Italy Snubs China: Pulls Back From Xi’s Mega Belt and Road Initiative; ‘Failed To Meet Italian Expectations’

Italy Snubs China: Pulls Back From Xi’s Mega Belt and Road Initiative; ‘Failed To Meet Italian Expectations’

Ira Singh
11 Sep’23

In a significant diplomatic shift, Italy has decided to pull back from China’s ambitious Belt and Road Initiative (BRI), signaling growing concerns about the project’s economic viability and China’s influence in the region. This move comes as a blow to Beijing’s global infrastructure plan and highlights Italy’s dissatisfaction with the initiative’s progress thus far.

The Belt and Road Initiative, launched by Chinese President Xi Jinping in 2013, aims to build a vast network of roads, railways, ports, and other infrastructure projects connecting China to Europe, Africa, and beyond. Italy was one of the first European countries to join the initiative in 2019, sparking both hope and controversy within the European Union.In 2019, the highly indebted Italian economy shocked the US and Europe by becoming the only nation from the G7 club of industrialised countries to take part in China’s Belt and Road Initiative. The move enraged Washington and represented a major political victory for Xi.

China’s faltering efforts to reignite its economy post-Covid may be dealt a big blow as Italy — the only nation from the G7 club of industrialised countries to take part in China’s Belt and Road Initiative (BRI) — is likely considering withdrawing from the deal.

*’Deal has failed to meet expectations’*
Ahead of his three-day trip to Beijing, Italian foreign minister Antonio Tajani said the BRI deal with China “has failed to meet Italian expectations”. The BRI deal is due to be renewed automatically in March 2024 unless Italy withdraws by the end of this year.

“We want to continue to work closely with China, but we must also analyse exports: the BRI has not produced the results we were hoping for,” Tajani told an economic forum before leaving for Beijing. He said Italian exports to China in 2022 were worth 16.5 billion euros ($17.8 billion), whereas the figures for France and Germany were much higher at 23 billion and 107 billion euros, respectively.

Italian defense minister Guido Crosetto recently called Italy’s decision to join the BRI an “improvised and atrocious act”, while Prime Minister Giorgia Meloni has often said that the deal was a “big mistake” that she intends to correct.

Why Italy took the deal
It is not difficult to see why the BRI enticed Italy. Having suffered through three recessions within a decade, Italy was looking to attract investment and expand Italian exports’ access into China’s huge market. At the time, many Italians felt abandoned by Europe, while its populist government was skeptical of the European Union (EU) and more than willing to turn to China to fulfill its investment needs. Italy saw an opportunity to leverage its political weight to sign on to the BRI in hopes of beating out others for Chinese attention and investments.

Xi had his own reasons for courting Italy. The country served as a major terminus along the ancient Silk Road, and Italy’s inclusion in the BRI helped Xi link his signature foreign policy initiative to a golden era of Chinese prosperity and influence. There are also enduring connections between the two countries: Italy is home to the largest Chinese population in Europe, while the countries share deep trade linkages in the production of fabrics, leather goods, and more. As China looked to increase its influence in Europe, drive a wedge in the EU, and sow divisions between Washington and Brussels, Italy appeared as a weak point it could press.

By exiting the BRI, Rome will be dealing an embarrassing blow to Beijing on the initiative’s 10th anniversary. Given how closely intertwined the BRI is with Xi’s political legacy, Beijing has reacted sharply to the withdrawal rumours and criticised “some forces” for “hyping up and politicising” Rome’s membership in the BRI.The planned withdrawal also underscores a broader shift in Europe as governments grow increasingly wary of their economic dependence on Beijing.

Withdrawal in the works

The withdrawal “has likely already been agreed in principle with Chinese authorities”, Lorenzo Codogno, a former chief economist at the Italian treasury, reportedly told AFP.

Meloni “will make the official announcement during her state visit to Beijing(expected by mid-October)as a sign of respect for China’s leadership”, but the Italian parliament will have the final say, he added.

Meloni’s predecessor Mario Draghi had frozen the agreement and blocked large-scale Chinese investment in sectors deemed of strategic importance, according to sources.

China’s crumbling relations
In the decade since BRI’s inception, two-thirds of European Union members, mostly in the east, have joined China’s Belt and Road Initiative. Many of these countries, like Italy, were grappling with slumping economies and touted the potential economic gains that could come from BRI investment.

The deal, however, has not brought great dividends for most of the nations, many of whom are also reconsidering the partnership.

China’s diplomatic push in Central and Eastern Europe, called the 17+1, has progressively lost members over the years; more recently in April, a key trade and investment agreement between the European Union and China collapsed.Europe is increasingly seeing China as a competitor, as a rival, as a challenge, and less as an economic opportunity, which is how it used to see China.

President of the European Commission Ursula von der Leyen recently argued that “the Chinese Communist Party’s clear goal is a systemic change of the international order with China at its center,” pointing to the BRI as evidence.Beijing’s support for Russia in its war against Ukraine has also led many European governments, including Italy’s, to shed their illusions about China

Why Chinese President Xi Jinping didn’t attend G20 in India
Chinese President Xi Jinping’sdecision to forgo the G20 summit in India is likely an attempt to avoid losing face. According to reports from Nikkei Asia, the root cause of this unexpected move can be traced back to the recent Beidaihe meeting in China, an annual gathering of incumbent and retired leaders of the Chinese Communist Party. While the discussions at this gathering are typically confidential, details from this year’s closed-door talks have begun to emerge, suggesting a significant shift in the political landscape.The report added in Nikkei Asia, Chinese president Xi Jinping is in the line of fire at home. The report further stated,Xi Jinping was reprimanded by Elders of the Chinese communist party over the economic situation in China and rising joblessness.