Italy-China Cooperation: A Matter of Concern in the US and the EU?

3 april 2019

Enrico Fardella is a Tenured Associate Professor and Executive Director at the Centre for Mediterranean Area Studies, History Department, Peking University, China.

enricofardella@gmail.com

Giorgio Prodi is an Associate Professor at the Department of Economics and Management, Ferrara University, Italy. giorgio.prodi@unife.it

Resume: In the eyes of Brussels, the main problem surrounding China’s signing of a memorandum of understanding with Italy, a founding member of the EU, is that it might jeopardise Europe’s attempt to create a united negotiating front vis-?-vis Beijing.

In the eyes of Brussels, the main problem surrounding China’s signing of a memorandum of understanding (MoU) with Italy, a founding member of the EU, is that it might jeopardise Europe’s attempt to create a united negotiating front vis-à-vis Beijing. A common European stance versus China is being perceived by the strongest industrial countries in the Union as a necessary instrument to face the outcomes of a potential deal between Washington and Beijing on trade. Such a deal could allow American interests to secure a larger portion of the Chinese market at the expense of the European players. 

French President Manuel Macron’s move to organise a meeting with German Chancellor Angela Merkel, EU Commission President Jean-Claude Junker and China’s President Xi (Italy was conspicuously absent), clearly reflects disappointment regarding the Italian position, as much as the need to preserve cohesion among the core actors of the Union towards China. Furthermore, Italy was the first proponent of a common European screening mechanism for foreign direct investments, but the new Italian government rejected it. 

Internal competition within the EU members is also another factor that influences this polarisation. The Northern European countries, home the main port facilities that have so far monopolised Europe-Far East maritime trade, stand to suffer from potential competition from the Mediterranean ports that might come via Chinese investments. The mounting friction between Italy and France, which has seen Italian PM Giuseppe Conte’s populist government arm-wrestling with Macron’s pro-European one within Europe, with little time remaining until the European election in May, is also another factor that has to be taken into account. 

The US looks at the China-Italy MoU through the prism of their strategic competition with China: they see it as a way to revitalise a project whose momentum appeared to have been vanishing, one that is meant to create an alternative sphere of influence to US global hegemony. That is why Washington puts so much emphasis on the technological dimension of the deal: Chinese 5G technology is more advanced than its Western equivalent and this has created a strong incentive for America’s European partners to use it. The security issue is still relevant and must be correctly managed: while the ban on the Chinese technology might be understandable from an American perspective, according to which China is a strategic threat, it might be considered short-sighted within the European Union, which mostly conceives of the security threat as a manageable risk. This doesn’t mean, of course, that the EU should not worry about security, which must be guaranteed through controls, the exchange of information, etc. The signing of the MoU by the new Italian government, however, might also weaken Europe’s capability to develop a common response on this issue.

Beyond the memorandum

To be honest, the MoU is almost a list of statements of goodwill. It includes everything, but only at very general level. Real economic cooperation is all that matters. China will invest only if there is a real interest in doing so: but China is now interested in showing the biggest economies of the EU that the choice Italy made is a rewarding option. We should not forget that Germany and France have achieved pretty good results with China so far without signing any MoU on the Belt and Road Initiative (BRI). So China needs to prove that the MoU is a game changer. 

We might then expect to see China exhibit a particularly proactive attitude in the next weeks, as a useful magnetic tactic to apply within sight of the BRI Forum in Beijing at the end of April. If China wants to weaken the anti-China forces in Europe and the US and persuade other European countries to follow in Italy’s footsteps, it must show that the MoU is anything but an empty box. But if this proactive stance from the Chinese side is to translate into facts, it will primarily depend on the capacity of the Italian side to bring about actionable proposals that will animate the MoU and turn it into a real success.

Belt and Road for other EU countries

Many other EU countries, while smaller than Italy, have already signed MoUs on China’s BRI. If another one follows, it will depend on several factors. 

First, it will be influenced by the success of the Sino-Italian MoU. If the agreement between Rome and Beijing brings productive and tangible results in the next weeks, other European countries might be tempted to sign a MoU. If that isn’t the case, Italy’s example will be an isolated incident, the critical anti-China front both in the EU and within Italy will gain momentum and the MoU will become a symbol of the inconsistency of the BRI and of pursuing any engagement policy with China. 

Second, it will also depend on how the US develops its own strategy with China.

Last but not the least, the choice of other countries will also be based on the capacity of the EU to maximise its position and prove that the arguments expressed by France and Germany in Paris are credible.

The Valdai Discussion Club

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