Italy Signed up Belt Road Initiative Agreement with China: Pioneering Move?

Italy has officially joined in China’s Belt Road Project. From China’s side, it is to rebuild the ancient trade route – Silk Road, and to consolidate regional cooperation from Asia to Europe. From Italy’s side, it is to develop the northern Italian ports and the InvestItalita Programme. The agreement establishes both countries building a banking sector executing the infrastructure plan (port Genoa and Trieste) and trade (Mediterranean to China).

All in all, the Belt Road Initiative (BRI) is to enhance the regional connectivity; however, currently the BRI is to develop infrastructure construction and investment, which is the largest infrastructure project as it involves in over 60 countries, about 65% world population, one third of world GDP.

(photo credit to: https://www.dw.com/en/italy-china-sign-new-silk-road-pact/a-48037267)

Shifting the US’s global political order

China’s Belt Road project has been considered to be a global political power change as it excludes the US. Though critiques and doubts were on the project’s funds and investment, the BRI is still ongoing and advancing more than infrastructure investment but to science and technology sphere. It reveals that BRI not only strategically but also technically challenges the US’s global political order.

As the US is going through trade war with China, Italy’s joining in BRI is arguably the US’s influence recedes. Historically, Italy ties with China since 14^th Century Marco Polo’s visit to China and initiate the connection and exchange within both sides. Economically, Italy’s opposition to the Eurozone and eager to enhancing investment fosters the signing of the agreement. On 9^th of April will be the EU – China summit. Though the EU has been coming up a common strategy that Europe should unite against ‘unfair’ Belt Road policy, Italy believes that its joint move is playing a pioneering role. Few days later after Italy signed, Luxembourg also signed the agreement with China.

The EU facing China’s global effect

Analysis reveals that it is within China’s long-term plan, which China has already since 2012 been targeting south and central European countries and EU members in order to slowly access to the core economies. It is China’s drastic progressing in technology that poses threat to the EU. Some argue that the EU should start investing local companies that can rival against Chinese ones. Protecting the sovereignty in technology sphere is arguably what EU should bear in mind. However, Italy, as one of the important ‘core economies’ in the EU, signing up with China will deter any EU joint strategy responding to China’s Belt Road Initiative.

However, the potential ‘unfairness’ is still to be judged. Some EU member countries have already been conducting large scale of trade with China. Although the EU is a strategic and diplomatic ally with the US, the US’s recession on global power and EU’s desire of economic growth may push stronger connections between the EU and China. Particularly, the BRI is based on the historical silk road trade relations and an attractive investment plan.

Within Italy itself

The BRI meets Italy’s need of economic growth and infrastructure investment; however, some argue that it is a worrying strategy as Italy did not consult with the EU in advance. For Italy, the EU as a single market, did not convince Italy to pursue EU common interest in terms of Belt Road project; nevertheless, some EU member countries; for example Germany has trade ties with China. Moreover, those who support Italy’s joining BRI are believed to be fostered by the antagonism toward Eurozone and the European Union.

No matter it is BRI’s economic attraction or Italy’s antagonism toward the EU, Italy has signed BRI with China. The potential benefits in the short term are estimated to be increasing Italian export to China, Chinese investment in Italian infrastructure and promoting Italy’s national investment demand.

Our View

Italy made a pioneering move but it seems incompatible at the moment that Italy acts different from the EU’s common plan, which is yet to be discussed. Though BRI meets lots of Italy’s demand, the relations with the EU and how the EU should act on BRI will be problematic in the future. The EU should approach to building common ground and make a clear stance of future cooperation with China; otherwise, it will induce instability within the EU not to mention that the Brexit has already cast a cloud. More attention should be paid to the EU – China Summit on 9th of April.

Author: Yung Lin, Researcher at ICRD