Italy To Pull Out Of China’s Belt And Road Initiative Deal

Italy is highly unlikely to renew China’s Belt and Road Initiative (BRI) deal, set to expire early next year, Reuters reported on Wednesday (4 May).

The report quoted an official familiar with the matter, who said the decision would not be made before the Group of Seven (G7) summit in Japan later this month.

He said that this is a highly sensitive topic and discussions need to be held with Beijing before any decision is made. The deal would expire in March 2024 and automatically be renewed unless either side pulls out of it.

The move would come at a time when European countries are re-calibrating their Indo-Pacific policies and attempting to balance their engagement with China, especially in trade and investment sectors.

Italy became a part of the BRI in 2019, becoming the first and only member of the G7 to do so. The then Prime Minister Giuseppe Conte hoped the deal would give a lift to Italy’s underperforming economy.

The deal, however, came as a shock to Western nations and Italy’s partners. BRI was known to be China’s way into Europe, boost its stature and influence and give way to its eventual “peaceful rise”.

However, over the last few years, the country has seen little benefits from the deal, with exports to China totalling a mere 16.4 billion euros(($18.1 billion) last year, up from 1 billion euros in 2019.

On the other hand, China’s exports to Italy have risen sharply to 57.5 billion from 31.7 billion over the same period, as per Italian data. Italy’s Eurozone partners France and Germany exported significantly more to China last year, despite not being a part of the BRI.

Notably, the nationalist government led by Giorgia Meloni has taken a hawkish stance on China. In an interview with Reuters last year before coming to power, Meloni said that “There is no political will on my part to favour Chinese expansion into Italy or Europe”.

Standing next to a representative from Taiwan, she said in a previous tweet that she stands alongside those who believe in democracy.

Earlier in 2021, former European Central Bank governor Mario Draghi froze the BRI deal and even vetoed three Chinese takeovers of Italian businesses.

While her government wants China to continue as a partner, it doesn’t want Italy to get into a situation of over-reliance on Beijing in any key sectors, Reuters quoted.