Orban
behind $7.8bn Chinese Battery Plant in Hungary
·
It is now the world’s biggest maker of
batteries for electric vehicles, led by Contemporary Amperex Technology Ltd.,
or CATL, the company behind the Hungarian project.
·
China’s dominance of the industry has
raised alarm in the United States, where a recent battery-factory project
involving CATL in Virginia collapsed after Gov. Glenn Youngkin denounced it as
a “front for the Chinese Communist Party.” In Europe, there have been warnings
about the risks of dependence on Chinese battery manufacturers.
·
Chinese megaprojects in Hungary, notably
a nearly $3 billon high-speed railway between Budapest and Belgrade, the
capital of neighboring Serbia, have been mired in delays and accusations of
corruption relating to secret contracts for Mr. Orban’s allies in business.
·
The new Chinese battery factory is
expected to create 9,000 jobs.
A $7.8 billion factory
planned by a Chinese company in eastern Hungary has become divisive even within
the party of Prime Minister Viktor Orban, who championed it.
The small-town mayor, long a
loyal foot soldier for Hungary’s governing party, recently committed what he
described as “political suicide,” throwing himself in the path of an enormous
$7.8 billion Chinese battery factory project promoted by his dissent-intolerant
prime minister, Viktor Orban.
“It is like lying in front
of a steamroller,” Zoltan Timar, the mayor of Mikepercs, said of his decision
to side with residents opposed to the project, which his Fidesz party
championed. “I just hope it won’t roll over me too soon.”
The factory, which would be
the biggest of its kind in Europe, is the fruit of a yearslong diplomatic and
economic tilt by Mr. Orban away from the West toward countries like China and
Russia. It promises to put Hungary at the center of a wrenching and, for some,
highly profitable green transition, with electric cars leading the way.
But residents in Mikepercs,
a Fidesz stronghold in eastern Hungary, are seething over the arrival on nearby
farmland of bulldozers and dump trucks preparing the way for the Chinese plant.
Many worry the project would create pollution, drain their water supply and
bring an influx of Chinese and other foreign workers.
“Pocketknives have opened up
in everyone’s pocket,” said Eniko Pasztor, a pensioner and opponent of the
factory, using a Hungarian phrase used to express anger.
Two public hearings on the
venture, held in the nearby city of Debrecen in January, descended into chaos
amid fistfights and shouts of “traitor” directed at officials by residents
anxious about their future health and property values.
Taman Polgar Toth, a
journalist with a local news site, Debreciner,
said he “had never seen anything like it — hundreds of people yelling and
fighting.”
Behind the noise, however,
lie two of the most consequential and closely entwined issues of the day: China
and climate change. Disagreement over what to do about either has thrust tiny
Mikepercs (population: 5,300) into a global ruckus.
In a push to dominate new technologies
vital to the reduction of carbon emissions, China has lavished tens of billions
of dollars’ worth of tax breaks and other subsidies on its electric carmakers.
It is now the world’s
biggest maker of batteries for electric vehicles, led by Contemporary Amperex
Technology Ltd., or CATL, the company behind the
Hungarian project.
China’s dominance of the
industry has raised alarm in the United States, where a recent battery-factory
project involving CATL in Virginia collapsed after Gov. Glenn Youngkin
denounced it as a “front for the Chinese Communist Party.” In Europe, there
have been warnings about the risks of dependence on Chinese battery
manufacturers.
CATL already has a $2 billion plant in
Germany that was widely welcomed, but its plans for the larger
one in Hungary has left it at odds with the nearly half of the country’s
population that, according to a survey this week, wants new battery plants
banned.
Mr. Orban’s courtship of
China and its investors is part of Hungary’s “Eastern Opening,” a policy he
announced in 2010 in an abrupt turn away from his previous role championing
democracy, human rights and Tibet’s exiled spiritual leader, the Dalai Lama.
The shift has delighted
Beijing. On a visit last month to Budapest, the Hungarian capital, China’s
senior foreign policy official, Wang Yi,
praised Hungary for its “China-friendly policy.”
Many other European countries
have soured on China, in part because of its support for
Russia over the war in Ukraine. But Hungary — already isolated from its NATO
and European Union allies because of its equivocal stand on
the war — has doubled down.
“He is the last man standing
as a friend of China in the European Union,” said Tamas Matura, a foreign
relations scholar at Corvinus University in Budapest.
When Hungary announced the
battery plant last August, it trumpeted it as the biggest foreign investment in
the country’s history.
Now, the battery plant has
been met with stiff opposition, first from local residents, and then from
opposition politicians and civil society activists.
They were joined last week
by the governor of Hungary’s central bank, Gyorgy Matolcsy, a former Fidesz
stalwart who accused Mr. Orban’s government of stoking inflation by pursuing
economic growth through large foreign investments in basic manufacturing, like
battery plants. Hungary has become a manufacturing hub for German carmakers,
Asian companies like Samsung, which has a battery plant near Budapest, and
others foreign corporations.
The
new Chinese battery factory is expected to create 9,000 jobs,
but some economists say the macroeconomic gains, like years of robust growth,
from such projects are offset by the inflation they help fuel. Hungary has Europe’s highest
annual rate of inflation, running at around 25 percent.
Gergely Karacsony, the mayor
of Budapest, a prominent liberal critic of both Mr. Orban and China who has
renamed several streets in the capital to give them names like “Free Hong Kong
Road,” said the “huge Chinese factory is a symbol of Hungary’s model of capitalism”
based on what he said were “low wages, low environmental standards and low
protection for workers.”
“In Hungary, we have
socialism for the elites and capitalism for the masses,” he said.
More worrying for the
government is the public rift, small but highly unusual, that has opened up
within the ranks of Fidesz.
Mr. Timar, the mayor of
Mikepercs, won 100 percent of the vote in the last election in 2019, his fifth
victory in a row for the party.
Struggling to contain
discontent among its supporters, Fidesz has deployed its vast media apparatus
to paint the furor over the battery plant as the work of outside agitators
funded by the Hungarian-born financier George Soros, the governing party’s
go-to villain, and “fake” residents mobilized by the opposition.
But Fidesz’s problems began
last November, when a group of women in Mikepercs, angry that they had not been
consulted about the Chinese project, organized a street protest, the first of
many.
Ms. Pasztor, the pensioner,
joined other women to form Mothers of Mikepercs, a group that wants to halt
construction of the factory until residents have reliable information about
what it would mean for their water supply, noise levels and pollution. Another
big question they have is where the plant’s workers would come from, since
unemployment in the area is nearly nonexistent.
The mayor, Mr. Timar, held a
town-hall meeting and invited CATL to address local concerns. The company, he
said, told him it was “too busy” to send someone to answer questions.
Asked about the meeting, a
spokesman for the Chinese company, Fred Zhang, said CATL “communicates
regularly” with the mayor and has been “actively responding to questions and
concerns from local residents.”
Many of the concerns, he
added, “are misinformation and misunderstanding. We intend to strengthen our
communications with local communities in the future.”
Ms. Pasztor said she has
nothing against China but did not want neighborhood houses turned into
dormitories for Chinese and other foreign workers, a widespread concern after
years of anti-immigrant fear-mongering by Mr. Orban and his party’s media
machine.
The Fidesz mayor of
Debrecen, Laszlo Papp, a strong supporter of the Chinese factory, acknowledged
that many locals were upset but said this was largely because there “is a lot
of fake information” about how much water the plant would use, where factory
workers would come from and other issues.
He added that it was
important to keep an eye on long-term economic development and not be
distracted by “momentary shifts in the public mood” driven by political
rivalries. “You can’t run a city on the basis of mood and feelings,” he said.
The Chinese factory, its
supporters say, is vital for the whole country.
“The green transition is
inevitable, and we want to be part of it,” said Mate Litkei, director of the
Climate Policy Institute in Budapest, hailing the Chinese investment as an
important contribution to the shift away from fossil fuels.
Mr. Litkei said that Hungary
needed to ensure there were enough batteries on hand before 2035, when a
European Union ban on the sale of
new gas and diesel cars will start.
Mercedes-Benz Group, which
has a big factory in Hungary, welcomed CATL’s plans, saying it would be the
“first and biggest customer of the new plant’s initial capacity.”
When CATL in January opened
a much smaller battery factory in Germany, it met with no opposition from local
residents or German environmentalists, whose Green Party is part of the
coalition government in Berlin.
In Hungary, however,
politics have become so polarized and toxic, with Fidesz for years vilifying
environmental activists as agents of Mr. Soros, that neither side trusts the
other.
Hungarian environmentalists
see electric cars as a big improvement on carbon-emitting vehicles, but point
to the damage caused by the mining and processing of lithium, cobalt and other
hazardous materials used to make batteries.
On top of that, said Peter
Ungar, co-chairman of the Green Party of Hungary, factories like the one next
to Mikepercs consume vast amounts of water and energy and cover arable land
with concrete. CATL’s Hungarian plant would cover an area around the size of 400
football fields.
“Batteries are not our
salvation,” Mr. Ungar said. “Nor is China.”