Get smart

China and Hungary are working together at the forefront of knowledge-based economy cooperation

Right after several waves of the COVID-19 pandemic, the world is facing another extraordinary situation related to the Russia-Ukraine conflict, which has resulted in severe turbulences in the global energy and food markets. This has aggravated the return of inflation, and many parts of the world are now experiencing double digit increases in consumer prices. For a significant number of analysts, these developments are casting shadows on the future of Eurasian cooperation, but I think such opinions fail to realize the true opportunity of addressing these challenges together. The prosperity of mankind rests on the partnership of the East and the West, most notably, Eurasia and this cooperation will succeed if it achieves long-term sustainable economic growth, a new model of digital and green development.

In Hungary, many people, including myself, believe that Asia and Europe should mobilize their strengths and resources for dialogue and joint efforts to harness the megatrends of our age: digitalization, long-term sustainability, the changing geopolitical landscape and the transformation of money. For the past decade, Hungary has been on the path to find the most promising areas of cooperation with its Asian partners, especially China. At least two of these fields stand out: logistics and the new energy vehicle industry.

Logistics has always played a key role in Hungary which is a hub in Central and Eastern Europe, lying at the crossroads of several important international trade, travel and energy corridors. Hungary was among the first European nations which joined the Belt and Road Initiative in 2015. The flagship project of the initiative in Hungary has so far been the ongoing reconstruction of the Budapest-Belgrade railway line, which is part of the land corridor connected to Piraeus Port in Greece. The reconstructed railway will cut the travel time between the Hungarian and Serbian capitals by more than half from about eight hours to three and a half.

It is, however, not just the goods and services which are transported along the different corridors of the Belt and Road. Knowledge sharing is becoming more and more relevant, and it really opens up new dimensions in fields where new ideas are growing exponentially. In Hungary, a prime example is the NEV industry. Hungary has set the target to be at the forefront of the global NEV supply chain. This is now being achieved in partnership with China as well-known Chinese electric car manufacturers and battery suppliers are establishing factories in Hungary. This August, CATL (known as Ningde Shidai in China) announced a 7 billion-euro ($7.3 billion) investment in Debrecen, Hungary's second-largest city in the eastern part of the country. This will create 9,000 new jobs in the industrial segment of battery production. This is a record for foreign direct investment in Hungary, which will be operational as soon as 2025 and deliver batteries to the world's top car manufacturers such as BMW and Mercedes. Just one month earlier, in July, NIO Inc also officially confirmed a 13.4 million-euro investment in Hungary, near Budapest. The new facility will produce swap stations for electric batteries of NIO cars, whose distribution in the European market started in 2021. The Hungarian factory is the first overseas plant of the premium EV manufacturer, which will also function as the R&D center of NIO Power. The Hungarian government allocated about 4.16 million euros in state funds to support the project. As a result, Hungary will become a key node in the international swap station network of NIO, especially within Europe.

These examples show that such investments promote knowledge-sharing and innovation, which need to be sustainable in terms of environmental, social and governance principles, too. In this sense, EVs and their inputs already feature important elements of sustainable mobility. Nonetheless, the partnership of the East and the West could even go further and expand to the emerging fields of new industries, for example hydrogen and nuclear fusion energy, as well as 5G-based digital solutions such as the metaverse. China has built the world's largest 5G network with 524 million 5G mobile users, and it has also announced groundbreaking results from its "artificial sun" (the HL-2M Tokamak nuclear fusion reactor).Looking at digitalization in the monetary field, China has been setting the pace of transforming central bank money: its Digital Currency Electronic Payment (DC/EP) project is a front-runner in terms of real-economy trials and pilot coverage. This is material as the digital transformation of our societies cannot be achieved without money also moving into the digital space.

In fact, it seems that China understands the rules of the new knowledge-based economy which are also highlighted in the 2022 Global Discussion Paper of the Central Bank of Hungary (New Sustainable Economics — Global Discussion Paper). If Hungary and China, together with other partners, continue to acknowledge the exponential benefits of knowledge creation, I am sure the global community will be able to handle the most pressing issues of our age, from tackling climate change to maintaining social well-being and a stable international order.

How should we embark on the way of strengthening joint innovation activities? Besides knowledge transfer in business, I strongly encourage decision-makers to leverage the opportunities of university cooperation. In a world where "data is the new oil", learning and experience are the new ways to exploit this resource. International university partnerships contribute to the development of these soft skills. An integral part is intercultural understanding which is at the heart of modern innovation activities. I am proud that Hungary is stepping up its exchanges with universities in China, including Fudan University. We also host an increasing number of Chinese students in our universities which have the ambition to reach the top range in international university rankings.

The Central Bank of Hungary is taking a lead in further strengthening dialogue and knowledge networks. Since 2019, we have already organized four sessions of the Budapest Eurasia Forum which is dedicated to enhancing exchanges between Western and Eastern decision-makers, business leaders, think tanks and academia.

We strive to remain on this path and firmly uphold the spirit of mutually beneficial international cooperation. I would like to conclude at this point by adding the wise guidance of Confucius: "Is it not pleasant to learn with a constant perseverance and application? Is it not delightful to have friends coming from distant quarters?"

Yes, in Hungary, we are fully committed to a positive answer.

The author is governor of Magyar Nemzeti Bank, the Central Bank of Hungary. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.