Italy’s decision on China’s Belt and Road Initiative and beyond

André Gattolin is a French senator, who serves as the French Senate’s vice president of Foreign Affairs and EU Affairs. Jianli Yang is the founder and president of Citizen Power Initiatives for China and the author of “Its Time for a Values-Based ‘Economic NATO.’”

During Chinese President Xi Jinping’s visit to Italy in March 2019, the two countries signed a Memorandum of Understanding on China’s Belt and Road Initiative (BRI). And with this memorandum, Italy became the only G7 country to join the BRI — which was seen as a major diplomatic breakthrough by Beijing.

Still the subject of ongoing debate within Italy itself, this agreement has faced strong criticism from both the United States and the European Union, as many Western countries view the BRI as a Trojan horse for Beijing’s geopolitical interests. And now, the memorandum is to be automatically renewed in March 2024, unless Italy formally requests to withdraw from it three months in advance.

Along these lines, Prime Minister Giorgia Meloni said in May that Italy was planning to hold talks with China regarding a possible withdrawal, sparking intense discussion within the country. And since then, China has not only warned that such a decision would damage Italy’s reputation and credibility, but Beijing also launched diplomatic efforts to persuade it otherwise, with officials lobbying and meeting with Italian politicians and business leaders, utilizing China’s standard tactic of “using business to exert political pressure.”

Now, facing what could be the biggest diplomatic test of her tenure, Meloni must make a decision before December. And we believe that at this juncture, it’s necessary to carefully consider the basic principles Italy should follow in making decisions regarding the BRI — a guideline that should also apply to the country’s economic relations with China more broadly.

Of course, principles are rarely one-dimensional — otherwise, the issue wouldn’t be so complex. Thus, we’ve identified three broad criteria for deciding whether Italy should pursue a business deal with China: First, the consideration of economic interests; second, the direct impact on the country’s politics, society and national security; and finally, the long-term risk of putting Italy in a position where it may be unable to uphold democratic values and principles in international affairs.

Considering economic interests is, of course, a natural part of doing business, and when Italy signed the BRI memorandum four years ago, the country’s then Prime Minister Giuseppe Conte initially hoped to boost the economy and increase Italy’s exports to China. But according to Italy’s Foreign Minister Antonio Tajani, Italy’s gained little from its participation in the BRI.

Italy’s exports to China increased only slightly — from €13 billion in 2019 to €16.4 billion last year, while China’s exports to Italy increased from €31.7 billion to €57.5 billion over the same period. Meanwhile, investments related to Italy and the BRI plummeted from $2.51 billion in 2019 to just $810 million the following year, according to the Green Finance and Development Center at Fudan University. And data from Rhodium Group shows that China’s direct foreign investment in Italy fell sharply from $650 million in 2019 to just $20 million in 2020, then $33 million in 2021.

Of course, these figures were affected by COVID-19.

As for the direct impact beyond the economy — on politics, society and national security — it’s important to note that media cooperation is also part of the BRI agreement between Italy and China. Major Italian outlets, including the Italian Broadcasting Corporation and Italy’s largest private television network Mediaset Group, have all signed content exchange agreements with Chinese official media — but these aren’t mutually beneficial or reciprocal, as China doesn’t publish or broadcast any Italian media content, while Italy carries official Chinese Communist Party (CCP) content. However, CCP content is propaganda, not news, which raises important ethical concerns and represents a serious erosion of Italy’s free society.

Similarly, in 2020, a report by Italy’s parliamentary security committee also revealed that during the pandemic, the country became the target of Chinese disinformation and conspiracy theories, at one point even being portrayed as the virus’s “country of origin.” In addition, the CCP mobilized all its “United Front” forces in Italy to raise funds for the purchase of masks and medical supplies to support Italian hospitals, only to then engage in “mask diplomacy” via thousands of bot accounts on social media, portraying Italy as receiving special treatment for its participation in the BRI. However, the assistance claimed by Chinese media was co-funded by Italy’s Civil Protection Department and provided through national agencies and foundations.

China’s narrative also downplayed the assistance provided to Italy by the EU too. Through its Civil Protection Mechanism, the bloc was actually the main supplier of over 330,000 protective masks distributed to Italy, Spain and Croatia between April and May 2020, which were primarily delivered via distribution hubs in Germany. The Italian parliamentary security committee then accordingly recommended Western democracies coordinate and take concrete actions to counter Chinese false propaganda in Europe in the post-pandemic era.

Then, when it comes to national security concerns, the BRI cooperation agreements between China and Italy include the development of the Port of Genoa and the Port of Trieste as well. Genoa and Trieste are Italy’s busiest ports, with Trieste strategically located to serve Central and Eastern Europe. During the Russia-Ukraine war, when Ukrainian ports were blocked by Russia, Trieste and Venice could serve as logistics hubs. And if these strategically important ports fell into China’s hands, it would inevitably threaten Italy’s security.

Finally, looking beyond whether Italy should renew its BRI agreement, there is a structural consideration to be made, balancing the country’s economic relations with China — which is defined as a systemic adversary of the EU — against the preservation of its democratic principles, which is synonymous with its national character.

In recent years, the CCP has become increasingly comfortable using its economic power to coerce and intimidate democratic countries with which it has ideological or values-related conflicts that arise over issues like human rights, Taiwan and holding China accountable for the pandemic. And countries that have been directly affected by China’s economic retaliation over value-based conflicts since 2010 include Norway, the United Kingdom, France, Mongolia, Japan, Taiwan, Australia, the Czech Republic, Lithuania and others.

Meanwhile, in the face of such economic retaliation, in recent years, Japan, Taiwan, Australia, the Czech Republic and Lithuania have all engaged in mutual economic assistance models that deserve to be institutionalized. While collective security alliances and trade organizations exist, they cannot address China’ economic coercion. And the economic losses that individuals, companies or countries are willing, or able, to bear are limited.

On this, the world’s democracies must come together to respond as one, and we advocate for the establishment of a values-based economic “NATO” for democratic countries. The NATO principle of collective defense should be applied to the economic field, meaning if China were to economically retaliate against a member country of such an alliance for upholding democratic principles, then other members would collectively provide protection and support to alleviate the resultant economic pressure — overcoming the collective action dilemma democratic countries have faced in the past.

Democracy is a fundamental principle enshrined in the Italian Constitution. Italy and China have a fundamental discrepancy in values, and political conflicts are inevitable. So, if Italy wants to remain a respected democratic power committed to strengthening democratic values and institutions at home and abroad, it must actively promote the establishment of a values-based economic alliance — starting with the G7, the EU and various transatlantic democratic allies. Therefore, the importance of political and economic relations with such partners far outweighs the importance of economic relations with China.

If these Western democratic countries view the BRI as a Trojan horse for Beijing’s geopolitical interests — and if renewing the BRI memorandum with China will damage Italy’s relations with its transatlantic democratic allies — Italy must make a wise choice.

This isn’t simply a matter of aligning with one of the two superpowers — the U.S. or China — as many observers have described it. Nor is it an attempt to decouple from the Chinese economy. Rather, it is a decision to establish a values-based economic alliance with democratic allies around the world, and to engage with China on principled terms that are consistent with Italy’s founding principles, economic security and long-term interests.