What you need to know
Italy’s potential withdrawal from China’s Belt and Road Initiative (BRI) reflects growing mistrust towards China, arisen due to concerns over diminishing economic benefits, debt traps, and incongruent ideologies.
China’s Belt and Road Initiative (BRI), which has been in play for a decade, stands as a testament to China’s global ambitions, propelling its international influence and trade. Beyond its infrastructure focus, the BRI seeks to broaden China’s market reach, elevate its economic and political clout, and pave the way for a high-tech economy. This initiative has been extending westward into higher-income nations, especially in Italy, with its historical ties to the Silk Road and robust trade connections with China, becoming a prime candidate for expansion.
Italy’s Journey with the BRI
In March 2019, Italy made headlines by signing a memorandum of understanding with China to join the BRI, making it the first G7 country to do so. However, as of July 2023, Italy, under Prime Minister Giorgia Meloni's leadership, has strongly hinted at its intention to exit the initiative. Concerns have arisen regarding the tangible economic benefits of the BRI, fears of falling into debt traps, and other contributing factors.
Viewing Italy’s potential withdrawal through the lens of an increasingly China-skeptical Europe and China’s own economic challenges, it becomes evident that Italy’s stance is part of a broader global trend of growing mistrust toward China and its economic management. When Italy initially joined the BRI, it held high hopes for economic growth and increased trade with China, with the expectation of strengthening its ties with Beijing. Italy also aimed to secure greater access to Chinese investment and envisioned itself as a prominent player in the BRI among European economies. The move was seen as vital to prevent a loss of trade opportunities, given China’s acquisition of Greece’s Port of Piraeus.
The Changing Tide
Over the past four years, Italy’s priorities and economic strategy have shifted, with perceived risks outweighing anticipated benefits. Notably, Italy’s trade deficit with China ballooned by 22.3 billion euros ($23.9 billion) between 2019 and 2022, according to the Italian Ministry of Foreign Affairs. This, coupled with concerns of debt traps and external pressure from Western nations, has prompted Italy to reconsider its BRI participation.
Italy’s experience reveals that joining the BRI does not guarantee special treatment from China or increased trade and investment. Chinese investment in Italy has been overshadowed by investments in non-BRI European countries. Furthermore, Italy’s high debt levels and the failure to realize expected economic gains have raised concerns about debt traps, a situatiol oon where borrowing from China for BRI projects can lead to loss of contrver assets or infrastructure.
Italy’s growing alignment with Europe and the West has played a significant role in its shift in BRI stance. Prime Minister Meloni’s meeting with U.S. President Joe Biden in July 2023 underscored Italy’s realignment with Western allies who increasingly view China as a systemic rival rather than just a business partner. As Italy assumes the G7 presidency, geopolitical considerations are driving Italy to align its priorities more explicitly with its trans-Atlantic allies.
Despite the likelihood of Italy leaving the BRI, it aims for a diplomatic “soft exit” while preserving essential business ties with China. Italian officials emphasize that withdrawal from the Belt and Road Initiative does not equate to a decline in the overall relationship with China. Italy is exploring a “strategic partnership” focused on economic cooperation.
Italy’s Decision in a Broader Context
Italy’s probable departure from the BRI has sparked discussions on the BRI’s purpose and its potential impact on countries across the economic spectrum. It highlights the interconnectedness of Europe’s satisfaction with the BRI and its effect on developing nations. This trend of distrust toward China and its economic management is significant, and potentially diplomatically embarrassing if Italy explicitly announces its withdrawal before the BRI forum in Beijing.
Italy’s move to exit the BRI, while maintaining diplomatic and economic relations with China, may influence other Western and Eastern European countries to consider similar actions. This development could hinder the BRI’s growth in Europe and lead to increased participation in alternative economic partnerships. The world is increasingly apprehensive about China’s rising political and economic influence. Worries about China using the BRI to create its sphere of influence and gain control of strategic assets have been expressed by several states. Italy’s democratic values are at odds with China, prompting concerns about media cooperation, misinformation, and the ethical and political considerations of engaging in the BRI.
With Italy’s withdrawal reflecting a broader mistrust of China’s intentions, there’s a growing desire for economic partnerships built on shared democratic values, ethical principles, and diversified trade agreements. Countries are seeking to reduce dependency on any single state, recognizing that geopolitical, security, and strategic questions play a role in trade agreements. We have seen progress in forming these value-based alliances with the trend of Friendshoring and the Indo-Pacific Economic Framework.
The Belt and Road Initiative holds the potential to reshape the global economy, but it also comes with significant controversies and risks. Italy’s decision to exit the BRI signifies a growing global trend of scrutinizing the initiative’s economic and geopolitical implications. As nations reevaluate their economic partnerships, values-based alliances and diversified trade agreements are gaining prominence, impacting the future of global economic cooperation. The move away from BRI further signals a decline in China’s global economic influence and potentially its political influence going forward.
TNL Editor: Kim Chan (@thenewslensintl)
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