Italy prepares to quit Xi’s global building megaplan

HIROSHIMA, Japan — It took four years for Italy to consider breaking off its special relationship with Chinese President Xi Jinping. 

In 2019, Italy became the first G7 country to join China’s global infrastructure program, the Belt and Road Initiative (BRI), to the surprise of allies in the West.

Now, Italy’s right-wing leader Giorgia Meloni is ready to tell her G7 counterparts she is prepared to sever ties with Xi’s landmark foreign policy project, according to one senior diplomat familiar with her government’s deliberations. 

Meloni has not yet taken a final decision, but the discussion in Rome is focused on how to exit Belt and Road, rather than whether to do so, said the diplomat, who was speaking anonymously because the matter is sensitive. 

If it comes, such a move would represent a dramatic turnaround in relations between Italy and China, planting Meloni firmly in the camp of Sino-skeptic countries led by U.S. President Joe Biden. It would also mark a blow to Xi’s flagship policy, potentially prompting other countries to follow Italy’s example.

While there are still divisions over how far Europe should go in joining U.S. support for the defense of Taiwan, there is growing transatlantic consensus over the need to resist Chinese economic power games. 

But it isn’t a straightforward calculation for Italy. The BRI’s supporters warn that breaking up with China would damage Italian business. 

“The relationship with the U.S. is really what she’s [Meloni] bet on in order to establish her international credentials,” said Nathalie Tocci, director of the Istituto Affari Internazionali, a Rome-based think tank. 

Four years ago Italy became the first EU country to join the BRI, Xi’s sweeping infrastructure development strategy to invest in 150 countries and international entities. Under the program, China is financing the construction of ports, bridges, railroads and skyscrapers, among other projects around the world. 

When Xi visited Rome in 2019 to seal the deal he was greeted like a king and treated to a concert by world-famous tenor Andrea Bocelli in the presidential palace. 

The Chinese leader told Italy’s then-Prime Minister Giuseppe Conte that it’s akin to the “natural principles of the universe” for their two countries — once the two ends of the old Silk Road — to reunite. 

Open question

Meloni hasn’t said whether she will take Italy out of the BRI, but indicated last week that “the debate is open.” She’s expected to signal the country’s way forward during the G7 meeting in Hiroshima this week, as other leaders such as Biden could raise the issue, according to an EU diplomat and an EU official who spoke on condition of anonymity to discuss sensitive issues.

The Rome-Beijing deal is set to be renewed automatically for five more years in March 2024 if neither side withdraws. Italy’s foreign affairs undersecretary Giorgio Silli said on Wednesday that “a careful reflection was ongoing,” and noted that the decision would be taken “keeping in mind” the China policies of NATO, the G7 and the EU. 

The deal was designed to boost trade and improve connectivity between Italy and China. But it fell short of its ambitions as Beijing failed to reduce barriers for Italian businesses and successive governments in Rome took an increasingly harsh line toward Xi’s administration.

The EU has also established its own rival Global Gateway initiative to counter China’s BRI. European Commission President Ursula von der Leyen will be teaming up with Biden and Japan’s Prime Minister Fumio Kishida for a trilateral infrastructure pledge on the sidelines of the Hiroshima gathering.

That puts Italy in an awkward position, with the special status as the only G7 nation that’s part of Beijing’s initiative, according to Alessia Amighini, an international economist who wrote a book on the BRI. “It has been a very Italian mess,” she said. 

Italy signed up to the project just as Western public opinion was turning against China over its increasingly authoritarian model and unfair trade practices. 

Risks ahead 

Backers of the China deal, on the other hand, remain adamant that Italy stands to lose if it opts out of the agreement.

One of the central figures in the negotiations with Beijing was the undersecretary for industry Michele Geraci, a former banker who has been teaching finance in Chinese universities for more than a decade. 

“Being an Atlantist, a member of NATO, doesn’t mean that you can’t make deals with China,” Geraci said during a phone interview from China, pointing out other EU countries that are also NATO members joined the BRI. He also stressed that the U.S. also concluded a so-called Phase One deal with China.

For Geraci, leaving BRI would make life more difficult for Italian exporters to China, a key argument made by business unions who backed the deal hoping it would lead to better access to the Chinese market.

China’s exports to Italy grew by 51 percent from 2019 to 2022, while its imports from the EU country rose by only half (26 percent) during the same years, according to Italy’s Trade Agency.

“If we go toe-to-toe fighting with China, dragged by this vision of decoupling, we cripple our economy,” Geraci said.