Welcome to the 65th issue of the CEEasia Briefing.
In this issue, we dissect the following topics:
- The EU limits Chinese firms in its tenders
- Hungary-China relations
- EU talks FTA with Malaysia
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1. The EU limits participation of Chinese medical device firms in public tenders
What’s going on? After more than a year of deliberations, the EU decided in early June to restrict China’s medical device makers from participating in public tenders. This is the first such action under the 2022 International Procurement Instrument aimed at promoting market access reciprocity for public procurements.
Going deeper… The move blocks access for Chinese firms to tenders worth more than €5 million for duration of five years. It follows findings by European Commission in January that stated that China has been ‘limiting access by EU medical device producers to its government contracts in an unfair and discriminatory way’. This includes by implementing both direct and indirect restrictions on imports. The China Chamber of Commerce to the EU expressed ‘profound disappointment’ over the decision, stating it sends ‘a troubling signal’ and adds ‘new complexity’ to China-EU relations.
What now? The move is likely to further add to already volatile relationship between China and the EU. Beijing has over the past few months went on a charm offensive against Europe, trying to improve relationship with the bloc amid ongoing trade war with the US. However, the response from the EU has so far been cautious and balancing to say the least. Indeed Chinese Commerce Minister will meet with EU trade officials early in June in Paris amid grievances by the bloc. These include not only unfair access to the procurement market but also concerns about redirection of exports from the US to European markets. Another thorny issue is China’s continuous support for Russia; in late May Ukraine confirmed Beijing has supplied Moscow with ‘tooling machines, special chemical products, gunpowder, and components specifically to defence manufacturing industries’.
To conclude… Although European officials remain seemingly open to potential hedging of its relations with China, there will probably be strong limits to the degree of strenghtening of relations . This is particularly evident when looking at the recent probes into Chinese EVs as well as statements by the Czech Ministry last month accusing China of being behind cyber-attack targeting email and other unclassified documents of the Ministry of Foreign Affairs.
2. Viktor Orbán meets Chairman of the Bank of China
What’s going on? Hungarian Prime Minister Viktor Orbán met with Bank of China chairman Ge Haijiao in Budapest on May 12. The meeting most likely centered around further financial cooperation amid Hungary’s worsening fiscal situation and deepening economic cooperation with China.
Going deeper… While the official statement claims that “the parties focused on the development of the bank’s business opportunities in Hungary,’’ the broader context suggests a more urgent motive: Hungary’s fiscal situation and using China to fill the gap after the frozen EU’s funding. This meeting takes place in the context of Hungary’s increasing economic challenges. Public debt has reached €140 billion, representing 73.5% of GDP, while the budget deficit stands at 6.7%. GDP grows slowly, and although inflation has declined, it still exceeds the target set by the Hungarian National Bank.
Meanwhile… The EU cohesion and recovery funds remain frozen due to rule-of-law disputes, leaving Hungary to try to secure alternative funding. The meeting comes just a year after Budapest quietly borrowed €1 billion from a consortium of Chinese banks that represents the highest stock in the state debt. The second largest debt is a €877 million loan from China Eximbank for the non-transparent and controversial Budapest-Belgrade railway project. This fiscal burden is leading Orbán’s government to deepen economic ties with Beijing, while China is trying to fill the financial vacuum left by the suspension of EU funds.
Keep in mind… The growing reliance on Chinese capital is not just financial but also strategic. Investments from Chinese companies, such as the electric car maker BYD or the technology giant Huawei, and Hungary’s National Battery Industry Strategy for 2030 highlight a clear intention: to position Hungary as a regional hub in the European battery and electric vehicle (EV) value chain, to be achieved chiefly by cooperating with Chinese (and also South Korean) companies.
Indeed… A recent CEIAS study on East Asian investment in V4 electric vehicle and battery sectors shows that Orbán’s proactive policy has positioned Hungary as the V4 leader in attracting Chinese EV investments, including BYD’s €5 billion project, ahead of Volvo/Geely’s €1.2 billion investment in Slovakia. The automotive industry contributes 5-6% to Hungary’s GDP (and up to 9% when including suppliers).
Moreover… Despite Prime Minister Viktor Orbán’s “Eastern Opening” policy toward Beijing, Moscow, and other non-like-minded partners, public opinion in Hungary remains largely unconvinced. CEIAS public opinion survey indicates that Hungarians, like much of the CEE public, remain skeptical of China. Even in countries like Slovakia and Hungary, where governments prioritize close ties with Beijing, China continues to be viewed unfavorably by the broader public. This growing disconnect between political elites and society, along with Orbán’s increasing estrangement from the EU (reflected in economic performance) could become politically sensitive as the country approaches the 2026 national elections. This could help explain why, unlike Slovak PM Fico, Orbán has refrained from visiting Russia this month.
3. FTA talks between the EU and Malaysia
What’s going on? Following the official relaunch of EU-Malaysia Free Trade Agreement (FTA) negotiations in January 2025, EU Ambassador to Malaysia Rafael Daerr in early May further reaffirmed the EU’s strong commitment to finalizing the deal. The EU sees this as a strategic tool to deepen economic integration in Southeast Asia amid growing geopolitical and supply chain uncertainties.
Going deeper… Initially launched in 2010 and suspended in 2015, the EU–Malaysia FTA talks were revived in mid-January 2025, following a joint statement by European Commission President Ursula von der Leyen and Malaysian Prime Minister Anwar Ibrahim. This move reflects the EU’s broader shift towards diversifying partnerships in Asia, especially in the context of ongoing change to global trade patterns amid the resurgence of US tariffs under the new Trump administration. It also follows a recent fast-tracking of the EU-India FTA negotiations after von der Leyen’s visit there earlier this year.
Regarding the EU-Malaysia FTA, the EU hopes to mirror the success of the EU–Vietnam FTA, which has significantly boosted trade since its entry into force in 2020. Malaysia is already the EU’s third largest trading partner in ASEAN and second-largest investment destination, with particular importance in semiconductors, green tech, and high-value manufacturing—areas of critical interest to the EU. Additionally, the EU aims to strengthen cooperation with Malaysia in areas beyond trade, such as education, maritime security, and environmental technologies, especially as Malaysia chairs ASEAN in 2025.
This means… The revived EU-Malaysia FTA negotiations signal a renewed push by Brussels to strengthen economic partnerships in Asia, while reducing exposure to protectionist policies and geopolitical risks elsewhere. If successful, the agreement could enhance the EU’s influence in the Indo-Pacific, set a new benchmark for digital and green trade standards in ASEAN, and consolidate Malaysia’s role as a regional manufacturing and innovation hub. Moreover, it would add momentum to the EU’s strategic engagement with ASEAN as a bloc, while reinforcing the EU’s broader Indo-Pacific strategy amid intensifying global competition.
Quick takes on CEEasia developments
CHINA | The Czech Republic accused China of being responsible for a cyber-attack targeting email and other unclassified documents of the Ministry of Foreign Affairs. The attack, which began in 2022, is believed to have been perpetrated by the group APT31, linked to China’s Ministry of State Security. China has denied the allegations.
CHINA | The Hungary’s Defence Procurement Agency awarded a €4 million military rail transport contract, running from 2025 until 2028, to GHIBLI Transport Ltd., a firm whose majority is owned by Chinese stakeholders. This is to move international military cargo across Hungary and European countries. The winning firm will carry out the transport of military cargo, whose contents is however not clearly disclosed, with help of a subcontracting company CER Hungary owned by the consul of the Kazakh consulate in Karcag László Horváth.
CHINA | Zhao Leji, head of the National People’s Congress, and Richard Raši, speaker of the Slovak National Council, met in Beijing, where they reaffirmed their commitment to strengthen strategic relations between China and Slovakia, and emphasized the importance of enhanced interparliamentary cooperation.
VIETNAM | Slovakia considers Vietnam a key partner in Asia, the Slovak Foreign Minister told the Vietnamese Ambassador during their meeting in May. He expressed interest in upgrading bilateral ties and visa exemptions for Slovaks while proposing to resume meetings of the intergovernmental committee.
MYANMAR | The Czech Ministry of Foreign Affairs has released CZK4 million (approx. €160,000) for humanitarian aid to Myanmar. The funds will support two projects by local NGOs, aimed at providing food, healthcare, and financial assistance to more than 10,000 internally displaced people in Chin and Kachin States in Myanmar.
SINGAPORE | The EU and Singapore have signed a digital trade agreement promoting online trade. It removes unnecessary barriers to digital trade and respects EU rules on privacy and data protection. The agreement is now awaiting ratification by EU institutions, including the European Parliament.
