Reuters via Asia Nikkei
Introduction
When Italy joined the Belt and Road Initiative (BRI), China’s ambitious foreign policy and global connectivity project, it became the first Group of Seven (G7) country to do so. By signing a Memorandum of Understanding (MoU) in 2019, Italy hoped to benefit from China’s investments to expand international markets. This symbolic gesture was seen as controversial in Washington and many European capitals. It marked an alteration of historical partnerships, perceived by many as an attempt by China to curb the United States’ economic influence on the global arena (Mazzocco, and Palazzi, 2023). Now, five years after the signing of the MoU, Italy has officially withdrawn from the BRI, following a reassessment of its bilateral ties with China (Insisa, 2023).
What are the reasons behind this decision, and what is its significance for Italy-China relations, the BRI, and the West?
China and Italy’s Relations
The BRI (previously known as One Belt One Road), first announced in 2013 by Xi Jinping, is China’s grand development framework and is inspired by the original Silk Roads, which connected the West and East both commercially and culturally. The strategic endeavour aims to establish a “community” of countries in various areas of academic, technological, and cultural fields among the over 150 countries that have joined since its launch (Traverso, 2022, p.725). Through the construction of roads, railways, ports, and substantial investments in partner countries, the BRI has evolved into the largest infrastructure undertaking of our time.
In addition to the BRI being a blueprint for economic cooperation, it has been meticulously crafted by Beijing as a political initiative with long-term strategic objectives (Dossi, 2020, p.3). Interestingly, the idea for the BRI was built upon an academic debate in China dating back to the 1990s, where “sea power” and “land power” were discussed as potential trajectories for China’s rise. From then on, and within the context of growing competition with the US, the idea of combining these divergent pathways emerged. As such, the concept of the BRI is fundamentally geopolitical and serves as a “counterbalance to the West” as well as an approach that is alternative to the “Western hegemony” in terms of both domestic and international space (Anthony, 2023; Dossi, 2020, p.3).
The relationship between China and Italy is a long-standing one, as the two countries have historically enjoyed cultural and commercial exchanges, which started increasing in the 1990s with joint ventures in engineering, textiles, and finance, among others. The pinnacle of their diplomatic relationship was in 2019, when Italy agreed to participate in the BRI, a clear reflection of their positive relations (Traverso, 2022, p. 726). Italy’s motivation to join the BRI is easy to understand. Italy, which at that point had gone through several recessions, wanted to draw Chinese investment into the country and enhance export opportunities. Next to the MoU, Italy and China also signed several additional agreements, such as double taxation and specific sanitary requirements for exports, which demonstrated the Italian government’s hopes for financial gains (Sacks, 2023; Mazzocco and Palazzi, 2023). Additionally, Italy’s eurosceptic populist leadership at the time (Five Star Movement) was more than eager to accept Chinese help and join the BRI as a way to outbid other countries in the region for Chinese investment (Chen, 2021, p. 445).
China’s reasons for pursuing Italy stem from Italy’s strategic location in Europe: it serves as a bridge between Europe and the Mediterranean region, both of importance to China. It is also a connecting point between mainland Europe and North Africa and has a sizeable economic presence in regions in which China has an interest to invest and grow. Over the last two decades, Chinese investments in these areas have significantly increased, in efforts to divide up European states and push forward its agenda for greater Europe-China relations (Dossi, 2020, p. 5). A further point speaking to the appeal of Italy to China is the fact that it is positioned within the US sphere of influence and has numerous American and NATO military bases (Chen, 2021, p. 445).
Why did Italy withdraw from the BRI?
Despite big expectations for economic and political successes on both ends, these were not met, and at the end of 2023, Italy announced that it would not be renewing its commitment to the MoU. This decision did not come as a surprise to Italy, since the BRI has not been able to yield the economic benefits the country had anticipated by joining (Nadalutti and Rüland, 2024). Giorgia Meloni, the current Prime Minister, highlighted the lack of benefits for Italy from China and the fact that, despite being the only G7 member to join the BRI, the economic relations do not reflect a particular expansion (Sacks, 2023; Mazzocco and Palazzi, 2023).
The significant drop in Chinese FDI in Italy shows that joining the BRI does not guarantee more trade and investment.
What is more, China’s standing in 2024, both domestically and on the international stage, has changed compared to the late 2010s. On the domestic level, in the country’s post-Covid reopening, there has been slow economic growth coupled with structural issues, such as demographic decline and a real estate market bubble (Insisa, 2023, p. 4). On the international level, there has been a stronger transatlantic convergence under the Biden presidency and efforts to be less dependent on China (Insisa, 2023, p. 4; Kazmin, 2023). This can be defined by the G7’s policy of “de-risking,” meaning gradually reducing the risks created by extensive economic ties between the US and China, instead of cutting all ties between the two countries (also known as “decoupling”) (Demarais, 2023). In light of this policy, Italy’s participation in the BRI is incompatible with the goals of the EU. The decision to withdraw falls in line with the interests of Meloni’s current government. It signals that Italy strongly aligns with Washington at a time when there are frequent security and political challenges with China. This highlights the government’s commitment to strengthening transatlantic relations and the G7’s de-risking strategy (Mazzocco and Palazzi, 2023). In addition, the BRI has been under scrutiny for leaving struggling economies in debt. With Italy's withdrawal, it is highly unlikely that another major economy will become a part of the BRI.
Conclusion
Overall, Italy’s decision to not continue pursuing cooperation with China’s BRI comes at a time of heightened geopolitical tensions and symbolically signals its alignment with the US and the rest of the G7 countries. While Italy’s parting is partly caused by the lack of anticipated economic gains, a larger factor is the influence of the current geopolitical climate in Europe and beyond. With the debt distress that China is causing in recipient countries and the focus on “de-risking” policies in Western economies, the BRI’s global image is increasingly meeting challenges.
So far, Italy is looking to maintain strategic ties with China, as well as to improve trade despite its exit from the BRI (Balmer and Amante, 2023). The question of how Italy and China’s relations would be affected post-BRI withdrawal remains to be seen.
References
Anthony, T. (2023, September 21). China, at UN, presents itself as a member of the Global South as alternative to a Western model. AP News. https://apnews.com/article/un-china-global-south-general-assembly-d8620e4502757c4de9ab41543f14eccb
Balmer, C., & Amante, A. (2023, December 6). Italy tells China it is leaving Belt and Road Initiative. Reuters. https://www.reuters.com/world/china/italy-tells-china-it-is-leaving-belt-road-initiative-sources-2023-12-06/
Chen, W. A. (2021). COVID-19 and China’s Changing Soft Power in Italy. Chinese Political Science Review, 8, 440–460. https://doi.org/10.1007/s41111-021-00184-3
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Insisa, A. (2023). Timing Is Everything: Italy Withdraws from the Belt and Road Initiative. Istituto Affari Internazionalli, 23(67), 1–6. https://www.iai.it/en/pubblicazioni/timing-everything-italy-withdraws-belt-and-road-initiative
Kazmin, A. (2023, December 6). Italy formally pulls out of China’s Belt and Road Initiative. Financial Times. https://www.ft.com/content/946636dc-2fa1-4b2b-a83b-84478f804a83
María Luz Traverso. (2022). The BRI and Italy-China Cultural Relations: An Overview of the “2020 Year of Culture and Tourism.” https://doi.org/10.5117/9789048557820/icas.2022.084
Mazzocco, I., & Palazzi, A. L. (2023). Italy Withdraws from China’s Belt and Road Initiative. Www.csis.org. https://www.csis.org/analysis/italy-withdraws-chinas-belt-and-road-initiative#:~:text=On%20December%206%2C%202023%2C%20the
Nadalutti, E., & Rüland, J. (2024, January 13). Hedging “Light”: Italy’s Intermezzo With China’s Belt and Road Initiative. Thediplomat.com. https://thediplomat.com/2024/01/hedging-light-italys-intermezzo-with-chinas-belt-and-road-initiative/
Sacks, D. (2023, August 3). Why Is Italy Withdrawing From China’s Belt and Road Initiative? Council on Foreign Relations. https://www.cfr.org/blog/why-italy-withdrawing-chinas-belt-and-road-initiative
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