(Bloomberg) -- Hungary agreed to deepen ties with Chinese telecom equipment maker Huawei Technologies Co. during President Xi Jinping’s visit to Budapest this week, a move that’s poised to further strain the country’s relationship with Western allies.

Huawei and 4iG Nyrt., a Hungarian telecom company Prime Minister Viktor Orban is grooming into a national champion, are planning to develop a joint cloud services platform, according to an initial agreement signed on Friday. The platform will serve Chinese companies with operations in Hungary, as well as the country’s domestic firms.

“Hungary wants to work with the best,” Economy Minister Marton Nagy told reporters on Friday. “That can mean both Western or Eastern companies.”

The deal marks a further rejection of Western pressure on Orban to loosen ties to Beijing and Russia. He has doubled down on business deals, and leveraged his country’s EU and NATO memberships to dilute EU sanctions against Russia, delay NATO’s expansion and block critical EU statements on China. 

Telecoms is a particularly sensitive area, with the US and much of the EU seeing Huawei as a national security threat - something the company and China reject. The US revoked licenses that allowed the Chinese firm to buy semiconductors from Qualcomm Inc. and Intel Corp., Bloomberg reported this week.

“No one is suggesting Hungary should not do business with China,” US ambassador to Hungary David Pressman told reporters on Wednesday ahead of Xi’s arrival. “But the manner in which Hungary is pursuing its relationship with Beijing, including incorporating problematic PRC technology into its critical infrastructure, demonstrates little regard for Hungary’s own security or that of its allies and partners.”

‘All-weather’

On Thursday, Xi and Orban agreed on an “all-weather partnership,” one of the highest forms of bilateral ties for Beijing and part of a strategy to expand China’s influence. Xi visited France and Serbia earlier this week during his first trip to Europe in five years, seeking to promote China as a reliable partner.

At a joint briefing, Orban endorsed a one-China policy and Chinese media attributed comments to him rejecting US and EU complaints about China flooding Western markets with cheap products.  

New business deals, including planned rail infrastructure works, may total as much as €10 billion ($10.8 billion), Nagy said after the two governments signed 18 agreements. Hungary will seek Chinese loans to finance these plans, he added.

Orban, the five-time nationalist leader of Hungary, set up a state agency this year ostensibly to defend the country’s sovereignty, appointing a government loyalist concerned about US influence in Hungary and downplaying the risks from Russia or China.

“Sovereignty and independence are things we need to defend against everyone, be it from the east, west, north or south,” Orban told the Telex news website Friday. “That also applies to China.”

Orban has pointed to a flood of investments from China as the dividend of what he’s coined his “Eastern opening” strategy.

BYD Co., the Chinese EV giant, picked Hungary as the site of its first European car factory, edging out Germany and France. Hungary is also a hub for car battery producers, with China’s Contemporary Amperex Technology Co. Ltd. currently building a €7.3 billion plant in the eastern city of Debrecen.

A multi-billion dollar rail line upgrading infrastructure between Belgrade, the Serbian capital, and Budapest is also in the works as part of the China’s Belt and Road Initiative. Hungary is the only EU country still participating in the Chinese program.

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