This article was written by Undra Tsend.
On March 23 during a ceremony in Rome, the Italian government signed a Memorandum of Understanding (MOU) with China, energetically endorsing the East Asian superpower’s global investment push known as the Belt and Road Initiative (BRI) that spans various continents through a network of bridges, ports, and power plants. In total, 29 separate protocols of the memorandum were signed while the Italian Premier Giuseppe Conte and Chinese president Xi Jinping, whose brainchild is the project hereby presented, conversed about their joint collaboration during the talk. Italy is the first Group of Seven (G7) country to join the initiative but not the first of the European Union to do so. A good portion of member countries in the EU such as Bulgaria, Czech Republic, Hungary, Poland and more are on the list of countries and regions along the 21st-century Silk Road to be included in an objective to develop stronger economic partnerships with China.
According to the Italian Minister of Economic Development Luigi de Maio, “there is a lot of ‘Made in China’ coming to Italy and too little ‘Made in Italy’ that goes to China”. In the process, exports increases will over time correct a trade imbalance that is currently underscoring Italy’s economy. While Spain’s debt, a country with similar conditions, is at 98.3% of the gross domestic product, Italy’s debt stands at a whopping 131.8% of their GDP, boasting one of the highest debt-to-GDP ratios in the world. In economics, a high debt-to-GDP ratio indicates an economy that produces and sells goods and services insufficient to pay back debts without incurring further debt. Considering Italy’s stuttering economic growth over the past two decades, the Italian government sees the One Belt One Road (OBOR) as an opportunity that cannot be missed. It anticipates providing an extensive boost to Italian businesses with a focus on SMEs through investments and further gear up the economy by exporting its own products on a much larger scale to China.
Previously, China announced the BRI in 2013, capping it as an ambitious plan with clear aims to strengthen infrastructure and trade links between China and an estimated 65 countries across four continents. It links the western tip of Europe to North Africa and the Gulf countries and continues all the way through to Southeast Asia and onto the east coast of China. What China plans to basically gain is both sea and land access to Europe, a strategy that many European countries are aware of and caution for. As a member of the NATO alliance and the third largest country in the Eurozone, Italy’s decision to become a member of the initiative and express willingness to open up its ports surprised its allies and did provide for discourse amongst members of the EU.
The day before the ceremony, the EU Council met to discuss a unified EU strategy toward China, which would later bear fruit and spur vital conversations at the EU-China Summit set to be held on April 9. Ironically the day after, the MOU was signed by the Italian government with Beijing to officially become a member of the BRI. Skepticism about China’s underlying intentions and the methodology involved with the implementation of such projects further led to distrust; in April, ambassadors from the member states of the EU to Beijing signed a statement citing that BRI “runs counter to the EU agenda for liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies.” Maintaining unity among EU nations would be tough as Greece and Hungary had already signed MOUs with China on BRI cooperation due to the need to alleviate existing economic difficulties, viewing this strategy as a “why-not” beneficial move towards domestic revenue accruement and possibly, economic growth.
Despite the general apprehension generated by a variety of countries sensing Chinese domination of planned networks, they acknowledge the opportunities presented by growing interconnectivity and the mutual benefits associated with it. While some observers see this pioneering project as China’s ultimate goal to dominate global affairs with a China-centered network, its ongoing growing support of nations welcome a new era characterized by mutual economic growth and a reshaping of the international system.