GMF Expert Analysis: Shifting Italy-China Relations
Dario Cristiani: COVID-19 and Italy’s Shifting China Policy
Italy began to rethink its approach to China with the outbreak of the COVID-19 pandemic in 2020 and with Beijing’s launching of an aggressive charm offensive to exploit rifts between Italy and its allies. Also irksome to Rome was the propaganda and disinformation that accompanied Chinese medical aid, including campaigns that questioned the virus’ origin. Chinese state media even reported that Italy was dealing with suspicious cases of coronavirus-related pneumonia before the Wuhan outbreak in November 2019.
As a result of China’s aggressive moves, many Italian political leaders altered their stance toward Beijing. And since then, a growing consensus across the Italian political spectrum, with the notable exception of Five Star Movement founder Beppe Grillo, has concluded that a review of Italy’s relationship with China is necessary, one that prioritizes national security.
In this regard, Prime Minister Giorgia Meloni and her government are breaking with the approach of the previous administration under Mario Draghi. They are charting a new course not only to bolster Italy’s traditional geopolitical and diplomatic alliances but also to confront fears of Beijing’s predatory economic strategy and unfair commercial practices.
- Dario Cristiani, Resident Senior Fellow. GMF South
Noah Barkin: Realigning With Europe
It was a geopolitical coup for China when, in spring 2019, Italy’s right-wing, populist government became the first G7 country to sign on to Beijing’s vast infrastructure project, the Belt and Road Initiative (BRI). The deal, masterminded by Michele Geraci, a junior industry minister with strong ties to China, looked like a bad bet when it was sealed during a visit by China’s President Xi Jinping to Rome. And it has not aged well since, neither from an economic nor from a political perspective. Italian exports to China have barely budged since the agreement was clinched. And Chinese direct investment in Italy plunged to $91 million last year, compared to $650 million in 2019, according to Rhodium Group. In the intervening years, China’s image in Europe has also taken a battering, due to its aggressive COVID-19-era diplomacy, its crackdown in Hong Kong, human rights abuses in Xinjiang, and economic coercion in Europe. De-risking from China has become the policy paradigm in Europe. And the EU now has a strategy, Global Gateway, designed to counter the BRI.
As Europe’s stance has shifted, so has Italy’s. Under former Prime Minister Mario Draghi, Italy blocked a number of planned Chinese acquisitions on security grounds. This approach has continued under Italy’s current leader, Giorgia Meloni. Her government intervened most recently in June to prevent China’s state-owned chemicals giant, Sinochem, from consolidating its control over tire maker Pirelli. It does not come as a huge surprise, therefore, that Meloni’s government has now confirmed for the first time that it plans to exit its BRI deal with China early next year. This would bring Italy back in line with its G7 partners, correcting a four-year-old mistake that had taken Italy in a direction that was at odds with the tide of European China policy.
- Noah Barkin, Visiting Senior Fellow, Indo-Pacific Program
Julia Pallanch: Rome is Pivoting East—Good News for the Transatlantic Alliance
After years of voicing discontent with her country’s 2019 decision to participate in China’s Belt and Road Initiative (BRI), Italian Prime Minister Giorgia Meloni seems set to pull out of it. In an interview with Corriere della Sera, her defense minister, Guido Crosetto, said the government intends to realign Italian policy on China with that of its European and transatlantic allies, thereby bolstering Rome’s wider strategy for the Indo-Pacific.
Italian foreign policy has traditionally focused on its neighborhood, but Meloni has broken with that to tilt East and expand engagement with Asian partners. She has elevated Italy´s relationship with Japan to a strategic partnership and announced, during Japanese Prime Minister’s Fumio Kishida’s visit to Rome in January, the launch of a bilateral foreign-defense consultation mechanism. She has also put relations with India on a strategic-partnership level and made defense cooperation the center of her trip to New Delhi in March, her first state visit to an Asian country. In another sign of increased engagement, Italy has sent the Francesco Morosini, an offshore patrol vessel, on a five-month mission that will take it to 14 Indo-Pacific countries. And ties between Rome and Taipei continue to deepen with the promise of allowing a Taiwan representative office in Milan. A bilateral deal on semi-conductor cooperation is in the making.
Meloni’s goal may also be to maintain the status quo with China despite its increasingly revisionist policies. Beijing, after all, remains an important business partner. But Italy’s cooperation with the BRI complicates matters. The prime minister may hope to emulate Berlin’s and Paris’ no-strings-attached approach that keeps them out of Chinese initiatives without harming German and French business operations. But can she break an agreement with China, which has been of little economic consequence for Italy, without prompting retaliation?
- Julia Pallanch, Program Coordinator, Indo-Pacific Program
Dario Cristiani: Italy’s BRI Decision and China’s Reaction
Giorgia Meloni’s recent trip to Washington seems to have accelerated Italy’s decision to withdraw from China’s Belt and Road Initiative (BRI). The issue was clearly at the top of the agenda in her White House meeting, and, according to il Foglio, an Italian daily, Rome will officially announce its exit from the BRI in September. Italy plans to put its relationship with Beijing on a new foundation by signing new trade agreements.
When Italy became, in March 2019, the first G7 member to join the BRI, Beijing was seen to have scored a major diplomatic and political success. Some even saw Italy as China’s Trojan horse in Europe. The optics were great for China, even if the agreement was significantly less ambitious than Beijing’s initial proposal. But there were problems from the beginning. The pact was not even legally binding, and its contents were generic due to the intervention of certain institutional actors and members of the government. Giancarlo Giorgetti, then undersecretary to the presidency of the council of ministers and now economy minister, limited the scope of the agreement. Meloni’s Brothers of Italy was the political party most critical of it, with Adolfo Urso, the current industry minister, saying that China was subjugating Italy.
Responding to recent developments in Rome, including Defense Minister Guido Crosetto’s announcement of a realignment in Italian policy toward China, the Global Times, an English-language nationalist newspaper overseen by the Chinese Communist Party, published two articles that warned “quitting the BRI might become Italy’s regret”. The pieces also blamed any such move on pressure from “the US and the EU”. Since Italy’s agreement to participate in the BRI was never implemented, the impact of withdrawing may be insignificant—assuming Beijing keeps its anger in check. Italy’s joining the BRI was a major symbolic and diplomatic success for China; Italy’s exit represents a defeat, something that often does not go down well in Beijing.
Dario Cristiani, Resident Senior Fellow, GMF South