Italy’s Risky Silk Road
The Italian government is keen to join China’s "Belt and Road Initiative" and plans to sign an agreement to this effect during Chinese President Xi Jinping’s upcoming visit to Italy. But although deeper trade and investment ties with China could boost its sluggish economy, Italy should pursue them through the EU, not bilaterally.
VENICE – Is China’s “Belt and Road Initiative” (BRI) “a train that Italy cannot afford to miss,” as Italian Finance Minister Giovanni Tria says? Prime Minister Giuseppe Conte also thinks Italy should jump on board, saying the multi-billion-dollar Chinese infrastructure plan is “an opportunity for our country.”
Italy’s government plans to sign a memorandum of understanding with China on the BRI during Chinese President Xi Jinping’s March 22-24 visit, making it the first founding European Union member or G7 country to do so. This will pave the way for Chinese investment in Italy’s infrastructure, energy, aviation, and telecommunications sectors. But joining the BRI carries serious risks for Italy and will probably also damage its relations with the EU and the United States.
True, deeper commercial engagement with China is a no-brainer for Italy, where GDP growth has been low or stagnant since the late 1990s, and is expected to decelerate from 1% in 2018 to 0.2% this year. China, on the other hand, boasts the world’s second-largest economy after the US. It is the biggest exporter, an increasingly significant overseas investor, and is gradually rebalancing its growth model toward domestic demand.