Wen Jiabao in Hungary - AFP

Wen Jiabao in Hungary. Source: AFP

Hungarian folk dances, a scene from Hamlet, Deutsche sausages, and a few billion euros in potential Sino-European deals, all drew the Chinese Premier to Europe over the weekend.

For China, Europe represents a land of opportunities even though (or perhaps because) it's in the midst of a sovereign debt crisis. Wen Jiabao visited Hungary on Saturday and the UK on Sunday and Monday.

Wen is prepared to do his bit to support the continent during the tough times, saying he would consistently like to support Europe and the euro.

But China did not go away empty handed. Not only will they pick up a few Hungarian bonds but Wen is also attempting to pave the way for more investments by Chinese firms in Europe: a look at some of the Sino-Hungarian deals suggests Chinese policymakers still covet the industries where they can gain access to European technology.

The deals are also advantageous for European firms, which need the capital to grow - and in some cases, survive - as FT Tilt previously reported.

On Saturday, Wen announced a series of deals between China and Hungary alongside the Hungarian prime minister Viktor Orban.

  • Chinese telecoms equipment maker Huawei signed a deal with Hungary's development minister to build the company's European supply centre in the country, the latest example of a Chinese firm using lower cost locations in eastern Europe as a bridgehead to the whole European market. Huawei, which already has a presence in Hungary, expects to employ 3,000 people at this facility, as well as export $1.2bn worth of products this year, making it the company's second-largest supply centre in the world.
  • The Bank of China and BorsodChem, a Chinese-owned chemical company in northern Hungary, signed a 1.1bn euro financing deal. Wanhua Industrial Group paid $1.7bn for a 62 per cent stake in BorsodChem earlier this year, giving the Chinese company direct access to the European chemicals market.
  • Privately-owned Chinese airline HNA Group inked a strategic deal with the Hungarian Capital Association, after making its European ambitions clear when it bought 20 per cent of Spanish hotel group NH Hoteles last month.
  • China Railway Construction Corp. may also take part in building Hungary's railway network, though the Hungarians may be wary of Poland's experience with Covac building their railway -- after a low-ball bid, it hit cash-flow problems and has now been abandoned.

So what can be expected when Wen sits down for a chat with Cameron?

About $1bn of agreements set to be announced between Britain and China on Monday -- stretching from encouraging more exports of British pork and poultry (sure to be welcomed by Chinese consumers desperate for safer food) to deals in the energy, retail and design sectors, according to Reuters.

A deal in clean technology is expected, with reports that Seamwell International will be helping to turn inner-Mongolian coal into gas.

This would no doubt mark a change in investment style from January, when Chinese deputy premier Li Keqiang visited London, signing £2.6bn in agreements mostly in the oil sector.

At the time, petrochemicals giant Ineos formed a $1.2bn joint venture with Chinese oil giant PetroChina. Jaguar Land Rover had also signed a £1bn deal to boost sales to China by 40,000 units. BP and Cnooc agreed to explore in the South China Sea.

See also:
China Inc. vs Europe Inc. - FT Tilt
Wanhua to use eastern Europe as a gateway to the West - FT Tilt