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Italy’s Exit from China’s Belt and Road Initiative: A Turning Point in Western Relations with Beijing

ChinaItaly's Exit from China's Belt and Road Initiative: A Turning Point in Western Relations with Beijing

Introduction

Italy’s participation in China’s ambitious Belt and Road Initiative (BRI) is nearing an end, a decision that’s drawing international attention. The original Silk Road was a network of trade routes that connected the East and West. Italy’s withdrawal from this modern counterpart is not just an economic matter but holds symbolic significance. This decision by the country’s Prime Minister, Giorgia Meloni, is expected to become official by year’s end.

The Belt and Road Initiative

The BRI, initiated by Chinese President Xi Jinping, is an extensive project to connect Asia with Africa and Europe via land and maritime networks. The primary goal is to enhance regional integration, increase trade, and stimulate economic growth.

Italy’s involvement in the BRI was controversial from the start. As the first and only member of the Group of 7 (G7) to join the initiative, Italy broke ranks with other major Western economies. The decision to join the BRI in 2019 was described by Italian Defence Minister Guido Crosetto as “improvised and atrocious.”

The Road to Withdrawal

Meloni, the first far-right leader in Italy since World War II, has been vocal about her stance on the BRI, calling the decision to join a “big mistake.” This opinion appears to have widespread political support. She is expected to travel to Beijing in the autumn to explain the decision personally to President Xi.

This move aligns with the general sentiment in Western Europe, where many countries are reassessing their ties with China. However, Italy’s withdrawal process is unique, with little ambiguity or diplomatic cover offered by Brussels.

Lorenzo Codogno, a chief economist at the Italian Ministry of Economy and Finance, said, “The challenge Meloni faces is how to move out of the BRI, which is a political and not an economic tool, while maintaining or strengthening economic links with China.”

Economic Impact and Concerns

Italy’s involvement in the BRI has not yielded the economic rewards it initially sought. Giuliano Noci, vice-rector at the Politecnico di Milano university, noted that joining without side deals was a mistake. He questioned why Italian products didn’t get better access to the Chinese market like German products.

The Italian government had initially hoped that joining the BRI would help rebalance a trade deficit with China. Former Economy Minister Luigi Di Maio expressed hopes for “a substantial and gradual increase of exports” to balance the trade imbalances. However, the data shows that the deficit has actually expanded by 55%, and Chinese investments in Italy have dropped by 81% from 2018 to 2022.

China’s Perspective

China’s view of Italy’s withdrawal is multifaceted. Losing Italy, the BRI’s wealthiest Western member, is a symbolic blow. When Italy joined, President Xi expressed hope that the agreement would cultivate richer bilateral relations.

However, the changing geopolitical landscape has altered the context. Europe’s relationship with China has deteriorated due to various factors, including the EU’s designation of China as a “systemic rival” and the global impact of the coronavirus pandemic.

For China, the initiative was about targeting pivot or lighthouse countries to set positive examples. But this approach seems less effective in Europe now, as Moritz Rudolf, an expert in the initiative at Yale Law School’s Paul Tsai China Centre, observed, “With the geopolitical situation, this just wouldn’t happen today. Economic relations are now viewed in terms of dependencies rather than opportunities.”

Italy’s International Relations

Italy’s decision comes during a critical period of realignment between the U.S. and Europe. The Trump administration had criticized Italy’s endorsement of the BRI, calling it a legitimization of China’s “predatory approach to investment.”

Under the Biden administration, the U.S. continues to hold a hawkish stance on China. While President Biden did not raise the issue during Meloni’s recent visit to Washington, the Italian decision aligns with the broader Western perspective.

Francesca Ghiretti, a researcher of EU-China economic ties, said, “Once the renewal of the memorandum became a public and international matter, it was not possible for Italy to avoid taking a political decision.”

Potential Repercussions

The manner in which Italy handles the withdrawal may have significant consequences. Lithuania, which openly deepened ties with Taiwan, became embroiled in a prolonged feud with Beijing. In contrast, Latvia and Estonia faced no retaliation beyond a diplomatic reprimand.

China’s foreign ministry has warned against politicizing the Sino-Italian joint construction of the belt and road. The potential for targeted and symbolic retaliation is not off the table, especially given the public profile of this story.

Conclusion

Italy’s exit from the Belt and Road Initiative marks a significant turning point in international relations and reflects the complex realities of the geopolitical landscape. For Italy, the challenge now is to navigate the exit strategically, maintaining its economic relationship with China without alienating other Western allies.

In the broader context, Italy’s decision could be a bellwether for how other European nations approach their relations with China. The economic, political, and symbolic implications of this move will likely resonate well beyond Italy’s borders, influencing future decisions by other countries regarding the BRI and China’s growing global influence.

The full effects of this withdrawal will unfold over time, and the diplomatic agility of all parties involved will be tested in the coming months. The choices made now will shape the future of international trade, economic partnerships, and geopolitical alignments in an increasingly interconnected but also divided world.

This decision by Italy is a case study in the complex interplay of economics, politics, and ideology in a rapidly changing world. It serves as a reminder that in international relations, no decision is made in isolation, and the reverberations can be felt far and wide. Italy’s choice to exit the Belt and Road Initiative reflects broader global trends and will be studied as a significant moment in the evolving relationship between the East and the West.

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