The European Union is encouraging member states to exclude Chinese telecom giants Huawei and ZTE from critical networks, citing growing security risks, a move that could have significant implications for countries such as Hungary.

The European Commission’s proposal is part of a broader cybersecurity framework currently under preparation. It would allow countries to restrict or ban “high-risk” vendors from participating in key infrastructure projects, particularly in the development of 5G networks.

This is a particularly sensitive issue for Hungary, as the Orbán government has pursued an open policy toward Chinese technology companies in recent years, building several strategic partnerships.

Rising tensions between the EU and China

Economic relations between the European Union and China have become increasingly strained in recent years. While trade between the two remains strong, concerns are growing in Brussels over the rapid expansion of Chinese companies across several key industries.

The EU is therefore taking a more proactive approach to protecting its domestic industries and reducing external dependencies, especially in technology and infrastructure.

According to makronom.eu, China recorded a trade surplus of $83 billion with the European Union in the first quarter of the year. Chinese exports to the EU reached $148 billion, while imports stood at $65 billion.

Chinese companies have also been gaining ground in the European automotive market, particularly in the electric and hybrid segments. In Central and Eastern Europe, their presence is expanding rapidly, driven by competitive pricing and technological advances.

The value of sales in this sector rose from $11 billion to $20.6 billion within a year, and Europe now accounts for a significant share of China’s electric vehicle exports.

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In Brussels, this trend is increasingly seen as a strategic issue. The current proposal (targeting telecom infrastructure and potentially extending to the energy sector) fits into a broader effort to limit Chinese presence in critical industries.

China signals possible countermeasures

Beijing has reacted sharply to the planned measures. Chinese officials argue that the proposal is discriminatory and not based on objective technical or security criteria.

According to reports, China has sent a letter to the European Commission’s industrial and telecom departments outlining the measures it wants Brussels to withdraw. Huawei stated that excluding companies based on their country of origin would violate the European Union’s principles of fairness and non-discrimination, as well as its international commitments.

The company also noted that it operates in more than 170 countries and runs its European supply center in Budapest, serving 40 countries and employing around 2,000 people.

Huawei added that it is monitoring the legislative process and may take legal steps if necessary.

Hungary heavily exposed to Chinese investments

In recent years, Hungary has attracted several major Chinese industrial investments. In Debrecen, CATL is building a battery plant worth around €7.3 billion, while in Szeged, BYD is establishing its first European electric vehicle factory.

In addition, several Chinese suppliers have entered Hungary’s battery industry. These projects are often supported by significant state subsidies and are closely tied to the growth of the electric mobility sector.

In this context, stricter EU regulation could create uncertainty around future investments and reshape the environment for ongoing projects, affecting supply chains and even financing conditions.

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