also has 27 more reactors under construction, which would provide 28.9 GW of additional capacity. In Hungary, there are currently four operable nuclear reactors with a total capacity of 1.9 GW. These reactors generate about 40% of the electricity consumed in the country.

Hungary has also established itself as one of the leading countries in Europe in the production of electric vehicles (EVs), and its government aspires to create many factories on the Hungarian soil in order to become a global manufacturing hub of electric batteries. Chinese firm CATL (Contemporary Amperex Technology Co. Limited), the world’s largest battery manufacturer, invested more than €7 billion in a 100-gigawatt battery plant in Debrecen, in the eastern part of Hungary. What happened during Xi’s visit to Europe highlights how China can find interesting spots on the continent for its energy firms and for new infrastructure projects, confirming the complex relationship between Beijing and the European countries in the energy sector. While common goals for the clean energy transition do exist, their approaches and geopolitical realities create a multifaceted relationship. Both the European Union and China are heavily reliant on fossil fuel imports, making them vulnerable to price fluctuations and geopolitical instability, as we saw in the last few years. While the EU experienced setbacks from the Russian invasion of Ukraine on the energy level, China gained more importance for Moscow, as the number one country for oil and gas exports. But the EU and China also focused on non-fossil sources, as the Roadmap on Energy Cooperation (2016–2020) highlighted cooperation in renewable energies, cleaner technologies, and energy market reforms.

It is clear that the renewable energy sector offers a promising avenue for cooperation, as China is a global leader in solar panel production while the EU boasts expertise in wind energy. In this context, collaboration can accelerate technological advancements and reduce production costs. Furthermore, the EU-China energy dialogue of 2022 focused on liquefied natural gas (LNG) markets, highlighting another potential area for joint efforts towards diversifying energy sources and ensuring stable supplies.

On the flip side, emerging tensions simmer beneath the surface of these potential mechanisms of cooperation. The main issue is the EU’s concerns regarding China’s unfair trade practices in the solar panel industry. At the same time, Beijing’s dominance in the critical raw materials’ market for battery production cast another long shadow on the collaboration between the two sides.

The European trip made by Xi Jinping can thus be seen as a potential way to enhance the existing gap between Brussels, Beijing, and the other EU capitals, especially if we look at the disruptive role played by Hungary in recent times.

Written by: Francesco Marino