As a G7 country, Italy was one of the first countries to join China’s Belt and Road Initiative (BRI) and made significant investments in the project. However, in 2023, the Italian government decided to withdraw from the project. This marked an important turning point in global geopolitics and strained Italy-China relations. The project, which aims to develop infrastructure and trade around the world, covers road, rail, maritime and air infrastructure, as well as other infrastructure projects such as energy and telecommunications.
From this point of view, Ankara Center for Crisis and Policy Studies (ANKASAM) presents the views it received from Sebastian Contin Trillo-Figueroa, Geopolitical Analyst and European Union (EU)-Asia Advisor at the Asia Global Institute, in order to evaluate the reasons for Italy’s exit from the BRI and how China will react.
1. According to data from the Italian Trade Office. The rate of growth of China’s imports from Italy is lower than China’s average import growth rate. How do you evaluate Italy’s withdrawal from the BRI?
Italy’s withdrawal from the BRI appears to be driven more by political considerations than economic factors. Despite the noticeable discrepancy in China’s imports from Italy compared to the overall import growth rate you refer to, the trade imbalance primarily favors China, suggesting potential challenges in the bilateral economic relationship extending beyond BRI participation.
The decision should prompt, therefore, a closer examination of Italy’s strategic considerations, emphasizing the broader implications beyond economic ties. Geopolitical factors and diplomatic shifts likely played a significant role in that choice. As we look ahead, it remains early to assess the long-term ramifications of the withdrawal and whether the trade figures indicate a transient phenomenon or a more sustained situation.
The economic factor, however, aligns with a broader trend in Sino-European relations, where China’s economic expansion raises concerns for Europe, shared by Italy as a significant EU member state, ranked third in both GDP and population after Germany and France.
Henceforth, the key concerns to tackle for an improved Sino-European relationship include the following.
China plays a big role in what Europe buys (20.8%), and it’s the third-largest buyer from the EU (9%). Since 2018, things changed – Europe used to buy more from China, but now it sells more. This shift created some trust issues because China is now more into relying on itself and buying less from Europe.
Another problem is that China sends about three times more to Europe (€1.7 billion) than Europe sends back (€660 million) every day. This could affect Europe’s ability to compete in the long run. European businesses also find it hard to invest in China due to existing barriers. Despite the agreement reached in 2020, known as the Comprehensive Agreement on Investment (CAI), its practical implementation remains uncertain, and no measures have been taken to set it in motion.
The evolving dynamics highlight the need for Europe, including Italy, to navigate the complexities of a changing economic setting, characterized by shifting trade patterns and geopolitical considerations.
2. Following China’s Belt and Road Initiative, China has started to buy shares in port companies, which is sensitive for Italy as well as Europe. Can you evaluate it within the framework of International Finance?
Indeed, this trend is notably observed in the implementation of “economic security” policies, aiming to counter foreign powers from acquiring strategic assets within a territory.
The complex interplay of geopolitics, economic policy, and global trade unfolds intricately in that context, reshaping the landscape of international competition.
Nevertheless, allow me to proceed to the origin of this matter. The world is undergoing a seismic shift. The illusion of guaranteed access to everything through globalization shattered during the pandemic, ushering in a new era of heightened competition and tension. Now, countries fiercely vie for strategic capabilities, reshaping the delicate balance of power daily.
In this pivotal moment, national security takes the reins of economic strategy. The old political playbook is obsolete. It’s a race for advanced technologies, eclipsing ideological concerns as leaders realign priorities. Security drives the economy, or the economy serves security.
Economic policies no longer hinge on traditional measures; instead, they pivot on national security objectives. This is the reality for major global players—the US, China, Europe, Japan—all navigating a world where military threats are a daily reality.
In the context of Europe, there are growing concerns about the increasing dependence on China for critical assets. This vulnerability became evident during the COVID-19 pandemic, as disruptions in the Chinese supply chain resulted in shortages in Europe. In response, a “de-risking” strategy was implemented, aimed at reducing reliance on specific sources, including decreasing dependence on Russia for energy, the U.S. for defense, and China for both trade and strategic assets, including ports, as you mention in your question.
Hence, in 2023, this trend solidified further. China’s enactment of the Foreign Relations Law was mirrored by the European Union’s implementation of the Economic Security Strategy and Foreign Subsidies Regulation. Concurrently, the US issued an Executive Order focused on “Investments in Certain National Security Technologies”, specifically targeting “Countries of Concern”.
As of 2024, the convergence of economic strategies, national security imperatives, and technological advancements is gaining momentum, propelling global powers beyond mere economic dominance. This transition is erasing the traditional boundaries between economic prosperity and national security, leading to a reevaluation for economic security. The emphasis is now on bolstering resilience and autonomy in critical areas to reduce global dependencies and enhance strategic self-sufficiency.
As a matter of fact, the EU revealed a new ‘economic security’ package on January 24, focusing on Russia and China. İt tries to enhance the EU’s trade-defense, following the principle “as open as possible, as closed as necessary”. Despite an alleged “country-agnostic” approach, the EU emphasizesa unified stance with the referred countries, particularly in export controls and investment screening. In an ideal setting, candid relationships would adequately address such issues, but contemporary geopolitics adds enormous complexity.
3. What strategy will China follow for the maritime corridor of its project to Europe after Italy’s exit from the Belt and Road programme and its subsequent participation in IMEC (European Middle East Economic Corridor)?
Predicting such a strategy would be premature, as I am uncertain about any potential link between Italy’s BRI withdrawal and IMEC, a project extending well beyond Italy’s borders and dimensions. Additional insight is essential to identify any correlation between these two elements. I am open to exploring the intricate dynamics underlying their association when the project comes to fruition. The future connection from India to Europe via the Middle East still faces numerous challenges, including many missing links and unknown costs. These factors necessitate careful consideration as the project progresses.
Considering what you term as China’s maritime corridor, it’s crucial to note the significant global impact of various port and railway projects over the past decade within the BRI, notably what has been framed as the “String of Pearls” strategy. This initiative has extended China’s influence from the South China Sea to key locations such as Sri Lanka, Pakistan, and Djibouti. The “String of Pearls” comprises military and commercial facilities along sea routes connecting Mainland China to Africa, passing through strategically important areas in multiple countries. India perceives this as a threat to its national security.
4. The decision of Italy, the only member G7 country of the Belt and Road project, to leave the project and subsequently join IMEC has been interpreted by some experts as a result of US pressure against Chinese growth. Could this situation in Europe be interpreted as the US response to China’s ecopolitical challenge to the US?
Differing perspectives exist. Here’s why: In the context of what I refer to as the “geo-economics battle”, global powers are presently involved in a competition focused on competing geopolitical strategies related to foreign infrastructural development. This phenomenon encapsulates a global contest where nations aim for economic advantages through commerce, including investments, loans, contract opportunities, and the expansion of market share.
Despite appearing aimed at global development, this competition extends beyond economic realms. China’s BRI serves as a prominent illustration of leveraging investments to advance strategic interests and global influence: China asserts to have mobilized US$1 trillion in global investments, implementing over 3,000 projects that have generated 420,000 jobs across 149 countries worldwide. BRI has become a versatile tool, enhancing both soft and hard power.
Recognizing China’s capacity to wield considerable influence by addressing the infrastructure needs of developing economies, the EU introduced the Global Gateway (GG) in December 2021, followed by the U.S. unveiling the Partnership for Global Infrastructure and Investment (PGII) in June 2022.
The GG seeks to mobilize up to €300 billion by 2027 through a mix of public and private funds. Diverging from China’s lending approach, it emphasizes demand-driven investments but faces challenges. While EU institutions claim progress, uncertainties persist about its political direction, including the level of commitment, specific figures, and implementation procedures. It remains unclear whether. The GG is primarily focused on development assistance or oriented towards geopolitical infrastructure investments.
The US initiated the five-year PGII, a “values-driven” initiative with US$600 billion funding commitment, providing one-third of the funding, while the remaining amount is expected to come from other G7 members.
Concerning your association of IMEC with countering BRI, it is acknowledged that some perceive it that way. However, it’s essential to recognize that the sheer scale and scope of the BRI far exceed IMEC by far. Given the complexity and extensive global reach of the BRI, it is prudent to conduct a meticulous assessment before making such direct comparisons or drawing implications.
Sebastian Contin Trillo-Figueroa
Sebastian, a Geopolitics Analyst specializing in EU-Asia relations, serves as a consultant for both public and private sector organizations, notably think tanks. Sebastian, as a bachelor in law, also holds two master’s degrees, one in commercial law and another in EU law and institutions from the College of Europe (Belgium). Sebastian’s research consistently contributes to prominent publications, including China-US Focus and the South China Morning Post. His understanding covers geopolitics, Sino-European relations, great power competition, and critical raw materials. His dedicated focus is on cultivating growth and synergy between Asia and the EU, acknowledging the far-reaching implications for the global stage. Currently, his research at the University of Hong Kong envisions the EU playing a crucial role as a peace balancer, adeptly navigating the dynamics between the US and China. Besides, he is an AsiaGlobal Fellow at the Asia Global Institute, the University of Hong Kong, and a Visiting Fellow at the Department of Diplomacy, National Chengchi University, Taipei.
