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Xi Jinping on his first European tour in five years

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Xi in Hungary after visiting France and Serbia

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China and Hungary expected to sign 16 to 18 cooperation

deals

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Hungary a big supporter of China's Belt and Road

infrastructure

project

By Anita Komuves

BUDAPEST, May 9 (Reuters) -

Hungarian soldiers on horseback joined President Tamas

Sulyok to give Chinese President Xi Jinping a warm welcome in

the grounds of Budapest's spectacular Buda Castle on Thursday on

the third and final stop on Xi's first European tour in five

years.

Hungary under right-leaning Prime Minister Viktor Orban

has become an important trade and investment partner for China,

in contrast with some other EU nations that are considering

becoming less dependent on the world's second-largest economy.

Xi arrived in Budapest late on Wednesday after visiting

France and Serbia. In Paris, President Emmanuel Macron and EU

Commission chief Ursula von der Leyen pressed him to ensure more

balanced trade with Europe and use his influence on Russia to

end the war in Ukraine.

Xi has "developed deep friendships" with Hungarian

politicians and Hungary was "the number one target in the

central eastern European region for Chinese investment", Xi

wrote in pro-government daily Magyar Nemzet on Wednesday.

Xi is scheduled to meet Orban later in the day, with the war

in Ukraine and infrastructure projects high on the agenda. A

press statement is expected at 1530 GMT.

Hungary and China, which mark their 75th year of diplomatic

relations, are also expected to sign 16 to 18 new cooperation

agreements, one of which could be a large-scale infrastructure

project within China's huge Belt and Road project, Foreign

Minister Peter Szijjarto said this week.

Media outlets reported that Xi and Orban might travel to the

southern town of Pecs to announce that China's Great Wall Motor

is going to build a plant and produce electric

vehicles there.

Szijjarto denied that the two leaders would travel to

Pecs in a statement on Monday, but said that "there were ongoing

negotiations with large Chinese companies about further

investments". The government did not respond to a request for

comment on the media reports.

Orban started bringing his country closer to Beijing after

he came to power in 2010. Warm political relations turned into

investments about a decade later when battery and electric

vehicle makers started to bring production to Hungary.

One of the biggest investors, CATL, is building a 7.3

billion euro ($7.86 billion) battery plant in Debrecen while

Chinese EV maker BYD announced late last year that it was

building its first European plant in southern Szeged.

China brought battery production into Europe first to save

on shipping costs, as they were so heavy that it made sense to

move production next to car factories of companies such as

Daimler and BMW, Tamas Matura, assistant professor at Corvinus

University, said.

The next step is producing Chinese electric vehicles in

Hungary as the EU's protectionist plans are threatening their

expansion, he added.

"These could affect them much less if they are already

established and produce inside the EU," he said.