Italy Quits China’s Belt and Road Initiative, Angers Beijing

Italy Quits China’s Belt and Road Initiative, Angers Beijing

Italy’s Prime Minister Giorgia Meloni has angered China’s Communist leadership as her government withdraws from President Xi Jinping’s trillion dollar Belt and Road Initiative (BRI).

Four years after joining the Chinese global infrastructure initiative, Italy is preparing to get out of the deal, the country’s Defense Minister Guido Crosetto announced in a recent interview.

The BRI brought no tangible trade benefits for Italy. The Chinese instead flooded the Italian market with their cheap goods, further raising the already high bilateral trade deficit. “We exported a load of oranges to China, they tripled exports to Italy in three years,” the defense minister said.

By pulling out of the project, Meloni is fulfilling her election promise. She called Italy’s entry into the Chinese infrastructure project “a big mistake.”

The DC-based journal Foreign Policy reported Friday:

China’s ambitions in Europe suffered a major setback this week when Italy signaled plans to leave Beijing’s flagship foreign-policy program, the Belt and Road Initiative (BRI), underscoring a broader shift in Europe as governments grow increasingly wary of their economic dependence on Beijing.

While Beijing has long sought to expand its economic footprint in Europe, including by funneling money into BRI infrastructure projects, the biggest European economies largely refused to sign onto the initiative. That changed in 2019 when Italy diverged from its peers and became the BRI’s first and only G-7 member, a move that enraged Washington and represented a major political victory for China.

By exiting the BRI, Rome will be dealing an embarrassing blow to Beijing on the initiative’s 10th anniversary. Italy’s planned withdrawal also reflects a broader reckoning overtaking Europe as many leaders turn away from the deep economic integration that has for years defined the Europe-China relationship. For years, Europe has lagged behind Washington’s confrontational approach to China, especially when it comes to economic integration—or decoupling. But that appears to be changing. (…)

A cornerstone of Chinese President Xi Jinping’s foreign-policy strategy, the BRI has allowed China to export its industrial overcapacity while expanding its geopolitical influence, although the program now appears to be drawing down. In the decade since its inception, two-thirds of European Union members, mostly in the east, have joined the initiative to harness Chinese investment and jump-start growth—resulting in a slew of railway, port, and highway projects. Many of these countries, like Italy, were grappling with slumping economies and touted the potential economic gains that could come from BRI investment.

Four years later, those bets have not paid off. When Italy signed onto the initiative, Chinese firms agreed to pour $2.8 billion into infrastructure projects, including for Italian ports—fueling lawmakers’ hopes of sweeping returns. But the economic boom never came.

The move will ‘hurt’ Italy, China warns

Xi Jinping’s Belt and Road Initiative envisions a vast network of ports, railways, roads, and pipelines connecting China to the Eurasian landmass. The unfettered access to Italian ports was key to the Chinese maritime designs of securing a foothold in Europe. Italy quitting the project is seen as big blow to these plans.

“For China, losing the belt and road’s richest Western member and a key node on the original Silk Road will be a symbolic blow,” the newspaper South China Morning Post admitted Saturday.

Beijing is angered by Rome’s defiant pullout. Germany state-run DW TV reported:

China on Friday blamed “some forces” within the Italian government who it said had “politicized” the Asian country’s huge Belt and Road Initiative (BRI), of which Italy is a member.

In a statement, the Chinese Foreign Ministry said it believed the recent criticism by Rome of its links to the BRI was an attempt to “disrupt cooperation and create division.”

It warned that the “malicious hype” created by Italy’s far-right government “goes against the trend of history and will hurt others without benefiting oneself.”

Losing access to Italian ports is a setback, but China isn’t giving up on its grand designs anytime soon. Apart from the maritime routes, Beijing is also looking to enter Europe from the east. The Czech Republic, Hungary, Poland, and Slovakia have also signed up for BRI-related deals. The initiative includes a “10,800-kilometer-long rail link [running] through Kazakhstan, Russia, Belarus, Poland and Germany,” Chinese news agency Xinhua reports.

Besides Italy, 70 countries across Asia, the Middle East, Europe, and Africa have signed up on the Chinese project. Italy is one of the few industrialized Western nations to join the BRI. Most of these countries are poor third-world nations with dysfunctional economies and corrupt governance.

Several of them have defaulted on Chinese loans handed out under the framework of the project. “About $78.5bn of loans from Chinese institutions to roads, railways, ports, airports and other infrastructure around the world were renegotiated or written off between 2020 and the end of March this year,” the UK’s Financial Times reported April 2023.

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