Buy Chinese and forget the crisis!

A left wing pundit suggests that Hungary should follow the example of the United States and borrow from China to alleviate her financial difficulties.

In his regular Népszabadság column, veteran foreign affairs analyst Endre Aczél contends that Prime Minister Viktor Orbán’s ideas of establishing new ties with Asia are “by no means evil,’  and do not threaten Hungary’s place in the Western World”.

Mr Orbán has been suspected by left wing commentators of seeking an ‘Asian option,’  especially when he spoke about the “decline of the West“ earlier this summer. But Aczél believes there is no such danger, “no matter what certain daydreaming politicians and economists find fashionable nowadays.”

What is really at stake is whether Hungary can find financial and industrial investors in Asia, which remains one of the few areas in the world where surplus capital can still be found. When Prime Minister Wen Jiabao visited Hungary early this summer, a one billion dollar credit line was opened and a promise was made to purchase Hungarian bonds. That seems fairly modest to Endre Aczél, who believes that if Hungary wants to attract Chinese money, it has to buy Chinese first. In that case, the Chinese will want their Hungarian counterparts to be in a position to pay for those Chinese goods. Hungary simply has to follow the example of the United States, where the Chinese trade surplus is largely  used to finance the federal deficit.

Aczél also thinks such a strategy would attract direct Chinese investment to Hungary, since   Chinese strategy is to reinvest a part of its profits in the countries where the profit originates.

Tags: China, debt, foreign affairs