Silk Road: Italian Companies’ Crucial Choices

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Ongoing corrections of foreign policy and economic policy: the Silk Road does not lead far. It’s not a question of siding with the United States or China. This is the idea that Beijing’s propaganda wants to pass. The reality is that the choice faced by the Meloni government – whether or not to abandon the agreement that in 2019 brought Italy into the Belt and Road Initiative (BRI, precisely the so-called New Silk Road) – is decidedly economic and political: the hypothesis of a change of alliances by Rome only makes you smile.

Telling Italy, as the Chinese state media did, not to heed Washington’s requests to abandon the partnership actually reveals what Beijing’s plan was probably all along: to alienate Italy from the United States. The first Conte government that signed the Memorandum of Understanding did not understand it or pretended not to understand it. In 2023 everything is clearer.

It is not true, as he often says, that the agreement had essentially no effects. This can be argued from the point of view of the business that has not resulted. But on the international level, for three years it has cast a negative shadow on Italy’s ability to understand where it is located and what its interests are, including economic ones. From this point of view, joining the BRI was a bad idea: sorcerer’s apprentices in the world of business and politics.

A budget

Whatever Giorgia Meloni and Joe Biden said in private last week in the White House, the Italian government can only take into account some facts in at least three dimensions. The first is the economic one, of the deals promised to those who embark on the New Silk Road. Since the signing of the Memorandum, Italian exports to China have certainly not experienced a boom: from 13 billion euros in 2019 to 16.4 in 2022: comparing them to Germany’s 106.8 billion is impressive. Chinese exports to Italy, on the other hand, jumped from 31.7 to 57.5 billion (191.1 to Germany). If we analyze Chinese investments in Italy, between 2019 and 2020 they fell from 2.5 billion to 810 million and direct investments from 650 million in 2019 to 33 million in 2021 (Rhodium group data).

Sure, it’s been years of pandemic and lockdown. The fact is, however, that last year 88% of investments by Chinese companies in Europe ended up in four countries: in order, the United Kingdom, France, Germany, Hungary. Beijing’s major investments in the Old Continent are today made not in acquisitions, but in the construction from scratch of factories for the production of electric batteries: in ten countries but not in Italy. Effect of the agreement: zero.

It is that the Memorandum of Understanding signed by the Conte government was moved by a dirigiste logic, where economic choices are decided by governments, while in reality investments then go to countries where there are the best opportunities.

In parallel with the “political” signing of membership of the BRI, in March 2019 a series of Italian media signed information exchange agreements with Chinese media (all referring to the Communist Party). Thus, Made in Beijing news and analyzes circulated in Italy, even if with very little effect on public opinion. Nothing Italian has been circulated in China. To explain how a “privileged relationship” with Beijing works.

The second dimension to consider is that of security. Not only with respect to Chinese investments in Italy which can create problems of export of technologies and infiltrations for strategic and military purposes: on this, both the Draghi government and the Meloni government have moved to limit the dangers (last, the Pirelli case) . The risk being run is now evident when Palazzo Chigi has to formally decide to terminate the BRI membership agreement (by December). How will Xi Jinping react, who came to Italy to sign the Memorandum? In many cases, the irritation of the Chinese leaders with respect to the political choices of other countries has translated into economic coercion, boycotts of the country’s goods or guilty of having disappointed Beijing. It happened to Lithuania, Norway, South Korea, Australia and many others. Could it happen to Italy? The EU, which by now considers China a “systemic rival”, would support Italy’s reasons; however, it cannot be excluded. A reason to free yourself as soon as possible from a bond from which, over time, you would no longer be able to extricate yourself.

The geopolitical nodes

The third dimension, which is no less important, concerns international relations. When, in 2019, Italy was the only member of the G7 to join the BRI, criticisms came both from Washington and from Europe.

It was very bad in the White House as in Brussels, Berlin, Paris. The sign that Italy should be trusted up to a certain point. Not only in diplomatic relations.

For example. At a time when Russia and China are forcing the West to increase its defense and security forces and to modernize its armies, finding industrial partnerships in the military field, where Italy has considerable know-how, would become more difficult. The doubt that what happens in Rome is influenced by Beijing would be a constant and the loss of business for Italian companies would be certain.

In addition, the Belt and Road Initiative has lost its initial momentum. It remains a large infrastructure project between Asia, Europe, Africa and partly Latin America. But those who joined it understood that under the promised gold there is the iron hand of the Communist Party of China.

This article is originally published on corriere.it

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