Sino-Hungarian Financial Relations

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Posted on:Jul 6,2021


We celebrated the 70th anniversary of the establishment of diplomatic relations between Hungary and China in 2019. Over the past 70 years, the two countries have undergone major changes. In Hungary the political transition in the early 1990s, while in China the 1978 reform and opening-up policy brought significant changes both in the economic and financial terms. Despite these significant changes, financial relations between the two countries continued to strengthen.

In 2010, the Hungarian Prime Minister proclaimed the policy of ‘Opening to the East’, and in 2013 China launched the ’One Belt, One Road’ initiative. The two policy initiatives have brought the two countries closer to each other and intensive co-operation has been established in all areas, including the fields of economy, finance, tourism, culture and education. Financial institutions, and in particular the Magyar Nemzeti Bank (MNB, the Central Bank of Hungary), have initiated many new Chinese co-operation schemes in the spirit of the policy of ‘Opening to the East’, thereby strengthening Hungarian-Chinese financial relations.

In my paper I give an analysis on the last 70 years of Hungarian-Chinese financial relations, which can be divided into 4 consecutive periods based on my research, these are: (1) Politically-driven financial relations, (2) years of changes in the financial systems, (3) the revival of financial relations and (4) the financial opening to the East.

Keywords: financial, Opening to the East, Hungary, China, National Bank of Hungary

1. Introduction

In 2019 we celebrated the 70th anniversary of the establishment of diplomatic relations between Hungary and China. In the past 70 years, Hungary and China has established a very strong relation in the field of trade, investment, finance, tourism, education and sport. Hungary takes important role in the China-Central-Eastern-European Countries 17+1 cooperation, and also Hungary was the first European Union Member State join the “One Belt, One Road” initiative. There are several Chinese researches on the bilateral cooperation between the two countries what introduce the trade and investment under the 16+1 cooperation or the “One Belt, One Road” initiative, such us the “How Hungary Perceives the Belt and Road Initiative and China-CEEC Cooperation”, “How the CEE Citizens View China’s Development” and “Hungary and RMB Internationalisation” books edited by Chen Xin, published by the Chinese Academy of Social Science, and “The Belt and Road Initiative an Europe” by Huang Pin, “One Belt, One Road” book edited by China Institutes of Contemporary International Relations, „Research on Trade and Investment relations of the 16 Central and Eastern European Countries on the Belt and Road Initiative” published by The Economic Daily Press and so on. Also, Hungarian researches were published about the relations of the two countries in the Financial and Economic Review by the Central Bank of Hungary, and in the Hungarian Geopolitics by the Pallas Athene Geopolitics Foundation etc.

As mentioned there are several researches about the trade, investment and financial cooperation, and also historical books about the Sino-Hungarians relations and the broader context (see Vásáry et al., 2013; Li – Zéman, 2016; Kusai, 2018; Moldicz, 2020), but they are not focusing on the Sino-Hungarian financial relations, so there is a huge gap in this field, however the financial relation was one of the strongest cooperation between the two countries from the beginning of the diplomatic relations establishment.
This paper is going through the Sino-Hungarian financial relations historically to give a comprehensive introduction about the cooperation during the 70 years, while there were so many changes in the countries’ financial systems. This study would like to fill this gap, and systematizing the past 70 years of the Sino-Hungarian financial relations.

2. Background

After Mao Zedong had proclaimed the establishment of the People’s Republic of China on the platform in the Forbidden City on 1st October 1949, the then pro-Soviet communist countries, the member states of the Warsaw Pact, were the first to recognise the new China in the next few days, right before establishing diplomatic relations (Table 1).

Even earlier there had been various, though lower-level relations between Hungary and China. Already in the 14th century there were Hungarians, who were confirmed to have travelled to China, e.g. Gregorius de Hungaria (1341-1346). Later, several missionaries (Matheus Escandel around 1399, János Gruber in the 1660s, Ignác Erdélyi 1861-1865) adventurers (András Jelky, Móric Benyovszky) and scientists (Sándor Kõrösi Csoma, Jenõ Cholnoky, Manó Andrássy, János Xántus, Béla Széchenyi, Lajos Lóczy, Jenõ Zichy) travelled to China until the beginning of the 20th century (Salát, 2009). There were other who pursued their activities as citizens of different countries in China: the famous Aurél Stein, as an English researcher or the somewhat lesser known Gyula Számwald, who – being an American citizen – was the Consul General of the United States of America in Shanghai between 1884 and 1885 under the name of Julius Stahel.

On interstate level, the Austro-Hungarian Monarchy pressured China to establish diplomatic relations in the 19th century and also gained concession territories in the town of Tianjin, situated 130 kilometres to the South of Beijing, which remained in the Monarchy’s possession until World War I, when China declared war on Germany and the Austro-Hungarian Monarchy. After WW I, diplomatic relations were cut between the two countries until 1949, though there had been several Hungarians, who played the role of a bridge between the two nations during this era e.g. the architect László Hudec , the businessman Pál Komor, and one additional architect Károly Gonda. The Hungarians living in China established the Hungarian Association (Magyar Egyesület) in Shanghai, which, occasionnaly also served as a Consulate General. Furthermore, Hungarian missionaries, Jesuits, the Sisters of Charity of St. Vincent de Paul in Szatmar, or the Fransiscan monks, also travelled to China. Under Bernát Károlyi’s supervision, the Mission of Paoking was founded in Shaoyang of Hunan province, but there were others in China who chose a different ‘path’ to prevail, e.g. Sztella Silman, who opened the ‘Hungaria Restaurant & Night Club’ in Shanghai.

Hungary re-established diplomatic relations with China only in 1949. In the next 70 years, the two countries had ongoing relations of political nature interrupted by short breaks.

However, China and Hungary had the diplomatic relation establishment in 1949, there were already several informal relations between the countries during the centuries. This cooperation also let Hungary and China understand one another what makes the countries to build up a good relation from 1949.

3. Hungarian-Chinese financial relations before 1949

In the 15th century, following the travels of Admiral Zheng He’s (1371-1433) to the West the emperor banned all future sailings and the empire had sought a policy of isolationism until the 19th century. China just closed down its gates when the European countries began their journeys of exploration and colonialization. As a result, no commercial relations could be established between China and the West. However, the Portuguese smuggled vast amounts of opium to China through Macao, where they set foot in 1557, and so did the British East India Company through India. This had fatal health and economic implications on the Chinese population; consequently, the Chinese emperor banned the consumption of opium in the country (Kissinger, 2017: 27-28.).

This served as an appropriate reason for England to start with the first Opium War against China (1839-1842). As a closure of the war, the unequal Treaty of Nanking was signed and five ports of China were forced to be opened to European merchants, China was also obliged to pay a compensation and the emperor had to approve of the transfer of sovereignty over Hong Kong to the British. 15 years later, as a consequence of an alleged incident, the British started another war against China, but this time allied with the French. China was defeated again in the Second Opium War (1856-1860). Subsequently, the Western countries pushed China into a semi-colonial state, several cities, amongst them Shanghai e.g., was divided into concession territories (Kissinger, 2017).

Although not in favour of colonialization, the Austro-Hungarian Monarchy did not wish to miss the trade opportunities with China, therefore, under an expedition to the Far-East, a group of 18 people, including five Hungarians, were sent to Siam, China and Japan aboard the ships Donau and Friedrich: Embassy Attaché Géza Bernáth, Consulate General Attaché László Hengelmüller, commercial reporters Mór Cserey, Ivor Kaas and ethnologist János Xantus. Trade and shipping agreements were signed with Siam on 17 May 1869, with China on 2 September 1869, and finally with Japan on 18 October 1869. Subsequently, the Austro-Hungarian Monarchy opened an embassy in Shanghai and later in Beijing. The Austro-Hungarian Monarchy’s army was one of eight countries to crush the Boxer Rebellion broke out in 1899. After the war the Monarchy gained a concession territory of about 108 hectars in Tianjin, where the appointed Consul General implemented the financial system of the Monarchy along the Danube. Furthermore, China was fined to pay war reparations of 450 million taels of fine silver. The Austro-Hungarian Monarchy was entitled to 4 million taels; however, this amount did not even cover the expenses of the Chinese expedition (Józsa 1966).

The trade cooperation with the Chinese did not live up to the expectations later either, the initiative to carry out colonialization in China only made a loss. The Austro-Hungarian Monarchy offered a loan of nearly GBP 6 million to the Chinese government in the 1910s (Table 2).

During the World War I, on 14 August 1917 China declared war on Germany and the Austro-Hungarian Monarchy. As a result, diplomatic relations were interrupted, and trade agreements were annulled automatically. After World War I, the Monarchy was dissolved and neither Austria nor Hungary attempted to establish diplomatic relations with China. Although the dictated Peace Treaty of Trianon cancelled China’s debt to Hungary, Austrian and Italian banks were able to collect their claims defined in the contracts, which were terminated as a result of the world war: they succeeded to collect all remaining debt between 1925 and 1933.

Between Hungary and China before the 1949’s diplomatic relation establishment there were several financial cooperation, however it was lead by Austria, and wasn’t a very friendly way for the cooperation, but via the Austo-Hungarian Monarchy and China financial relation the Hungarian Parliament Members were focusing on China and trying to understand the Chinese culture and history.

4. Hungarian-Chinese financial relations in the past 70 years

In 2019, we celebrated the 70th anniversary of the establishment of Hungarian-Chinese diplomatic relations as of 1 October 1949 Mao Zedong announced the establishment of the People’s Republic of China on, in the following days, the then ‘Soviet-friendly’ communist states and members of the Warsaw Pact recognised the new China and also established diplomatic relations towards it.
Hungarian-Chinese financial relations over the past 70 years can be divided into four periods (Table 3), which are detailed in the following subchapters. However, in order to understand the evolution of Hungarian-Chinese financial relations, it is also necessary to study the Hungarian and Chinese financial systems first.

Table 3– Hungarian-Chinese financial relations in the past 70 years
70 years of Hungarian-Chinese financial relations
1949-1990 Politically-driven financial relations
1990-2000 Years of changes in financial systems
2000-2010 Revival of financial relations
2010 Financial opening to the East

4.1. Our politically-driven financial relations between 1949-1990

The Hungarian People’s Republic and the People’s Republic of China were both formed in 1949 and belonged to the Soviet bloc. The same year in 1949, with the participation of Hungary, the Council of Mutual Economic Assistance (CMEA) was established, in which the People’s Republic of China had an observer status until 1962. The economic co-operation of the socialist states, especially the members of the CMEA, consisted of three spheres: the system of plan co-ordination, the system of foreign trade co-operation, the system of currency-financial co-operation (Magyar Nemzeti Bank 1977). The currency of cross-border clearing accounts was the Soviet ruble.

By 1955, Hungary was in a difficult financial situation. To handle this situation the Chinese central bank provided a loan of GBP 2 million, in addition to financial assistance received from the central banks of the Soviet Union, Poland, Romania and Czechoslovakia.
Between the end of 1956 and the beginning of 1957, the socialist countries provided huge loans to help eradicate the economic consequences of the 1956 Hungarian revolution and war of independence, to start production and to secure supplies. In his letter to Kádár, dated 6 November 1956, President Zhou Enlai welcomed the formation of the new government and provided the Hungarian government with a financial assistance in the worth of 30 million rubles. The assistance was communicated to the Chinese people on the front page of the Chinese party’s mouthpiece, Renmin Ribao on 8 November 1956.

The People’s Republic of China provided a convertible currency loan of 100,000,000 rubles, the second largest loan among the communist countries after the Soviet Union (MNB 2006: 251, Kiss 1961: 294), announced by Prime Minister Zhou Enlai during his visit to Hungary on 5 January 1957.

From 1956 onwards, the central bank staffs of the communist states visited each other several times in form of study visits during which they exchanged information on their operation and structure of their own central banks.

Due to the conflict between the Soviet and Chinese communist parties in the early 1960s, delegates of the Magyar Nemzeti Bank were not allowed to visit to China, and any form of contacts between the two central banks there were frozen (MNB 2013: 304).
Relations between the two countries deteriorated during the Chinese cultural revolution (1966-1976), and China did not appoint ambassador to Budapest for three years between 1966 and 1969. Relations between the two countries recovered in 1970, but inter-party relations broke down, and from 1980, thanks to the efforts of the leaders of the two countries, inter-state and inter-party relations were revived, and areas of cooperation have once again expanded on a political basis.

Following China’s “Reform and Opening” policy of 1978, Chinese reform politicians, including Teng Xiaoping, paid close attention to the experience of the new economic mechanism in Hungary. A number of Chinese high-ranking government officials, economists and experts travelled to Hungary, thus in October 1983 the Chinese Deputy Minister of Finance and his delegation participated in a two-week study tour in Hungary.

In 1981, Hungary encountered liquidity problems while joining the International Monetary Fund as a result of the second oil price explosion in 1979, the world economic crisis and other global political turns (Soviet military intervention in Afghanistan, the Iraq-Iran war, the Polish state of emergency situation, etc.). Thanks to the intervention of János Kádár and János Fekete, the former central bank Deputy Governor, who also had good relations with the Chinese leadership, in August 1982 the People’s Republic of China granted a loan of USD 100,000,000 to Hungary to pay its quota to the International Monetary Fund (MNB 2006: 485).

In November 1983, an MNB delegation headed by central bank Governor Mátyás Tímár (1975-1988) visited China, where it was also received by Deputy Prime Minister Tian Jiyun (1983-1993). One year later, Lv Peijian, the Governor of the Chinese central bank (1982-1985) and his delegation travelled to Europe to pay a visit to several banks as the Magyar Nemzeti Bank and in addition the Italian, Yugoslav and Romanian central banks.

In June 1985, at the invitation of the Agricultural Bank of China, János Fekete, Deputy Governor of the Hungarian central bank and his delegation visited China. Deputy Prime Minister Li Peng (1983-1987); Deputy Prime Minister Yao Yilin (1979-1993) and Ms. Chen Muhua, Governor or the central bank (1985-1988), received the central bank executives separately.

In 1986 and 1987, the daily newspaper Renmin Ribao reported on the visit of the delegation of the National Bank of Hungary to China and the high-level reception by the People’s Republic of China.

On 4-21 June 1987, Chinese Prime Minister Zhao Ziyang (1980-1987) visited Hungary, besides Poland, the GDR, Czechoslovakia and Bulgaria. During the Chinese Prime Minister’s visit to Hungary, Renmin Ribao newspaper published reports on the reform of the Hungarian banking system, transforming the one-tier banking system into a two-tier banking system with the establishment of five commercial banks. In October 1987, János Kádár visited China again after 30 years, where Teng Xiaoping, Prime Minister Zhao Ziyang and other national leaders received the Hungarian delegation, which also included Péter Medgyessy, then Minister of Finance and later Prime Minister. On 27 October 1987, central bank Governor Ms. Che Muhua received Sándor Demcsák, President of the Hungarian Foreign Trade Bank, in Beijing. In May 1989, central bank Governor Li Guixian and his financial delegation, visited Hungary, Romania and Czechoslovakia. On 1 November 1990, Jiang Zemin and central bank Governor Li Guixian received Péter Medgyessy, Deputy Prime Minister for Economic Affairs of the Miklós Németh’s government (1980-1990) in Beijing, despite the formation of the regime-changing József Antall’s government on 23 May 1990.

The first phase of Sino-Hungarian financial relations developed mainly along political relations. Both countries were governed by a Communist Party and had the similar political idea what makes the two countries strengthen their relations. Because of the countries from 1949 mostly were managing planned economy, so they didn’t have several financial cooperation, mostly it was leaded politically to help each other. After the two countries economic system changed, the first phase of Sino-Hungarian financial relations ended in 1990. Relationships established in the 1990s were a significant contribution to revitalising Hungarian-Chinese financial cooperation.

4.2. Years of changes in financial systems, 1990-2000

After the cold war and the fall of the Soviet Union, Hungary and China both underwent major changes.

The Tiananmen Square movements (1989) and the resulting spread of the ‘yellow peril’ cast a bad light on China in the international arena; therefore, it took an active role in international organisations and supported multilateral relations to convert the enemy image in field of diplomacy. During the 1990s, the China-APEC co-operation, the China-ASEAN dialogue, the Shanghai Co-operation, the China-Africa Forum, etc. were established.

In Hungary, the political transition began in 1990, the Warsaw Pact and the CMEA disintegrated in 1991, and the Hungarian banking system was also undergoing a transformation. Hungary turned to the West, joining the Council of Europe in 1990, the WTO in 1995, the OECD in 1996 and NATO in 1999, along which the Euro-Atlantic integration became a top priority for the country. Furthermore, after breaking relations with the Soviet Union and the dissolution of the communist system, it would have been politically difficult to establish close relations with China, thus Hungarian-Chinese relations loosened for a short period of time. Although high-level reciprocal visits remained at high political levels, this was insignificant compared to recent close relations.

In the period between 1950 and 1990, trade between the two countries was accounted for on a compensation basis under intergovernmental agreements, but in 1991 the two countries switched to cash settlement, after which, bilateral trade declined significantly for a while, but soon followed an upward trend year by year.

During the 1990’s Hungary went through in a big political changes than turn to the West, also China had her own changes, so the Sino-Hungarian financial relations were less in focus, both countries were working hard for their new statuses in the new world after the Cold War.

4.3. Revival of financial relations, 2000-2010

Prime Minister Péter Medgyessy paid official visit to China in August 2003 (following his earlier visits as Minister of Finance with Kádár in 1987 and then as Deputy Prime Minister in 1990), where he was received at the highest level. In 2003, Hungary received the Approved Destination Status (ADS) status in China, which allowed Chinese tourists to go to Hungary. One year later, a direct flight was launched between Budapest and Beijing. In 2004, Chinese President Hu Jintao visited Hungary. In May 2005, Péter Medgyessy visited China already as a former prime minister. In September 2005 Prime Minister Ferenc Gyurcsány paid a visit, followed by another trip in 2007. In addition to the prime ministerial visits, an increasing number of ministerial and professional negotiations between the two countries took place.

The Bank of China’s office in Budapest, opened in October 1997, was officially upgraded to a Hungarian branch during a visit by Bank of China President Liu Mingkang in February 2003. In 2004, ZTE, and then in 2005, Huawei IT companies invested in Hungary and started to build their East Central European headquarters.

Hungary and China are stabilized their status in the new World order, they started to rebuild their financial relations. However, Hungary went through a political system changing, a lot of politician still stayed in the Parliament who were participating the Communist Party before the 1990’s too. They had good personal relations with the leaders of China as has mentioned above. The Prime Minister, Péter Medgyessy as the minister of finance in the Kadar era had visited China and built up good network in the Chinese financial sector. Later, when he became the Prime Minister of Hungary, he could easily rebuild the Sino-Hungarian financial relations. Also it was a big help for the next decades, to speed up the developing of the Sino-Hungarian financial relations.

The relations between the two countries were reinvigorated, and China began to notice the region and Hungary.

4.4. Financial opening to the East, or the role of the National Bank of Hungary in the opening to the East

Viktor Orbán, Prime Minister of Hungary, announced in 2010 the policy of “Opening to the East”, in the framework of which the Hungarian government intends to establish closer relations also with China, among others, in all areas.
The development of Hungarian-Chinese financial relations started in 2010, e.g., within the co-operation of OTP Bank and China Union Pay’s credit card company of the People’s Republic of China, from October 2011 cards issued by the Chinese card company are accepted through OTP Bank’s ATM and POS networks.

However, the real opening of financial relations between Hungary and China has started in 2013, after the appointment of György Matolcsy, former Minister of National Economy as Governor the Magyar Nemzeti Bank. With the change of management, ‘not only monetary and other policy frameworks have changed significantly, but the international activities of the MNB have also expanded’. Already as minister, central bank Governor Matolcsy was very much in support of the opening to the East, and from 2013 onwards he has begun with the opening of financial relations to the East in the context of Hungary’s economic recovery, increasing its competitiveness and maintaining the financial stability. Prime Minister Viktor Orbán described central bank Governor György Matolcsy in his opening speech of the ‘Tourism Summit’ in 2019 as ‘father and master’ of the policy of opening to the East, along with Péter Szijjártó, Minister of Foreign Trade and Foreign Affairs.

Since 2013, more and more cooperation projects have been established between the Magyar Nemzeti Bank and the People’s Bank of China (PBoC), China’s central bank, the Chinese supervisory authorities (China Banking and Insurance Regulatory Commission, CBIRC, Chinese Securities Regulatory Commission, CSRC), and Chinese commercial banks.

Thanks to the policy of opening to the East of the Magyar Nemzeti Bank, existing relations with China have deepened in the field of financial relations and many new contacts and opportunities have been opened up. Established in 2003, the Bank of China branch office now operates in Budapest as a Central and Eastern European centre, and the Bank of China branches in the surrounding countries are subsidiaries of the bank located in Hungary: In 2015, additional branches were opened in Vienna and Prague, and in 2016 even a subsidiary was established in Belgrade. The Bank continued its expansion in the region and opened a branch in 2019 in Romania. In addition, other major Chinese commercial banks, such as the Industrial and Commercial Bank of China, China Construction Bank and China Development Bank are also working on establishing branches in Hungary.

The Magyar Nemzeti Bank has established close relations with the Chinese Academy of Social Sciences (CASS) and other research centres, as well as with China’s elite higher education institutions such as Tsinghua University in Beijing and Fudan University in Shanghai.

In addition, the Budapest Stock Exchange, a subsidiary of the Magyar Nemzeti Bank, has close Chinese relationships: At the beginning of 2017, the Budapest Stock Exchange commenced capital market co-operation with China by signing a co-operation agreement with the Bank of China. Already in May of the very same year, an agreement was signed with the Shanghai Gold Exchange, one of the most important platforms for global gold trading, and in 2018 a strategic agreement was signed with the Shanghai Stock Exchange. The main purpose of the co-operation agreements is to commonly develop new products for trade at the stock exchange for Hungarian and Chinese investors, which , on the one hand, might help the BSE in broadening its palette with products related to the Chinese capital market and provide assistance to Chinese investors to familiarise themselves with Hungarian companies and invest in the Hungarian market on the other.

The co-operation between the BSE and the Bank of China is also aiming at ensuring that Chinese companies that are active in Hungary and the Central and Eastern European region will choose the Hungarian capital market for fund-raising also in the future. The Bank of China Ltd. issued USD 2 billion in securities through its Hong Kong branch office, of which bonds with a total nominal value of EUR 8.5 million and USD 15 million were listed on the Budapest Stock Exchange in December 2018. For Central and Eastern Europe, this is the first admission to stock exchange listing by a Chinese bank.

The People’s Bank of China and the Chinese Government respect the policy of opening to the East of the Hungarian Government and the Magyar Nemzeti Bank; therefore, Governor György Matolcsy is regularly invited to China’s top international conferences to hold presentations about Hungarian economic reforms, Hungarian-Chinese financial relations, the Eurasian era and the future of money. In 2017, György Matolcsy made a presentation at the Shanghai Forum with former Turkish Prime Minister Abdullah Gül, Nobel Prize-winning economist Christopher Pissarides, and former Prime Minister of Tajikistan Temir Sariev, and in 2018 he was invited to the ‘China Financial Summit 2018’ and the Finance Conference of Tsinghua University in Beijing, where he gave keynote speeches. In 2019, central bank Governor György Matolcsy delivered a speech at the ‘II. One Belt, One Road’ forum launched by Chinese President Xi Jinping, and was invited by the Lujiazui Financial Forum to deliver a presentation, where Deputy Prime Minister Liu He received the Governor of the central bank of Hungary.

Viktor Orbán, the new Prime Minister of Hungary bravely stand for China, and started a very strong cooperation with China. Also, the members of the Orbán government were opened to cooperate with China, so György Matolcsy, as minister and later the governor of the Central Bank of Hungary had long-term vision about the globalisation and world economic developing, where Hungary is counting on China. After 2010, beginning with the “Open to the East” policy, the Sino-Hungarian financial relations turned on a high-speed cooperation, between the two countries financial sectors had huge numbers of cooperation what were affected not only the financial relations but also helped to develop the trade, investment, tourism, cultural, educational etc. relations.

5. Summary

The relationship between Hungary and China has long existed in history. Many researchers, scholars and explorers travelled through China. Hungary was always looked at China as the home of their ancestors, the Huns, so the Hungarian explorers were travelling to China to research on the relations between the two nations. During this the Empire also acquired its own ‘colony’ within the Austro-Hungarian Empire, which was more Austrian-owned. As a result, it was Austria that profited from the financial relations of the time, but it gave big opportunity for the Hungarian politicians to understand more about China.

Later on, Hungary and China formally entered into diplomatic relations in 1949, and over the last 70 years, the two countries have enjoyed continuous relations in all areas, including finance.

Initially, financial and central bank relations between the two countries were politically controlled. As a result, the Chinese central bank repeatedly supported Hungary’s financial system, including during the 1956 revolution, and then at the time of Hungary’s joining the WTO.

Following the political transition, Hungary was busy with Western integration and China focused on converting the ‘enemy image’ widespread in the world, thus relations loosened, but they were revived at the beginning of the 2000s. And, from 2010 onwards, co-operation in all areas, intensified, especially in the financial sector.

It is clear from the above that with the support and assistance of the Magyar Nemzeti Bank, financial co-operation under the Hungarian Government’s ‘Opening to the East’ policy has become very intensive, in which the role played by the Governor of the Hungarian central bank is highly appreciated both politically and professionally. Nevertheless, all the initiatives of financial, academic and cultural co-operations of the MNB greatly facilitates to the further developments of Hungarian-Chinese relations.

Through its cooperation, the Magyar Nemzeti Bank has established a very strong relationship with China’s two main cities, namely, the capital Beijing, the political centre, and Shanghai, the financial centre. Thus, in contrast to those established in other fields, Hungarian-Chinese financial relations are not only of political nature but also address market participants, thereby deepening the relationship between the two countries and allowing the Hungarian-Chinese financial co-operation to be filled with concrete content.
Financial relations between the two countries stand out not only from the other areas of co-operation through their achievements, performance and several professional contents accomplished so far, but it also can be considered as very successful in comparison with other countries of the Central and Eastern European region.

The paper tried to use the Hungarian and Chinese central banks’ and financial sector’s archives to give a comprehended historical introduction about the Sino-Hungarian financial relations from the beginning to understand the developing of the financial cooperation between the two countries. Also, with the paper would like to fill in this historical gap of the Sino-Hungarian financial relations.

During the development of the 70 years of the financial relation, we can recognize that now the Sino-Hungarian financial relations in the highest level of its history. And also, we can see that they had built up not only a very fruitful government cooperation but they have a strong friendship too: as the COVID-19 appeared in the World, and China had numbers of cases, the Central Bank of Hungary were one of the first institution to discuss with the Hungarian Government about how to help China. Also when the number of the COVID-19 cases increased in Hungary, the Chinese financial sector who are the partners of the Hungarian Government and the Central Bank of Hungary were the first institutions to dominate medical supplies, such as the Construction Bank of China, Bank of China, and also other partner of the Central Bank of Hungary, Fudan University.


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Levente Horváth
Chief Advisor tot he Governor of Central Bank of Hungary, former Consul General of Hungary in Shanghai