In a significant setback for China’s post-Covid economic revival endeavors, Italy, the sole member of the G7 consortium of industrialized nations to participate in China’s ambitious Belt and Road Initiative (BRI), appears to be contemplating a withdrawal from the accord.
Preceding his imminent three-day visit to Beijing, the Italian Foreign Minister, Antonio Tajani, conveyed that the BRI agreement with China “has egregiously fallen short of Italian expectations.” Unless Italy formally withdraws by the conclusion of this year, the BRI pact is set to automatically renew in March 2024.
“We aspire to maintain our close collaboration with China, yet we must also scrutinize our exports: regrettably, the BRI has not yielded the outcomes we had anticipated,” Tajani stated during an economic forum preceding his departure for Beijing. He highlighted that Italy’s exports to China in 2022 amounted to 16.5 billion euros ($17.8 billion), significantly trailing behind France and Germany, which recorded figures of 23 billion and 107 billion euros, respectively.
Italian Defense Minister Guido Crosetto recently criticized Italy’s decision to join the BRI as an “impromptu and ill-advised act,” while Prime Minister Giorgia Meloni consistently referred to the agreement as a “grave misjudgment” that she intends to rectify.
This potential withdrawal poses a considerable embarrassment for Chinese President Xi Jinping and represents a major blow to China’s ambitions in Europe. The Belt and Road Initiative, a colossal global infrastructure undertaking, stands as Xi’s flagship foreign policy program, entailing substantial investments in infrastructure such as ports, railways, and airports to enhance trade connections between Asia, Africa, and Europe
In 2019, Italy, grappling with a deeply indebted economy, stunned the United States and Europe by becoming the only G7 member to engage in China’s Belt and Road Initiative. This decision elicited strong disapproval from Washington and marked a substantial political victory for Xi.
If Rome indeed withdraws from the BRI, it will deliver a severe setback to Beijing on the initiative’s 10th anniversary. Given the deep entrenchment of the BRI in Xi’s political legacy, Beijing has reacted vehemently to the withdrawal speculations, accusing certain factions of sensationalizing and politicizing Rome’s BRI membership.
This planned withdrawal also reflects a broader trend in Europe, where governments are growing increasingly apprehensive about their economic reliance on Beijing.
The prospect of withdrawal may have already received preliminary approval from Chinese authorities, as noted by Lorenzo Codogno, a former chief economist at the Italian treasury. The formal announcement is anticipated to be made by Meloni during her state visit to Beijing, expected around mid-October, although the Italian parliament will have the ultimate say.
Italy’s decision to initially join the BRI stemmed from its desire to attract investment and expand its access to China’s vast market, especially during a period when the nation endured three recessions within a decade. Italy’s populist government, at the time, was skeptical of the European Union and turned to China to fulfill its investment needs, leveraging its political influence to secure a place in the BRI.
However, the subsequent institutional arrangements and agreements under the BRI did not substantially alter Italy-China economic ties. While Italy’s exports to China increased marginally since joining the BRI, Chinese exports to Italy witnessed more substantial growth. Chinese investment in non-BRI European countries surpassed its investments in Italy, revealing that BRI participation did not necessarily confer special status or enhanced trade and investment benefits with China.
Over the past decade, the majority of European Union members, particularly in Eastern Europe, aligned with China’s Belt and Road Initiative, primarily motivated by hopes of economic gains. Nevertheless, the partnership has not yielded significant dividends for most of these nations, many of which are now reconsidering their involvement.
China’s diplomatic endeavors in Central and Eastern Europe, including the 17+1 initiative, have seen dwindling membership, and a key trade and investment agreement between the European Union and China recently collapsed. Europe’s perception of China is gradually shifting from an economic opportunity to a competitive and challenging force, a transformation emphasized by President of the European Commission Ursula von der Leyen, who pointed to the BRI as evidence of China’s aim to alter the international order.
Furthermore, China’s support for Russia in the conflict with Ukraine has prompted European governments, including Italy, to reassess their perceptions of China.
This potential withdrawal by Italy underscores the growing complexity of China’s international relationships and the evolving dynamics between Europe and China on the global stage.