Italy misses the point on China’s Belt and Road Initiative
by Emanuele Scimia

The Italian government is ready to join the New Silk Roads project, but the president of the EU Chamber of Commerce in China warns that foreign firms’ success in the Chinese market is not decided by memorandum of understandings. The problem of transparency

 


Italy is set to become the first G7 country and founding member of the EU to formally endorse China’s Belt and Road Initiative (BRI), a move that has puzzled the United States and the European Union’s institutions.

Beijing and Rome are expected to sign a memorandum of understanding (MoU) on the latter’s participation in the BRI during Chinese President Xi Jinping’s visit to Italy from March 21-23. Similar agreements on the China’s megaproject, which is designed to improve trade integration and connectivity across Eurasia and beyond, have already been inked by 13 EU member states.

Italian government leaders who have worked on the MoU say it will give their country’s businesses greater access to the vast Chinese market.

Mats Harborn, president of the EU Chamber of Commerce in China, is not so sure that there is such a clear link between the two things.

“The signing of this MoU is more a statement that Italy wants to show its support for the Belt and Road scheme” he told AsiaNews. “It should be remembered just how competitive the Chinese market is, and business success in China is not decided by such agreements.”

For Harborn, it is possible that China might offer Italy special access to certain licences or could accelerate approvals, but to do so would be highly problematic at a time when its leadership is doubling down on pledges to provide equal treatment to foreign companies.

“Since the BRI is potentially very important for a large part of the global economy, we hope that Italy’s signing signifies a step towards increasing involvement from the EU as a whole,” he pointed out.

In his view, if the MoU is rightly formulated, with China committing to an open and inclusive BRI based on international norms and standards, “the chances of the project becoming sustainable would be vastly increased.”

On March 15, on the final day of its annual plenary session, the National’s People Congress (China’s top legislature) adopted a new foreign-investment law that should ensure a level playing field between domestic and foreign industries.

This is a sensitive issue for the EU, which has been negotiating a comprehensive investment agreement with the Asian giant since 2013.

“If Italy’s signing of this MoU led to greater transparency, as well as more and equal opportunities for European companies to participate in BRI projects, then it would be a positive step towards reciprocity in procurement practices, particularly as far as the public sector is concerned,” Harborn said. “After all, Chinese companies enjoy access to the EU’s open procurement market and frequently win bids, while European companies have [so far] lacked similar access, both in China and abroad in BRI projects.”

Transparency is especially important when it comes to China’s trade and investments practices, which are often seen as opaque and part of a “debt-trap” diplomacy, with developing countries – but also struggling EU countries such as Greece and Portugal – becoming heavily dependent on Chinese loans.

In this respect, Bonnie Glaser, director of the China Power Project at the Center for Security and Strategic Studies in Washington, noted that “if the entire process is transparent, and the Chinese do not force Italy to use Chinese labor and materials, there is nothing wrong with Italian participation in the BRI.”

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