Italy was the first G7 country to join China’s Belt and Road Initiative, signing a Memorandum of Understanding back in 2019. Chinese investors took strong positions in Italian corporate jewels such as tiremaker Pirelli.
But Prime Minister Meloni is now emerging as one of Europe’s hardliners in “de-risking” from China. She is moving towards pulling out of the Belt and Road and has blocked Pirelli’s biggest shareholder, Chinese chemical company Sinochem, from taking a controlling share.
The shift is significant — and stands in contrast to some key European allies. Germany released its first China strategy on July 13, taking a strong line against Beijing’s “grave violations of human rights” but backing away from imposing tough economic sanctions. French President Emmanuel Macron traveled this spring to China with a large business entourage, determined to strike deals.
Italy has long leaned to the East — remember Marco Polo’s journey and the Silk Route. Many feared that Meloni would share an ideological affinity for Vladimir Putin and impose a prickly nationalist aversion to joining the West in standing up to China.
Instead, she has turned out to be a steadfast Atlanticist, supporting Ukraine and securing transatlantic cooperation on “de-risking” from China. The Italian Prime Minister will make her first visit to the US since taking office last year on July 27. President Joe Biden will host her at the White House.
China will be on top of the agenda. Italy was the only major G7 country to have joined China’s Belt and Road Initiative, which envisions rebuilding the old Silk Road to connect China with Europe through large infrastructure spending. Former Prime Minister Giuseppe Conte’s populist, anti-establishment coalition justified the move by explaining that the Belt and Road Initiative would boost Italy’s exports toward China and help it reduce the gap with other major EU economies.
It didn’t happen. Over the past four years and three governments, Italy’s trade with China remains far below that of France and Germany: Rome’s exports only grew from €13 to €16 billion in 2022, while Paris’ went from €23 to €25 billion, and Berlin rose from €104 to €113 billion in the same period.
Despite Beijing’s assurances of pursuing a “balanced relationship” and harnessing “the potential of cooperation,” the trade remains unbalanced, in China’s favor. Chinese imports nearly doubled from 2019 to 2022, soaring from €35 billion to over €65 billion. A surge this past spring of Italian exports to China was a one-off, driven by demand for a liver drug that might help prevent COVID-19.
Italy’s Belt and Road MOU will renew in March 2024 unless one of the parties decides to exit. Although Rome has until the end of this year to make a decision, Meloni reportedly told US House Speaker Kevin McCarthy that she was leaning toward pulling out. “We can have very good relations with China without being part of a strategic plan,” said told the Italian Senate late in June.
In recent years, Italy has expanded its foreign investment screenings and protection mechanisms, as well as the scope of its so-called Golden Power (which the government can wield to stop dealings in the name of national security). Rome is wielding this power to limit tech transfers to China of telecommunications, drones, biotech, and robotics.
The most recent test deal concerns Pirelli. Beijing-controlled chemical giant Sinochem is the 151-year-old Milan-based tire maker’s biggest shareholder, with a 37% stake. In late June, Meloni blocked the Sinochem plan to appoint additional board members out of concerns to protect Pirelli’s Cyber Tire technology, which allows tires to transmit data while driving.
As Prime Minister, the right-wing nationalist Meloni has emerged as a key Western ally. She has become a strong supporter of Ukraine. She has worked with, not against, Brussels to secure EU funding. And now, she looks set to become the US’ leading European partner in “de-risking” from China.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.