Home Business A Hungarian city is seething over a giant Chinese battery factory

A Hungarian city is seething over a giant Chinese battery factory

by SuperiorInvest

The small-town mayor, long a loyal pawn of Hungary’s ruling party, recently committed what he described as “political suicide” by throwing himself into the path of a massive $7.8 billion Chinese battery factory project pushed by his dissent-intolerant prime minister. Viktor Orbán.

“It’s 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 promoted by his Fidesz party. “I just hope it doesn’t overwhelm me too soon.

The factory, which would be the largest of its kind in Europe, is the result of Mr Orban’s years of diplomatic and economic drift away from the West towards countries such as China and Russia. It promises to make Hungary the center of a breakneck, and for some highly profitable, green transition led by electric cars.

But residents of Mikepercs, a Fidesz stronghold in eastern Hungary, are up in arms over bulldozers and dump trucks arriving on nearby farmland to make way for the Chinese plant. Many fear the project would cause pollution, deplete their water supplies and bring in an influx of Chinese and other foreign workers.

“Pocket knives opened in everyone’s pocket,” said Eniko Pasztor, a pensioner and factory opponent, a Hungarian phrase used to express anger.

Two public hearings on the venture, held in January in the nearby town of Debrecen, descended into chaos amid fistfights and shouts of “traitor” directed at officials by residents who feared for their future health and property values.

Taman Polgar Toth, a journalist from a local news site, Debrecenhe said he had “never seen anything like it – hundreds of people screaming and fighting”.

But behind the noise are two of today’s most serious and closely related issues: China and climate change. Disagreement over what to do in either case threw little Mikeperks (population: 5,300) into global chaos.

China has lavished tax breaks and other subsidies worth tens of billions of dollars on its electric car makers in an effort to dominate new technologies vital to reducing carbon emissions.

It is now the world’s largest manufacturer 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 $2 billion plant in Germany it was widely welcomed, but his plans for a bigger one in Hungary put him at odds with nearly half the country’s population, who according to survey this weekwants a ban on new battery plants.

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 departure from his previous role as champion of democracy, human rights and the exiled spiritual leader of Tibet, the Dalai Lama.

The move pleased Beijing. On a visit last month to Budapest, the Hungarian capital, a senior Chinese foreign policy official, Wang Yi, praised Hungary for its “China-friendly policy”.

“He is the last man who is a friend of China in the European Union,” said Tamas Matura, a foreign relations expert at Corvinus University in Budapest.

When Hungary announced the battery factory last August, it billed it as the largest foreign investment in the country’s history.

Previous Chinese megaprojects in Hungary, most notably the nearly $3 billion high-speed railway between Budapest and Belgrade, the capital of neighboring Serbia, have been mired in delays and allegations of corruption over secret contracts for Mr. Orbán’s business allies.

Now, the battery factory has faced fierce opposition, first from local residents and then from opposition politicians and civil society activists.

They were joined last week by Hungary’s central bank governor, Gyorgy Matolcsy, a former Fidesz stalwart, who accused Mr Orbán’s government of fueling inflation by seeking economic growth through large foreign investment in basic manufacturing such as battery plants. Hungary has become a manufacturing hub for German automakers, Asian companies such as Samsung, which has a battery factory near Budapest, and other foreign corporations.

The new Chinese battery factory is expected to create 9,000 jobs, but some economists say the macroeconomic gains, such as years of strong growth, from such projects are offset by the inflation they help support. Hungary has The highest annual inflation rate in Europe, which hovers 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 such as “Free Hong Kong Road,” said that “the giant Chinese factory is a symbol of the Hungarian model of capitalism” based on of what he said were “low wages, low environmental standards and low worker protection”.

“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 consecutive victory for the party.

Fidesz is trying to contain discontent among its supporters and has deployed its vast media apparatus to paint the uproar over the battery factory as the work of outside agitators funded by Hungarian-born financier George Soros, the false villain of the ruling party. ” residents of the mobilized 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.

Pensioner Ms Pasztor has joined other women to form the Mothers of Mikepercs group, which wants to stop the factory from being built until residents have reliable information about what it would mean for their water supply, noise and pollution levels. Another big question they have is where the plant workers would come from since unemployment in the area is almost non-existent.

The mayor, Mr. Timar, held a town hall meeting and invited CATL to address local issues. The company told him it was “too busy” to send someone to answer questions.

Asked about the meeting, Chinese company spokesman Fred Zhang said CATL “regularly communicates” with the mayor and “actively responds to local residents’ questions and concerns.”

Many of the concerns, he added, “are misinformation and misunderstanding. In the future, we intend to strengthen our communication with local communities.”

Ms. Pasztor said she had nothing against China but did not want the neighborhood’s houses to be turned into dormitories for Chinese and other foreign workers, something that has become widespread after years of anti-immigrant fear-mongering by Mr. Orban and his party’s media machine.

Debrecen’s Fidesz mayor, Laszlo Papp, a strong supporter of the Chinese factory, acknowledged that many local residents were upset, but said it was largely because “there is a lot of false information” about how much water the factory would use, where workers factories would come for other problems.

He added that it was important to monitor long-term economic developments and not be distracted by “momentary changes in public sentiment” driven by political rivalries. “You can’t run a city based on mood and feeling,” he said.

The Chinese factory, its supporters say, is vital to the entire country.

“The green transition is inevitable and we want to be a part of it,” said Mate Litkei, director of the Climate Policy Institute in Budapest, praising Chinese investment as an important contribution to the shift away from fossil fuels.

Mr. Litkei said that Hungary needs to secure enough batteries before 2035, when the European Union ban on the sale of new gas and diesel cars will start

Mercedes-Benz Group, which has a large factory in Hungary, welcomed CATL’s plans, saying it would be “the first and largest customer of the initial capacity of the new plant”.

When CATL opened a much smaller battery factory in Germany in January, it faced no opposition from local residents or German environmentalists, whose Green Party is part of the coalition government in Berlin.

In Hungary, however, politics has become so polarized and toxic, with Fidesz vilifying environmental activists as agents of Mr. Soros for years, that neither party trusts the other.

Hungarian environmentalists see electric cars as a major improvement over 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.

Besides, said Peter Ungar, co-chairman of Hungary’s Green Party, factories like the one next to Mikepercs use huge amounts of water and energy and cover arable land with concrete. The Hungarian CATL plant would cover an area the size of 400 football fields.

“Batteries are not our salvation,” Mr. Ungar said. “Neither does China.

Barnabas Heincz contributed a report from Budapest and Keith Bradsher from Beijing.

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