Italy’s moves to sign a deal with
China and get involved in its Belt and Road Initiative (BRI) are highly significant
as Italy is the first of the European Union’s founding countries to join this
program. By way of reminder, the Belt and Road Initiative aims to develop
stronger trade between China and various other regions of the world. Italy is
the 12th European Union country to get involved in this program.
Meanwhile Greece, Hungary and Poland are not opposed to it, and rail transport between
Chengdu and Lodz has increased considerably over the past five years due to
trade between the two countries. However, Sweden is fairly opposed to the Chinese
program, while France and Germany are reacting cautiously – probably as they
see potential business and trade opportunities, but also the restrictions
involved in the program as it is primarily dictated by China.
The value of the Italy-China agreement
is not yet huge and does not reflect a firm commitment between the two countries,
but it has already caused some strife in the Italian government between Di Maio
who went all out to promote the agreement, and Salvini who wanted none of it.
China sets great store by this
international drive and the country’s role in the global balance, and when Xi
Jinping set up the BRI in 2012 just after he took over as President, he put this
world view center-stage again. His aim then as now is to root China’s fresh
phase of growth within a broader context and link it back to the country’s
development more than 2,000 years ago when the growth of the Silk Road network
shaped Asia, sprawling out as far as Europe. During his recent visit to Europe,
Xi Jinping was keen to remind listeners of the very long-standing relationship
between Rome and the Han dynasty, which ruled from 206 BC to 220 AD, and he also
referred back to the rich 13th century Venetian merchant Marco
Polo’s trip to China. He took great pains to mark the country’s historical ties
with Italy, but also China’s long-standing influence and role across the globe.
China’s incursion into Europe via the
BRI obviously raises questions on the relationship between the two regions: targeting
one of the EU founder countries marks a new milestone, especially as Italy has
already been on the receiving end of quite a bit of China’s investment in the region.
The UK has traditionally been China’s favorite focus for investment since 2000,
with a total of €59.9bn up to 2018 according to Merics, but Italy ranks third
with €15.3bn, just behind Germany’s €22.1bn, while France is fourth with €14.3bn.
However, Italy’s political choice
raises a number of questions.
Is this decision a way to divide
Europe amidst a global backdrop where doubt already prevails over European harmony?
Several countries no longer want to comply with EU rules as strictly as they
did before: Italy is a case in point, but we could also mention Poland, Romania
and a few others. Considering European wariness of China, could this be a way
for it to drive a wedge between the countries of Europe? This is a valid
question as by promoting an easing of European-led restrictions, perhaps China could
gain some more leeway to implement its worldwide growth strategy while also
shoring up its international position…
Well may we wonder then whether
Italy’s move is also a way for Southern Europe to put pressure on Northern Europe
and the European Commission, as the region could use the relationship with
China to gain leverage – particularly Italy, as tension with Brussels has soared
since the coalition government took over.
China has already invested in the
port of Athens (Piraeus), the port of Sines in Portugal, the port of Valencia
in Spain, and has taken a foothold in the industrial port of Venice
(Mestre-Marghera). The country – alone or sometimes via Hong Kong – now owns or
manages 10% of European ports, while there are also bids to manage even more.
This is a hefty figure and these moves could fuel imbalances and pressure
between European states in a less harmonious Europe.
So all this begs the question whether
China’s behavior as it seeks to extend its influence is a reflection that
Europe is relegated to second place. The old continent harbors strong
purchasing power, but it is divided despite the European institutions and does
not seem to have a role to play in the tech battle between China and the US. So
is this a way for China to disrupt Europe’s supposed unity with the US and move
forward in the technological war, which will ultimately lead to China’s
technological domination in Europe as it asserts its worldwide position? We
recently saw threats from the White House – particularly to Germany – as it
sought to stop the use of Huawei equipment when renewing mobile phone infrastructure.
Lastly, the key point in the
Italy-China agreement is the port of Trieste, an industrial free zone that is
set to be China’s bridge into Italy. Trieste boasts major advantages that
Piraeus does not have, and these explain much of why Chinese investments in the
port of Athens ended in failure. Firstly, the port of Trieste is already part
of a broader industrial framework: secondly, there is a much more extensive rail
network than in Greece, which makes Munich closer via this route than if
getting there from Hamburg, in terms of both time and distance. In other words,
Trieste is close to southern Germany, northern Italy and south-east France, and
the route from Shanghai to Trieste is almost 10 days shorter than the route to
ports in the north of Europe. This is very important and could put Trieste in a
position to rival with Rotterdam or Hamburg, and this factor could play a
crucial role in shaping the new European landscape.
This post is available in pdf format My Weekly Column – 1 April