Italy’s new government lays the foundation for a more balanced China policy

Italy raised eyebrows in Europe and across the Atlantic when it joined China’s Belt and Road Initiative (BRI) in March. Under the new coalition, Italian China policy promises to be better aligned with that of Brussels. If complemented with strategic and value-based considerations, an increased attention to China inherited from the previous government might not be a bad thing, says Lucrezia Poggetti.

Just one day in office after being sworn in on September 4, the new Italian government immediately indicated that it will not continue on the course of all-out cooperation with Beijing initiated by its predecessors. During its very first meeting, the new Conte government, a coalition between the anti-establishment 5 Star Movement (M5S) and the center-left Democratic Party (PD), exercised its “Golden Power” – special powers to examine foreign investment in strategic sectors and critical infrastructure – to scrutinize a number of supply deals for 5G networks, including two that involve Chinese ICT companies Huawei and ZTE.

By so doing, it showed resolve where the previous government had hesitated. The former Interior Minister and Vice Premier, League’s leader Matteo Salvini, had expressed security concerns, but did not act with his coalition partners to actually approve the use of special powers on 5G deals. The new government has now done this and imposed undisclosed “conditions and requirements” on the contracts. The introduction of balanced assessments in the cooperation with Chinese actors can help Italy pursue economic opportunities without exposing itself to excessive risks. It can also serve Italy well in earning back the credibility it had lost in European capitals and DC.    

Coordination with the EU and the US will be central to Italian China policy

The new government has put Italy’s European and Transatlantic relations back in focus by stating clearly in its program that the Euro-Atlantic alliance and European integration will be pillars on which the pursuit of national interests in foreign policy will be based. For China policy, this means that cooperation with Beijing will be circumscribed by wider European and Transatlantic interests, preventing eccentric moves like the ones that led to Italy signing a Memorandum of Understanding on the Belt & Road Initiative with China in March. Its swift action on 5G is itself indicative of a more cautious approach to China – something that should reassure Brussels and Washington.

At the same time, some elements of continuity with the previous China-friendly government remain. 5 Star leader and former Economic and Labor Minister Luigi Di Maio, signer of the controversial MoU, is now Foreign Minister. He picked the current Ambassador to China, Ettore Sequi – who was also a strong promoter of the MoU signature – as his Head of Cabinet at the Foreign Ministry. Their new roles signal to China that Italy is still interested in cooperation.  

Nevertheless, the 5 Stars’ new coalition partner might provide some counterbalances. Democratic Party’s Paolo Gentiloni is back with an important role as Economic Commissioner in Brussels. In 2017, he attended the Belt and Road Forum in Beijing as Prime Minister of a PD-majority government, while at the same time promoting, along with Germany and France, the creation of the EU framework for foreign investment screening that entered into force this year. His more balanced approach to cooperation with China could inspire the new government to pursue economic opportunities without cozying up to Beijing politically.

A remarkable step has already been suggested to signal where Italy should stand politically. In an unprecedented move, Italian lawmakers Lia Quartapelle (Democratic Party, she also heads the Parliament’s Foreign Affairs Committee) and Maurizio Lupi (Us with Italy, a Christian-democratic group), have proposed a parliamentary hearing to listen to Hong Kong protesters, saying that Italy should stand with Hong Kong and “hold high the banner of freedom and civil rights”. The proposal came as Beijing summoned the German ambassador to China because of a meeting between Hong Kong activist Joshua Wong and German Foreign Minister Heiko Maas.

Beijing hopes that Italy will keep pursuing a pro-China stance

Beijing has welcomed Di Maio’s and Sequi’s appointments as good news. Chinese Foreign Minister Wang Yi communicated his approval in a congratulatory message delivered to the Italian Foreign Ministry. In hopes that the new government will keep pursuing China-friendly policies, Beijing is being very careful not to upset its new partners. Xinhua, mouthpiece of the ruling Chinese Communist Party (CCP), was quick to remove a statement depicting Di Maio as an unusual choice for his new role. The deleted comment stated that the 33-year old “never graduated from university, has very limited foreign language skills, and has shown little interest in global affairs in his public life”.

Similarly, the new government’s decision to scrutinize deals involving Huawei and ZTE has not provoked the expected outrage in Beijing. In a balancing act, Chinese foreign ministry spokesperson Geng Shuang limited himself to expressing hope that Italy will grant “fair conditions” to Chinese businesses. This is somewhat misleading, given that Golden Power legislation applies to all non-EU companies when critical infrastructures are concerned, without discrimination. 

Italy should build on the increased number of government and public debates on China

One positive legacy that the current government has inherited from the previous coalition is the increased attention to China. However, Italian China policy has so far been governed only by economic interests, with the Economic and Finance ministries taking over large parts of the portfolio on China. Recent moves on 5G and Hong Kong indicate that more strategic and value-based considerations are slowly making their way into debates about China.

In addition, the Italian industry has started to position itself more clearly on China. In April 2019, the General Confederation of Italian Industry (Confindustria), issued a position paper advocating for a more strategic and cohesive EU approach to dealing with economic challenges in the relationship with Beijing. Port authorities and shipowner associations involved in Belt and Road projects are increasingly calling for more reciprocity, as they see the initiative still mostly serving Chinese interests, and for a European approach to BRI.

With increased government and public discussion on China, Italy has an opportunity to devise a more strategic approach to relations with Beijing. Working closely with the European Commission President-elect Ursula von der Leyen, who plans to “define our relations with a more self-assertive China”, would be a very good start.