For the first time in ages, thousands of angry people rallied in Budapest to protest not some tax-hike or strict lockdown measures – but a Chinese university. While those lockdown measures still forbid such rallies, organizers found a loophole in the regulation by formally registering at least a dozen small, under-500 gatherings with the police.

The Hungarian government’s plans to roll out the red carpet for the Shanghai-based Fudan University to establish a new campus in Budapest has been dominating Hungary’s domestic political discussions. While generally uninterested in foreign affairs, the consummate China-ally in Central Europe is suddenly debating China, debt-trap diplomacy, and the brand of Marxist ideology taught at Chinese universities. 

A Big Deal or Business as Usual in Budapest?

Years ago, one of China’s top universities, Fudan decided to launch a joint double degree MBA program with Corvinus University of Budapest, a Hungarian institution with considerably less international recognition. At that time, this rather unremarkable development did not attract much attention. There was a warning sign, however: György Matolcsy, governor of the Hungarian National Bank himself seemed to be managing this nascent partnership despite its apparently innocuous and inconsequential nature. 

The eccentric, often controversial, and unapologetically pro-Chinese Matolcsy is the ideologue behind Prime Minister Viktor Orbán’s pivoting towards Asia, known as ‘Eastern Opening’. While official statements alleged that Fudan’s presence in Hungary would be limited to educate only a few dozen students every year, chatter among Hungarian university professors suggested Fudan University had more ambitious plans. 

Matolcsy already hinted that the partnership is somehow linked to China’s Belt and Road Initiative (BRI) in 2018, but his remark went unnoticed for years to come. It was only two and a half years later, during his lengthy investigation into China’s growing influence over Hungary, that the author of this piece obtained and later published internal government documents revealing the true scale of the project. The documents proved Fudan University’s expansion into Hungary is much more than merely a cultural-educational partnership – it is another example of a gigantic BRI infrastructure project and a first of its kind inside the European Union.

Hungarian government estimates put the size of Fudan’s Budapest campus – called Fudan Hungary University – at 520,000 square meters in buildings, spread over 26 acres, with an additional 40 acres accounting for the surrounding parks and greenery. The price tag for this enormous construction is estimated at a whopping $1.687 billion (540 billion Hungarian forints) – more than Hungary spends on the annual operation of its over two dozen state-run public universities combined. To seasoned China watchers, there is nothing unusual neither in the magnitude nor in the financial conditions of a regular BRI project. Hungary’s general public, however, was truly shocked to learn that Hungarian taxpayers would have to pay the exorbitant cost of construction for Fudan University’s new campus. 

A ‘Chinese Only’ Bidding Process

Documents that the author obtained show that the Orbán government has already agreed that the construction can only be carried out as a ”Chinese only project” – meaning that only Chinese companies and banks could be involved. Specifically, Shanghai’s Fudan University strongly recommended to the Orbán government that China State Construction Engineering Corporation (CSCEC), the world’s largest construction company, be contracted for the job. Meanwhile, China Development Bank has also submitted a preliminary financing offer to cover 80 percent of the costs. While the Hungarian government tries to claim no decision has been taken on these preliminary offers, official government proposals accepted at cabinet meetings clearly state that Fudan’s construction cannot be carried out in any other way. Documents state that the blueprint for this project should be China’s other local BRI development, the $2.4 billion reconstruction of the Budapest-Belgrade railway line, meaning that Chinese entities should be responsible for carrying out the construction as well as its financing.

Bribery and corruption risks are not only obvious given CSCEC’s tarnished reputation and involvement in various scandals around the world, but due to unexplained discrepancies shown in internal Hungarian government documents. Namely, that CSCEC pledges to erect Fudan Hungary University’s buildings for $1,06 billion, much lower than the $1.687 billion cost estimate of the Hungarian government, while at the same time, the Chinese financing proposal would cover a total expenditure of $1.81 billion. There is absolutely no explanation for this ‘overfinancing’, which is even more concerning given that high-level corruption in Hungary is traditionally linked to state-funded construction projects. 

What makes this even worse is that the Hungarian government carefully designed the legal structure of the project in such a way that they can avoid launching public procurements and open biddings in the construction and later in the operation of the campus. In the case of the Budapest-Belgrade railway reconstruction, the two countries signed an international agreement, which made it possible for them to sidestep stricter EU procurement regulations. After years of negotiations, the two sides finally agreed to contract a consortium of two Chinese and a Hungarian company – the latter is owned by Orbán’s childhood friend, Lőrinc Mészáros.

Documents also reveal how the Fudan project was kept secret from the Hungarian public for years. When visiting Hungary in July 2019, Chinese foreign minister Wang Yi already regarded the establishment of Fudan’s Budapest campus as a ’priority project’, and compared it in importance to the expensive Budapest-Belgrade railway reconstruction. One of the reasons why that railway project has not caused a similar uproar in Hungary years ago was that its financial details have been classified in time, while the Fudan project’s plans have leaked out, taking the Hungarian government by surprise.

China Enters the National Debate

Facing criticism, Viktor Orbán’s government argues that Fudan is a world-class university that will help raise standards in Hungarian higher education and lure in more Chinese investments – especially tech companies, while it also downplays concerns over Fudan University’s close ties to China’s communist leadership. For example, Hungarian government officials and right-wing pundits emphasize that Western universities are already plagued by ‘cultural Marxism’. Hence, it is a ‘double standard’ to criticize the Chinese Communist Party’s influence over Fudan University. The defense comes despite recent investigations revealing at least 25 percent of Fudan University’s staff and students are CCP members.

The government also claims that mostly hard sciences and applied sciences will be taught at the Budapest campus, not humanities, hence leaving little room for Marxist ideology in classes. Government officials also try to point out that Fudan’s critics had no problem with Hungarian-American billionaire George Soros’s Central European University (CEU) spreading the ideology of the US far-left in the country. At the time, as part of Orbán’s anti-Soros campaign, the government passed legislation forcing CEU to leave Hungary, a move that has since been ruled as unlawful by the European Court of Justice.  

These arguments do not seem very convincing to Hungary’s general public, which, to the surprise of many, has shown major interest in the controversy surrounding the project. Hungary is generally viewed as an inward-looking country, and China has never been a major political issue. Although Orbán’s controversial move of acquiring non-EMA-approved Chinese and Russian vaccines in 2020 has led to serious debates, these procurements helped propel Hungary to become the EU’s second-most vaccinated country, hence justifying the decision for many.

However, a recent poll not only shows that two-thirds of Hungarians strongly reject the Fudan Hungary University project, but also that even a third of Orbán voters disagree with it. This is remarkable because Hungarian voters are notorious for agreeing almost blindly with whatever policy stance their party is taking. This time, Orbán’s government has failed to convince even its supporters of why it is in the country’s national interest to pour tons of Hungarian taxpayer money into a Chinese university. Since Orbán is typically championing himself as a nationalist, right-wing leader and labels his rivals domestic or foreign either as communists or postcommunists, the debate over Fudan Hungary University is politically damaging to him. 

Domestic Politics Reign Supreme

It is little wonder the Hungarian government identifies the Fudan project as a potential risk for reelection as the 2022 parliamentary elections are nearing. Orbán’s main rival, mayor of Budapest Gergely Karácsony – a former political analyst specialized in public opinion pollings – instantly made opposing the Chinese campus one of his main campaign issues. Hungary’s opposition has just launched a non-binding local referendum on Fudan University, and – since they are running the local city councils – they renamed some streets at Fudan Hungary University’s construction site after the Dalai Lama and even the “Uighur martyrs”. 

Karácsony’s reasoning against the Fudan campus in Hungary also stems from the fear of China’s debt-trap diplomacy, the corruption risks associated with the construction, as well as the fact that the Chinese campus would take away space from the so-called Budapest Student City project. This was an earlier government-backed plan to create affordable student housing for low-income Hungarian students in the Southern Pest area of the capital. The mayor argues that the $1.687 billion of Hungarian taxpayers’ money spent on an expensive Chinese private university should be used to help Hungary’s underfunded higher education instead.

According to the Hungarian government’s financial projections, Fudan Hungary University would ask for an annual tuition of $8,000-14,000 while offering an average salary of $250,000 to top-class university professors – ten times more than Hungarian professors typically earn at present.

In reality, however, Hungary’s opposition also has internal divisions over the Fudan project. Although liberal and green parties are vocally opposing the Chinese campus and try to portray the political struggle as a choice between Western democratic values versus Orbán’s penchant for Eastern autocracies, the picture is more complicated. For example, former Socialist Prime Minister Péter Medgyessy – the man behind Hungary’s original ’China reset’ in 2003 – came out in defense of Fudan University, and multiple Socialist politicians have also taken a softer stance.

If elected in 2022, they say they would not cancel the project, but rather renegotiate the terms of the deal with China. The Hungarian Socialist Party itself – which supports Gergely Karácsony as their candidate for prime minister – has always maintained a good relationship with the CCP. Earlier, representatives participated at the CCP’s annual meetings with left-wing parties from around the world and, more recently, at BRI summit side events.

This is a clear sign that at least some of the opposition’s heavy campaigning against Fudan University is motivated by domestic politics rather than an elaborate foreign policy agenda. Nevertheless, the campus project may well be an important issue during the 2022 parliamentary election campaign as ire grows about the issue within Hungary’s borders and moves even the Orban government to respond.

Gergely Gulyás, the minister in charge of the Prime Minister’s Office, was quick to defend the project as a benefit to the people of Budapest and Hungary overall in an interview amidst the protests, but his statements to Hungarian outlet Mandiner betray a sort of damage control operation. At the very least, the minister moved to release some pressure by musing about a potential public vote on the issue.

“We do not want to “do good” to the people, so to the people of Budapest, despite their possible will,” he told the paper. “Therefore, we support that if the conditions of the investment are known, the people of Budapest can decide in a referendum whether they want Fudan University.”

As such, the very first domestic debate over Chinese relations could be a final straw to force the Orbán government to tone down its longstanding and vocal support for Beijing. The immediate threat of its election impact is likely to leave no other option.