Photo: Róbert Hegedüs
Levente Horváth
08/11/2024 10:38
You initiated Hungary's Eastern opening policy as early as 2009-2010, and it has become the defining foreign economic strategy of our country. Why did you think it was important for Hungary to seek new directions?
The global financial and economic crisis of 2008 exposed the weaknesses of the unipolar world order and the unicentric world economy. The crisis also made it clear that neither the West nor other regions are capable of finding solutions to the challenges of the 21st century alone. While the economic recovery in the West has taken longer, China and other Asian economies have been less affected by the crisis, accelerating their convergence with Western economic performance. Regardless of the crisis, it was already clear that new centres of power were emerging in the world, which would sooner or later become leaders rather than followers in technology. In order to take advantage of megatrends such as digitalisation and the sustainability transition, it is essential to involve these new centres, to increase connectivity and to widen knowledge networks. To catch up, Hungary needs to find ways to maintain its links with the West, while at the same time creating new connections with the Asian drivers of the global economy. In addition, Hungary's geography, historical roots and many other strengths (such as its skilled workforce and knowledge industry) make it a meeting point between the West and the East, a multi-hub of the East-Central European gateway. Among the development "wonders" (Singapore, South Korea, or even Chinese megacities such as Shenzhen, Shanghai, etc.), there are many that owe their success to the multi-hub role.
At the Itinerant Conference of Economists in 2016 you said that the new Silk Road, the Belt and Road Initiative (BRI) could double Hungary's GDP. And last year, your statement at the Belt and Road Forum in Beijing that the BRI is a "win-win-win cooperation" went viral in Chinese media. How can Hungary get the most out of the BRI?
Increasing productivity and domestic added value has become a key issue for Hungary. With the labour market transformation of the 2010s (creating one million new jobs) and the expansion of domestic working capital, we have exploited the potential for extensive growth, so a level-up - a new phase of intensive growth - is needed. This has already begun to take root in successful domestic sectors such as pharmaceuticals, creative industries and information technology, but at least two important factors remain to be secured. Firstly, the formula of balance and growth must be put in the forefront, because the two are inseparable. Only by finding a sustainable growth path can we win the 21st century. The other key condition is investment in working capital, which is where the Belt and Road Initiative, that has already helped to lay the foundations for Hungary's catching-up process, comes into play. At the same time, the focus should now be on the high added value projects of the BRI. "Win-win-win" cooperation can only be truly achieved if we network the Eurasian region through knowledge and technology sharing, joint development and knowledge centres. Of course, infrastructure and productive investments are also important, but they must serve 21st century knowledge-, talent-, capital- and technology-driven development, not least green development. This has been recognised by Chinese policymakers and the BRI has moved in these directions. This win-win-win outcome is also supported by the BRI's financial cooperation. Targeted financing and financial innovation are an integral part of sustainable catching-up. The future of money and the money of the future is taking shape before our eyes, and China has been quick to recognise this and spearhead the digital money revolution. Thanks to the Hungarian policy of Eastern opening and the BRI, financial cooperation - including the domestic presence of Chinese banks, central bank cooperation and access to Chinese financial markets - has become one of the drivers of Hungarian-Chinese relations over the past 15 years.
As you has pointed out in your book, The American Empire VS. The European Dream, the end of the five-hundred-year Atlantic era and the unipolar world order defined by US hegemony is marked by the fact that a large part of the world, including the Global South, sees an ally in each other and in China rather than in the West. What might the new world order look like, and where does Europe, including Hungary, have a role to play in it?
The Global South's economic weight and international ambitions are undoubtedly growing, and it is looking for new formations and leaders in China or possibly India and other emerging powers. These countries, despite their extraordinary diversity, are still bound together by the often bitter experience of Western colonialism and the need to find their own way. These are natural aspirations on their part, but, like the West, we cannot consider any 'disengagement' or 'bloc' from the Global South to be reasonable. The West - and Europe in particular - must continue to play an important role in global networks. It is connectivity that allows for the maximum multiplication of knowledge, which, as a special resource, expands rather than diminishes as it is consumed. Hungary's role, as I mentioned earlier, can be primarily to provide a beneficial interface for this, and in doing so, to create added value for Hungarian society. In addition to its traditional Western relations, Hungary has been developing ever closer cooperation with the countries of developed Asia and the Global South over the past decade. The links we have established with the world's economic, technological, geopolitical and sustainability hubs such as China, South Korea, Singapore, Türkiye and Dubai (United Arab Emirates) are also prominent among these. We need to continue to pursue a balanced and cross-bloc strategy that will connect them and enable Hungary to become a multi-hub.
At the Budapest Eurasia Forum, which was initiated by you, you drew attention to the fact that Asia has clearly taken the lead in the world in technological development and innovation. If Hungary is to benefit from this technological revolution, how is it necessary to build up the Hungarian formula of 2T2C, or talent-technology-capital-cognition, which you repeatedly emphasised?
Within the universal framework of the 2T2C, each country must build on its own strengths. This is why it is necessary to develop a Hungarian model of 2T2C. For example, Hungary has limited or no access to certain sources of capital formation (raw materials and energy carriers, certain natural resources). At the same time, our geographical location in the heart of Europe and our membership of the European Union are major strengths. All this provides an excellent basis for our country to become a globally important meeting point between the West and the East and a key player in supply chains. But in order to exploit our strengths, we need a clear vision and strategy, because according to the ancient wisdom, if one does not know to which port one is sailing, no wind is favourable. Hungary does indeed have strong foundations for future catching-up objectives. Such as the 1,100 hidden champions - particularly innovative Hungarian companies that are also competitive in foreign markets - that we have identified with the MNB team. They are already good examples of the 2T2C concept at their organisational level. But as part of the Hungarian 2T2C model, I could also mention Hungarian higher education - especially its strong attractiveness for foreign guest students - or even the complexity and competitive service exports of the Hungarian economy. The social, business and financial environment in our country is also conducive to the 2T2C model. It is no coincidence that the big Chinese banks (Bank of China, China Construction Bank) have chosen Hungary as their regional headquarters, as we have an international financial embeddedness that cannot be taken for granted even in the developed world. In addition, our country offers financial stability and a flexible business environment, and under the leadership of the MNB, further balanced financial relationship building has started.
Over the past 14 years, you have done much to promote Hungarian-Chinese relations, and became an honorary professor at Fudan University in Shanghai and an advisor at Tsinghua University in Beijing. Why are partnerships with Chinese universities important?
Chinese universities have been at the top of international rankings of higher education in the West over the past decade. For example, Tsinghua University is ranked 20th in the QS World University Rankings 2025 and 12th in the Times Higher Education 2024 rankings. The same rankings are for Fudan University: 39th and 44th respectively. Rankings are of course a factor, but they cannot be ignored, especially as Hungarian universities have similar ambitions (to be among the world's top higher education institutions). In academic and scientific life, it is particularly important to have an open approach and to multiply contacts, thus multiplying the opportunities for knowledge expansion. This includes scholarships and visiting student opportunities. China is becoming increasingly open to foreign talent, as evidenced by the physical environment and the educational programmes offered on the world-class Chinese campuses. Tsinghua University maintains a financial arm in partnership with the People's Bank of China, which has now developed a strong international presence, working with top universities in the US and Europe, from MIT to the London School of Economics. And let's not forget that Chinese students are also attracted to Hungary, which offers them a competitive offer in many fields of study, even compared to international centres of higher education. Education has always been of great importance in Far Eastern cultures, and this can be seen today in the resources and government strategies for universities and research centres. Hungary's role as a multi-hub requires it to mobilise these resources for its own benefit through mutually beneficial cooperation, combining the best traditions and forward-looking approaches of Western and Eastern education systems.
What exactly would be the Chinese high-speed rail programme that you advocated in your speech at this year's Itinerant Conference of Economists?
For Hungary, the lack of transport links between Liszt Ferenc Airport and Budapest - and even the surrounding areas - has long been a weak point. I have pointed out this problem several times in the past. World-class hubs have long been addressing the logistical challenges, while our country has only achieved partial success in this area. As we have forward-looking plans to expand the airport, we also need transport development, which could include Chinese high-speed rail investment. China has used the last decades to network its territory with high quality railways, and has therefore gained a great deal of experience in railway technology. We need to find a way to integrate this knowledge and technology - which even includes capital and even Hungarian engineering talent - into the development of Hungarian transport. Besides the Budapest-Belgrade railway line, there may be ways to identify other projects that promise radical improvements. After all, according to the Pareto principle, spending 20 per cent of resources can deliver 80 per cent of results. In other words, with the right strategy, it could be a game-changer in the history of the Hungarian transport hub - or even multi-hub. I am confident that Hungary can become a winner of the 21st century, even by 2040, if the above aspects are taken into account. Experience has shown that the winners of each century will be decided early, at least in the first decades. The decade of 2020 is now akin to the 1970s and 1940s based on longer-term cycles of 50 and 80 years, so we need to be particularly careful to guard against scenarios fraught with inflation, geopolitical turbulence, and energy crises. Of course, every decade is a little different. Still, we need to take into account the patterns of time, and the development of a Hungarian model for long-term sustainable development offers the answer to the current challenges.
The author is editor-in-chief of Eurasia