Hungary was the top European destination for Chinese foreign direct investment (FDI) for the second consecutive year in 2024, according to a report by the Hungarian Investment Promotion Agency (HIPA), citing a report by the Mercator Institute for China Studies (MERICS) and Rhodium Group.

Hungary received 31% of all Chinese FDI targeting the EU and the UK in 2024, higher than any other country. Germany, France and the UK together accounted for just 20%. Total Chinese FDI in the EU and the UK reached €10bn in 2024, climbing 47% from 2023.

Greenfield investment also increased for the third consecutive year, up 21% to €5.9bn, dominated by EV-related projects, which reached €4.9bn. Hungary received 62% of all Chinese EV-related FDI during the year.

The renewed Chinese push into Europe comes amid a complex mix of domestic and global pressures. Slowing growth and excess capacity in China have driven companies to seek new markets abroad, while escalating geopolitical tensions and Western trade barriers have made localising production in Europe more attractive, according to the report.

The rebound was fuelled by a modest revival in mergers and acquisitions and a continued surge in greenfield investments. M&A activity doubled from 2023’s historic low to €4.1bn, led by a handful of large deals, including Tencent’s €1.5bn acquisition of Poland’s Techland and Haier’s €716mn buyout of Carrier’s Dutch refrigeration business. Nonetheless, overall M&A volumes remained weak by historical standards.

Four of the ten largest Chinese investments in the EU and UK last year were located in Hungary, including BYD’s car plant in Szeged and CATL’s battery factory in Debrecen. The combined value of the investments is around €9bn, according to the report.

BYD has picked Budapest as its European business and R&D hub, signalling a shift toward higher-value-added activities, noted HIPA CEO and government commissioner Istvan Joo. The company will relocate its European headquarters from the Netherlands to Hungary as part of a newly signed strategic cooperation agreement with the government.

HIPA, operating under the Ministry of Foreign Affairs and Trade, has supported 2,200 investment projects worth €59.2bn since 2014, helping to create nearly 170,000 jobs across the country.