Defense Minister Guido Crosetto recently criticized the signing of the Italy-China MoU(Memorandum of Understanding) on March 23, 2019, on the Belt and Road Initiative (BRI, also known as the new Silk Road). And Premier Giorgia Meloni, returning from Washington, said the Italian government has yet to decide whether to allow its automatic renewal for the following five years, March 23, 2024. That is, whether to communicate its termination, by December 23, 2023. (1) An in-depth study.
1) Italy – China, a cultural and historical relationship.
Italy is the only European country to have a cultural and historical relationship with China, which dates back to Marco Polo (Venice, 1254-1324) and Matteo Ricci (Macerata, 1552 – Beijing, 1610) and has continued even following the establishment of the People’s Republic of China (1949), thanks to prominent political figures such as Pietro Nenni, Amintore Fanfani, Giorgio La Pira and Enrico Mattei. In 1952 Ferruccio Parri founded the Study Center for the Development of Economic and Cultural Relations with China. (2)
Diplomatic relations between the two countries began on November 6, 1970 with the recognition of the People’s Republic of China and the severing of diplomatic relations with the autonomous province of Taiwan by Italy, later followed by other European countries. Since then, Italy-China bilateral relations have seen important developments. A few passages are recalled:
– 1978. Italy-China agreements on cultural cooperation as well as scientific and technological cooperation,
– 1984. Sino-Italian protocol for scientific and technological cooperation in space,
– 1991. Sino-Italian agreement on legal assistance and civil affairs, Sino-Italian agreement on economic cooperation, Sino-Italian agreement on cooperation for peaceful utilization and space research, (3)
– 2004. Establishment of the Italy-China Intergovernmental Committee,
– 2009. China’s participation in G8, signing of nine bilateral cooperation and development agreements with Italy,
– 2019. Italy-China cooperation is consolidated with three MoUs on the Belt and Road Initiative, e-commerce and startups.
2) Silk Road and the Italian economy
Between 2003 and 2022, the value of trade between Italy and China increased almost sixfold (+590 percent) from US$ 11.73 billion to US$ 78 billion (3.4). Between 2019 and 2022–following the MoU on the Belt and Road Initiative (BRI) and bucking the Covid crisis–trade between Italy and China grew by +42%. (4) Exports from Italy to China exceeded € 3 billion (US$ 3.3 billion) in February 2023, up 131 percent from a year earlier, after up 137 percent in the previous month. (5)
The Silk Road is perhaps the only hope to revive a country in exhaustion that recorded a cyclical decline in GDP(Gross Domestic Product, or GDP) of -0.3 percent in the second quarter of 2023. (6)
Italy’s balance of payments, as of May 2023, collapsed to – €14.7 billion (- €32.5 bn compared to + €17.8 bn a year earlier). (7) In line with the eurozone, which-in plummeting from + €285 billion to – €137 billion, between 2021 and 2022-burned 3.3 percent of GDP. (8)
3) Looking East
European Central Bank
(ECB, or ECB) continues to raise interest rates, (9) in a vain attempt to tame inflation, which instead continues, to general indifference. (10) And it comes with the technical recession, marked by two consecutive quarters of negative GDP (-0.1 percent) between October 2022 and March 2023. (11) Stagflation is served, as was already predicted at the dawn of the Russia-Ukraine war. (12) And the energy crisis although already announced (13)-in increasing energy expenditures in the EU by a trillion, or 6 percent of GDP-has triggered the deindustrialization of the Old Continent (14,15).
Looking East is the only option available, and the Belt and Road Initiative (BRI) can return Italy to a leading role precisely because of its historical, cultural and cooperative ties with China. Exports of Italian products alone to the People’s Republic of China-where Made in Italy is highly valued, and the middle class expresses half a billion consumers-can save our industry from the precipice. Not to mention that the BIS is already participated by 150 countries, a dozen less than the 164 WTO member states. What’s more, maritime logistics can bring centrality back to the ports of Genoa and Trieste, as Europe’s key hubs.
4) Belt and Road Initiative (BRI)
Belt and Road Initiative (BRI, 一带一路) is an international cooperation strategy launched by the People’s Republic of China on September 7, 2013, with the goal of connecting Asia to Africa and Europe-through land and sea networks-to enhance regional integration, increase trade, and stimulate economic growth and the well-being of populations.
Xi Jinping – fifth president of the People’s Republic of China, unanimously re-elected on March 10, 2023, for his third five-year term (16)-drew inspiration from the Silk Road, an ancient network of trade routes that, starting during the Han Dynasty some 2,000 years ago, linked China to the Mediterranean through Eurasia for centuries. The BIS includes:
– a land passage, connecting China with Southeast Asia, South Asia, Central Asia, Russia and Europe, and
– a maritime route, linking China’s coastal regions with Southeast and South Asia, the South Pacific, the Middle East and East Africa, and all the way to Europe.
People’s Republic of China
(PRC), which now expresses 18.5 percent of the planetary economy, has supported the Belt and Road Initiative with an investment program of more than US$ 1 trillion. 3,000 infrastructure development projects-ports, roads, railways and airports, as well as power plants and telecommunications networks-created 420,000 jobs in participating countries.
Over 200 cooperation agreements with more than 150 countries and 30 international organizations. According to World Bank data, BRI cooperation will help lift nearly 40 million people globally out of poverty in the medium and long term. (17)
5) BIS. Italy – China Memorandum of Understanding
The Memorandum of Understanding signed by Italy and China on March 23, 2019 for the development of the Belt and Road Initiative-noted, ‘does not constitute an international agreement that may entail rights and obligations under international law. Nothing in this MoU shall be construed and executed as a legal or financial obligation or commitment of the parties‘ (paragraph 6). (18)
The document is public-unlike the negotiations carried out in recent years between the EU and the U.S. (TTIP), as well as Mercosur countries and various others-and it is crystal clear, clear and simple. Impossible not to seize the opportunities.
5.1) Objectives and guiding principles.
The objectives and guiding principles of cooperation in the BRI pertain to:
– Strengthen inter-regional cooperation and connectivity in an open, inclusive and balanced framework for the benefit of all,
– Promote peace, security, stability and sustainable development under the banner of mutual trust and beneficial cooperation in line with the UN charter,
– Fostering synergies between BRI, Investment Plan for Europe, Trans-European Network, EU-China Connectivity Platform (paragraph I).
5.2) Areas of cooperation
The areas of cooperation, in the Belt and Road Initiative, are diverse. Policy dialogue is a prerequisite for promoting synergies, including through the establishment of regulatory-technical standards, connectivity initiatives, and collaborations with the Asian Infrastructure Investment Bank (AIIB). In the broader, multilateral perspective that follows, as set forth in paragraph II of the Italy-China MoU.
Transportation, logistics and infrastructure:
– development of infrastructure connectivity, including financing, interoperability and logistics (e.g., roads, railways, bridges, civil aviation, ports, energy-including renewables and natural gas-and telecommunications),
– connectivity platforms,
– synergies between Belt and Road Initiative (BRI) and
Trans-European Transport Network
(TEN-T),
– simplification of customs clearance, digital transportation solutions (including investment and financing).
– Open, transparent and non-discriminatory procurement procedures.
Trade, cooperation and investment:
– bilateral trade and investment flows between Italy and China, industrial cooperation and mutually beneficial synergies including in third country markets,
– free and open trade and investment, to counter current macroeconomic imbalances and oppose unilateral or protectionist policies,
– transparent, non-discriminatory, free and open trade and industrial cooperation, open procurement, level playing field and respect for intellectual property rights, (19)
– North-South, South-South and triangular cooperation.
Financial cooperation:
– fiscal, financial and structural reforms will be able to foster economic and financial cooperation, thanks to the
– dialogue between the finance ministries of Italy and China, including with a view to
– partnerships among financial institutions that can support investments at bilateral and multilateral levels targeting, among others, third countries.
Relations between peoples:
– To broaden relations between the peoples of Italy and China,
– develop networks of sister cities and promote their respective UNESCO sites, including through the platform of the Italy-China Cultural Cooperation Mechanism,
– education, culture, science, innovation, health, tourism and public welfare,
– media, think-tanks, universities and youth.
Sustainable development:
– Belt and Road Initiative follows an approach based on sustainable development, with a focus on low carbon emissions and circular economy,
– parties (Italy – China) collaborate on environmental protection and combating climate change, with a
– Shared commitment to the implementation of the Sustainable Development Goals in UN Agenda 2030 (20) and the Paris Agreement on climate change, and
– the Italian Ministry of the Environment and Land and Sea Protection actively participates, at least in theory, in the International Coalition for Sustainable Development of the Belt and Road Initiative.
5.3) Methods and mechanisms of cooperation
Cooperation arrangements include high-level meetings and discussions within existing governmental and non-governmental mechanisms. As well as the development of pilot programs in key areas, exchanges and economic cooperation, joint research, infrastructure development, personnel exchanges and training. Always having regard to opportunities for Italy-China cooperation in third countries as well.
Social, environmental and economic sustainability is the basic requirement for investments inBelt and Road Initiative (BRI) programs, which, however, follow market principles and are open to public and private capital (Paragraph III). Existing bilateral mechanisms can foster the development of cooperation, and the Italy-China Government Committee will be able to monitor progress.
6) Interim Conclusions
The Italian government would do well to consult the relevant social partners before making ill-advised assumptions about withdrawing from the Italy-China MoU on the Belt and Road Initiative (BRI). Industries of all sectors, artisan enterprises, service providers-from logistics to tourism-and even citizens.
The opportunities offered by the new Silk Road are extraordinary, the only serious risk for Italy is to give it up and fall permanently into the social and economic abyss of an increasingly isolated Europe. And it is time to take care of the good of the country-system.
Dario Dongo
Notes
(1) Italy minister: joining China’s Belt and Road was ‘atrocious’ decision. https://tinyurl.com/y7m3hhsc Euractiv. 31.7.23. Italian language text at https://tinyurl.com/yc7c229z
(2) Lorenzo M. Capisani. Italy-China relations between 1949 and 1970. https://tinyurl.com/yxmxshwz China files. 1.8.14
(3) Major events in China-Italy relations. https://tinyurl.com/3dzxrjwt China view. 5.7.04
(4) Don’t let quitting BRI become Italy’s regret: Global Times editorial. https://www.globaltimes.cn/page/202308/1295423.shtml Global Times. 1.8.2023
(5) Brendan Murray. Italy’s Surging Shipments to China Confound Experts. https://tinyurl.com/yvxjrhxp Bloomberg. 15.5.23
(6) Preliminary estimate of GDP, Q2 2023. https://tinyurl.com/yc48ytu8 ISTAT (National Statistical Institute). 31.7.23
(7) Balance of payments and international investment position, May 2023. https://tinyurl.com/aspryuyu Bank of Italy. 20.7.23
(8) Euro area quarterly balance of payments and international investment position: fourth quarter of 2022. https://tinyurl.com/5d34v3dx European Central Bank. 5.4.23
(9) Monetary policy decisions. https://tinyurl.com/2hej5ekf European Central Bank. 27.7.23
(10) Dario Dongo. Food inflation, the demands of SAFE Food Advocacy. GIFT (Great Italian Food Trade). 23.6.23
(11) Europe’s economy enters technical recession as households struggle with cost-of-living crisis. https://tinyurl.com/2ah7tt54 Euronews. 8.6.23
(12) Dario Dongo. Price increases in Germany, below-cost sales in Italy. GIFT (Great Italian Food Trade). 4.4.22
(13) Dario Dongo. Gas and electricity, a crisis foretold. GIFT (Great Italian Food Trade). 20.3.22
(14) Hugo Erken, Hans van Es. The Economic Impact of European De-industrialization: Geopolitics Takes Center Stage. https://tinyurl.com/bdh7jfrm Rabobank research. 3.2.23
(15) Matthew Karnitsching. Europe’s economic engine is stalling: Germany deindustrializes. https://tinyurl.com/yp7my6fw Politico Europe. 13.7.23
(16) With popular mandate, Xi Jinping spearheads new drive to modernize China. https://tinyurl.com/5357mdkz The State Council Information Office, People’s Republic of China. 15.3.23
(17) Foreign Ministry Spokesperson’s Remarks on Media Reports that Italy Is Considering Not Renewing the Belt and Road Cooperation Document. https://tinyurl.com/mwhdvrfp Ministry of Foreign Affairs of the People’s Republic of China. 4.8.23
(18) Belt and Road Initiative, BRI. China – Italy, MoU 23.3.19.
https://www.governo.it/sites/governo.it/files/Memorandum_Italia-Cina_EN.pdf
(19) Dario Dongo. EU-China agreement to protect 200 geographical indications. GIFT (Great Italian Food Trade). 20.11.19
(20) Dario Dongo, Giulia Caddeo. Sustainable Development Goals, SDGs. The challenge of humanity. Égalité. 5.9.19
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
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