Part I — Situation overview

On 3 and 4 June 2026 two mutually reinforcing news items converged. According to 444.hu’s report, the European Union’s position on the question of Chinese overproduction and dumping became unified: according to the European Commission the current form of trade with China is unsustainable, and the development of response instruments has begun — against the backdrop of the EU–China trade deficit at its 2025 level of some EUR 360 billion. At the same time Portfolio, citing the OECD’s fresh industrial-subsidy data, wrote that between 2005 and 2024 Chinese industrial companies received, relative to revenue, on average eight times more state support than their OECD competitors — precisely in the green-energy, chip and electric-car sectors where Europe too would build. The distortion directly puts the Chinese giga-investments in Hungary ‘in the crosshairs’, which the Commission may examine under the EU regulation in force since 2023 (the Foreign Subsidies Regulation). Meanwhile, according to another 444.hu article, the domestic battery plants closed a difficult 2025: amid demand falling due to the slowing electric-car transition and Donald Trump’s tariff war, they laid off some 1,500 workers in total, and there was a plant that closed with a loss of over one hundred billion forints.

The topic stands out because it touches one of the pillars of the Hungarian growth model: the Chinese (battery- and automotive-industry) capital inflow of recent years. If the EU acts with anti-dumping tariffs, while the Chinese manufacturers — circumventing the tariffs — increasingly produce already from European plants (including Hungarian ones), all the while the domestic battery plants are loss-making, then the model comes under economic, employment, foreign-policy and environmental-policy pressure at once. According to the new VOSZ president quoted by Portfolio, ’the Hungarian growth model has run out of steam, a productivity turn is needed’ — this gives the broader diagnosis of the topic.

In MIAK’s reading the question is not an ideological China debate. The investments should be judged not by a worldview but by a data-based yardstick: how large is the actual return, the net employment effect, the technological and supplier integration, and compliance with EU rules. The character of the problem is structural: a one-legged, FDI-driven model is vulnerable to the global subsidy race and to tariff shocks — the way out is diversification and raising productivity.

Part II — Literature foundation

Before turning to MIAK’s proposals, it is worth fixing the economic frame. Ha-Joon Chang, a Cambridge-based economist of South Korean origin, in his work 23 Things They Don’t Tell You About Capitalism reminds us that practically every rich country today applied protectionism, subsidies and the restriction of foreign direct investment (FDI) to protect its nascent industries during its rise — that is, the question is not the existence of intervention but its conditionality and its tying to performance. The International Monetary Fund’s (IMF) 2025 World Economic Outlook report complements this with fresh data: it indicates that the large-scale subsidies given to Chinese manufacturing have reached their limit and lead to a significant misallocation of resources — the contrast is sharp between the strong productivity growth of some sectors (electric cars, solar panels) and the stagnation of aggregate productivity. From these two sources comes MIAK’s frame: state industrial policy is a legitimate instrument, but it only brings lasting advantage if it is data-driven, conditional, time-limited and publicly audited — otherwise it makes the host country an exposed station of a global subsidy race. The detailed literature treatment can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures that turn the exposed FDI model into a conditional, diversified strategy.

3.1 Conditional, performance-tied and publicly audited investment incentives

Following the G9 strategic industrial-policy programme point, MIAK proposes that state investment incentives should not be an automatic concession but support tied to pre-fixed, measurable commitments (local supplier ratio, R&D content, export integration, net employment), time-limited, with a public, annual review that reduces or withdraws the concession if the commitments are not met. In the Chang frame (see 6.4.1) this is the decisive difference: the question is not the existence of protection or incentive, but whether there is an exit condition and a performance yardstick. The responsible parties are the government responsible for economic policy and the bodies awarding the support.

3.2 Diversification: growth should not rest on a single industry and a single capital source

The loss of the Hungarian battery plants showed the risk of the one-legged model. Following the G5 competition-policy and the G9 strategic industrial-policy programme points, MIAK proposes that the identification of target sectors rest on comparative-advantage and export-complexity indicators, and that the economy be deliberately diversified — across more sectors, more capital sources. Thus a global demand or tariff shock does not shake the entire model. This is not the ideological rejection of Chinese investments but the data-based moderation of exposure: the aim is a more resilient economic structure standing on several legs.

3.3 Managing the tariff shock on the labour market and the productivity turn

To handle the layoffs, MIAK proposes — following the FO13 labour-market programme for trade realignment — targeted retraining and regional mobility support for workers in the affected sectors (battery industry, automotive industry), based on an annual, public ’trade-realignment impact report’ that forecasts which regions the shock will hit. The long-term answer is the FO9 productivity movement: the productivity turn also urged by the VOSZ president — innovation incentives, the involvement of small and medium-sized enterprises. An important delimitation: the programme must not turn into protectionist industrial policy; data-driven targeting is the key.

The common principle of the three proposals is that it moves the model from exposure towards resilience: it ties support to conditions, diversifies the structure, and prepares the workforce for raising productivity. This is what links the proposals to the literature frame of Part II — industrial policy is useful when it is data-driven and conditional, not when it blindly follows the global subsidy race.

Part IV — Expected impacts and risks

Dimension Expected impact Risk
Economy Conditional, audited incentives improve the actual return of investments Too strict conditions may deter capital; a temporary fall in investment
Employment Targeted retraining and mobility soften the effect of the layoffs If the shock is faster than retraining, lasting regional unemployment
Foreign policy Diversification reduces exposure to EU–China tension An open EU–China tariff war may temporarily raise prices and weaken exports

The main consideration is the balance of openness and exposure. The proposal works if conditionality does not deter capital but makes investments higher-quality; it tips to the risk side if the system of conditions becomes unpredictable or protectionist. Diversification may in the short term slow the spectacular capacity expansion, but in the long term it builds a more resilient economy — the question is always the actual return and the net employment effect, not the mere size of the investment.

Part V — Measurability and summary

5.1 What is worth tracking? (suggested KPIs)

MIAK considers the following suggested performance indicators (KPIs) worth tracking:

  • Quality of investments: the local supplier ratio, R&D content and net (not gross) employment effect of the subsidised giga-investments — the aim is actual integration, not mere assembly.
  • Economic concentration: how much manufacturing output and exports depend on a single sector (the battery industry) and a single capital source — the aim is gradual diversification.
  • Productivity: the trend of total factor productivity and output per hour worked — this shows whether the model has truly ’turned’.

5.2 Summary

MIAK’s message is that the matter of the Chinese giga-investments and the loss-making battery plants calls not for an ideological China debate but for cold, data-based deliberation: conditional, performance-tied incentives, a diversified economic structure and the raising of productivity. From decision-makers MIAK asks these three accountable steps. The topic moves two MIAK foundational values: data-drivenness, because we judge investments not by worldview but by return, net employment and technological integration; and the ideology-free approach, because for MIAK the question is not ‘East or West’ but what the country gets in return for the investments — and it is precisely this that distinguishes policy analysis from a geopolitical slogan.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

The economic band gave the topic its quantitative backbone: Portfolio analysed the OECD industrial-subsidy data (the eightfold subsidy advantage of Chinese companies, the USD 108 billion in global industrial support in 2024), the investigative possibility of the Foreign Subsidies Regulation, and the rapidly growing (above 8% in the first quarter of 2026) European market share of Chinese brands, projected directly onto the Hungarian BYD and CATL investments. The left-liberal public-affairs band (444.hu) brought two threads: the EU’s increasingly unified anti-dumping position and the loss of the domestic battery plants, with the 1,500 layoffs. The conservative band put the topic less in top focus on this day; where the question appeared, it typically emphasised the job-creating side of the investments. For MIAK it is precisely the two framings together that give the full picture: the investment may bring capacity and jobs, but the lasting advantage comes only from actual technological and export integration — not from the mere siting of production.

6.2 Facts and data

  • EU–China trade: the trade deficit in 2025 was some EUR 360 billion (up from the earlier EUR 312 billion); the European Commission began developing response instruments (444.hu, 4 June 2026).
  • Industrial support: according to OECD data, between 2005 and 2024 Chinese industrial companies received, relative to revenue, on average eight times more state support than their OECD competitors; in the 15 key sectors examined, global industrial support in 2024 was some USD 108 billion (Portfolio, 3 June 2026).
  • Hungarian battery plants: the domestic plants accumulated heavy losses in 2025, laying off some 1,500 workers in total; there was a plant that closed with a deficit of over one hundred billion forints (444.hu, 3 June 2026).
  • Market shift: the European market share of Chinese car brands was above 8% in the first quarter of 2026 (about four times the level of three years earlier); the Commission may examine the Hungarian giga-investments under the Foreign Subsidies Regulation (Portfolio, 3–4 June 2026).

6.3 Policy aspects

  • Economy (programme points) — strategic industrial policy with conditional, audited instruments; competition policy and the moderation of concentration;
  • Employment policy (programme points) — the labour-market programme for trade realignment and the productivity movement;
  • Foreign policy (background material) — reducing exposure to EU–China trade tension through diversification.

6.4 Literature in detail

6.4.1 Ha-Joon Chang: 23 Things They Don’t Tell You About Capitalism

Chang’s historical argument is that the developed countries themselves protected and supported their nascent industries — that is, intervention is not in itself the question:

“Virtually all of today’s rich countries used protectionism and subsidies to promote their nascent industries. Many of them (especially Japan, Finland and Korea) also severely restricted foreign investment.”

Chang warns at the same time that in many developing countries the protected industries ‘failed to grow up’ — that is, protection in itself is not enough, the exit condition and the performance expectation are the key. In the frame of the Hungarian battery-plant debate this means: the question is not the presence of Chinese capital but whether the incentive is conditional, time-bound and tied to performance — as MIAK’s G9 programme point would prescribe.

📖 Source: Ha-Joon Chang: 23 Things They Don’t Tell You About Capitalism

6.4.2 International Monetary Fund (IMF): World Economic Outlook 2025

The IMF’s 2025 report gives fresh, quantitative support for the limits of the Chinese subsidy model:

“The signs are mounting that large-scale subsidies to the manufacturing sector have reached their limit and are contributing to significant misallocation of resources in the economy. This is evident in the contrast between strong productivity gains in some key industrial sectors, such as electric vehicles and solar panels, and the absence of aggregate productivity gains.”

The report also warns that intensifying protectionism and fragmentation may, over the medium term, hamper technological diffusion. In the Hungarian reading this is a twofold lesson: the Chinese subsidy-driven overproduction is unsustainable, so the model built on it is risky; yet the Hungarian response cannot be protectionist either — the way out is raising productivity and diversification, not another distorting subsidy spiral.

📖 Source: International Monetary Fund (IMF): World Economic Outlook 2025 — Global Economy in Flux

6.5 International comparison

Several proven examples are available for the conditionality of industrial policy: South Korea in its heavy and chemical industry programme (HCI), and Taiwan in its semiconductor industry, tied state support to measurable performance and export targets, with a decades-long but continuously reviewed framework. The common lesson for the Hungarian case is that lasting advantage came not from the size of the support but from its tying to performance and the exit condition — and it is precisely this that distinguishes the ‘successful’ industrial policy emphasised by both Chang and the IMF from the barren overspend of the global subsidy race. The EU’s Foreign Subsidies Regulation raises this logic to the EU level: filtering out distorting external subsidies in defence of market competition.

Economy

  • G5 — Competition policy and anti-monopoly
  • G9 — Strategic industrial policy

Employment policy

  • FO9 — Productivity movement
  • FO13 — Labour-market programme for trade realignment
  • FO14 — Early-warning system for technological unemployment

6.7 Source register

Press sources (MIAK press monitor, 4 June 2026 — topic 5):

Knowledge-base references (literature):

  • 📖 Ha-Joon Chang: 23 Things They Don’t Tell You About Capitalism
  • 📖 International Monetary Fund (IMF): World Economic Outlook 2025 — Global Economy in Flux

Note: the books’ local file path does not appear in the visible text of the blog — only the author and the title.

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G5, G9)
  • MIAK policy area: Employment policy (programme points; programme point ID: FO9, FO13)
  • MIAK press monitor, 4 June 2026 — topic 5, score: 76/100

Additional public data sources:

  • OECD industrial-subsidy database (MAGIC) and Economic Outlook 2026
  • European Commission — Foreign Subsidies Regulation, anti-dumping investigations

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