Italy's plan to join the Belt and Road Initiative a pragmatic path to boosting its economy
Italy is set to be the first G7 country to join the China-proposed Belt and Road Initiative (BRI) by signing on to the initiative with China, a development that is expected to meet the respective needs of both sides.
From the perspective of China, promoting the BRI, or expanding China's global economic cooperation, will allow it to build more ports that can handle large-scale container ships. Except for Piraeus Port in Greece, which has been acquired by China's Cosco, there aren't many large-scale container hub ports in Europe. In fact, China's investment interest in European ports is mainly because ports that can accommodate large container ships carrying Chinese goods can not only reduce the costs of trade transactions and logistics but can also help increase Chinese exports to European countries. Against the backdrop of the US-China trade war, the move could be seen as China's attempt to seek diverse export markets. In this sense, Italy's plan of joining the BRI is essential for China.
From the Italian side, the country's economy hasn't fundamentally recovered from the 2008 financial crisis and the European debt crisis. Despite some recovery, its overall economic performance has not been very satisfying. Under these circumstances, Italy's new populist government is now committed to improving people's livelihood and boosting economic growth, which is why foreign investment is urgently welcome. Meanwhile, port cooperation with Chinese investors will lead to increased freight volume, bringing substantial economic benefits to its economy.
Moreover, with multiple ports, Italy has great geographical advantages in the Mediterranean region. Therefore, port cooperation between Italy and China under the BRI framework is of strategic significance to both sides as it will allow Chinese goods to enter the European market through the ports of Venice and Ravenna, representing a considerable reduction in logistics costs between China and Europe.
The big picture that has to be mentioned is that the EU is currently pushing for a harder line on China across the board. A few days ago, the European Commission published a joint communication on the EU-China strategic outlook. In addition to setting out 10 concrete actions for EU leaders to discuss at their next meeting, the communication set a defensive tone toward China by calling it "an economic competitor in pursuit of technological leadership and a systemic rival promoting alternative models of governance." Apparently, the EU is likely to put pressure on China on some trade issues. Nevertheless, Italy seems to have different values and standards from other EU countries as its new populist government sings a different tune on many issues. In fact, the EU is experiencing an internal differentiation due to the rise of populism in some countries, such as Italy.
However, Italy's open expression of its willingness to join the BRI indicates that its populist leaders are quite pragmatic and are really concerned about bringing benefits to their people. They are more motivated to boost the country's economy because their power comes from the people.
As for how the BRI could boost Italy's exports to China, it is certain that progress will be made in this respect. China has already begun preparations for the second China International Import Expo, a platform representing its welcoming attitude toward high-quality foreign products. Meanwhile, there are already many China-Europe express freight trains running between Chinese and European cities. It is also believed that port construction under the BRI will inject new vitality into the country's export development.
Finally, Italy's plan of joining the BRI could be a major example for some pragmatic countries to abandon their ideological thinking. There is no doubt that the move by Italy is bound to add momentum to its economy. If the cooperation could yield some substantial gains in the short term, the BRI will become really attractive to other EU countries - not just those in Central and Eastern Europe, but also Western European countries with interest in the BRI. Of course, the choice to join the BRI is still up to each country. Some countries are more cautious, while others may be more flexible or pragmatic. But since Italy, as a major EU country, is willing to take the first step, it won't be the last one.
The article was compiled based on an interview with Song Qing, a research fellow at the Shanghai Institutes for International Studies.